MUDRA Credit Guarantee Extended Till 2031

GOVERNMENT EXTENDS MICRO CREDIT GUARANTEE SCHEME UNTIL 2031

WHY IN THE NEWS ?

  • Cabinet Approval: The Union Cabinet has approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for five years, until March 2031.
  • Financial Support: The scheme will facilitate approximately ₹12.6 lakh crore in PM Mudra loans, strengthening collateral-free credit access for micro and small entrepreneurs.

GOVERNMENT EXTENDS MICRO CREDIT GUARANTEE SCHEME UNTIL 2031

CREDIT GUARANTEE FUND FOR MICRO UNITS (CGFMU):

  • Scheme Extension: The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the continuation of CGFMU for another five years, up to March 2031.
  • Financial Corpus: The government approved a corpus of ₹5,000 crore to support credit guarantees and facilitate ₹12.6 lakh crore in loans under PMMY.
  • Risk Protection: CGFMU provides credit guarantee coverage to lending institutions against potential loan defaults, reducing their lending risks.
  • Implementing Agency: The National Credit Guarantee Trustee Company Limited (NCGTC) manages the credit guarantee mechanism for the scheme.
  • Economic Objective: The initiative aims to strengthen access to institutional finance for micro-enterprises that lack sufficient collateral or conventional banking credentials.

PRADHAN MANTRI MUDRA YOJANA (PMMY): ACHIEVEMENTS AND SIGNIFICANCE

  • Launch Year: The Credit Guarantee Fund for Micro Units was launched in January 2016 to support the expansion of Pradhan Mantri Mudra Yojana.
  • Loan Performance: As of September 2026, more than 60.36 crore loans, amounting to approximately ₹43.34 lakh crore, had been sanctioned since PMMY’s launch.
  • Collateral-Free Credit: PMMY enables eligible non-corporate, non-farm micro and small enterprises to access institutional loans without collateral.
  • Entrepreneurship Promotion: The scheme has helped individuals from economically weaker sections enter entrepreneurship by improving access to formal banking finance.
  • Financial Inclusion: The extended guarantee mechanism is expected to encourage banks and other lending institutions to provide greater credit support to underserved entrepreneurs.

ABOUT PRADHAN MANTRI MUDRA YOJANA:

●      Launch: PMMY was launched on 8 April 2015 by the Government of India to promote entrepreneurship and provide institutional finance to micro-enterprises.

●      Nodal Institution: The Department of Financial Services, Ministry of Finance, oversees the scheme’s policy framework.

●      MUDRA: Micro Units Development and Refinance Agency Ltd. supports the development and refinancing of micro-enterprise lending institutions.

●      Loan Categories: Mudra loans are classified into four categories:

○       Shishu: Loans up to ₹50,000.

○       Kishore: Loans above ₹50,000 and up to ₹5 lakh.

○       Tarun: Loans above ₹5 lakh and up to ₹10 lakh.

○       Tarun Plus: Loans above ₹10 lakh and up to ₹20 lakh for entrepreneurs who have successfully repaid previous Tarun loans.

●      Beneficiaries: The scheme primarily supports small businesses, shopkeepers, artisans, service providers and other eligible micro-enterprises.