MFI Scheme Extension 2026: Credit Guarantee Validity, New Loan Limits & What It Means for Small Borrowers

The Government of India has made a vital step in respect of MFIs. It has extended the period of the Credit Guarantee Scheme 2.0 till July 10, 2026. Moreover, the maximum loan limit for large organizations has been increased up to ₹1,000 crore. The Ministry of Finance released this information in its press statement.

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The scheme started on March 20, 2026. The key objective of this scheme is to facilitate lending to small clients. Banks and other financial institutions provide lending to NBFC-MFIs, and then they get guarantee cover against their losses through NCGTC. At present, ₹770 crore loans have been approved under this scheme. The validity of this scheme till June 30, 2026, or issuance of guarantees against loans amounting to ₹20,000 crore, whatever is earlier.

The government has extended the validity of this important scheme. It will now remain in effect until August 31, 2026, or until guarantees totaling ₹20,000 crore are issued, whichever comes first. This extension will enable better utilization of the scheme and will benefit more people.

The government has also increased the maximum loan amount for large NBFC-MFIs and MFIs.The earlier limit was ₹300 crore, which has now been raised to ₹1,000 crore. The increase is within the overall limit of 20% of assets under management (AUM). This is expected to increase the flow of credit to the microfinance sector and make it easier for small borrowers to access credit.