Mudra loan guarantee fund extended to 2031; fee cut from 1% to 0.75%

The Cabinet has approved continuing the Credit Guarantee Fund for Micro Units (CGFMU) for five years, until 31 March 2031, and has cut the guarantee fee from 1% to 0.75% a year.

The fund gives lenders a guarantee against default through the National Credit Guarantee Trustee Company Limited. It covers loans of up to ₹20 lakh to micro enterprises under the Pradhan Mantri Mudra Yojana (PMMY), overdrafts of up to ₹10,000 under Jan Dhan accounts, and loans to self-help groups whose portfolio is between ₹10 lakh and ₹20 lakh.

The scale

As of September 2026, lenders have sanctioned more than 60.36 crore loans worth ₹43.34 lakh crore under the Mudra scheme since its launch, the government said, and it calls CGFMU, launched in January 2016, a major catalyst for that growth.

What changes

• The guarantee fee falls from 1% to 0.75% a year.
• Self-help groups continue to pay 0.25% in the first year and 0.50% afterwards.
• Guarantee coverage will be linked to the disbursed amount for working-capital limits and to the outstanding amount for term loans, so that it reflects the lender's real exposure.

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Source: official release by the Cabinet, issued through the Press Information Bureau, Government of India (11 NOV 2026 3:14PM by PIB Delhi). Read the full official text: Cabinet approves continuation of Credit Guarantee Fund for Micro Units.