GoI Introduces CGSMFI 2.0 to Facilitate Credit Flow to MFI

Current Context: On 20 March 2026, the Government of India launched the Credit Guarantee Scheme for Microfinance Institutions 2.0 (CGSMFI‑2.0).

• Aim: To ease the liquidity crunch and ensure credit flow to the bottom of the pyramid.
• Implementing Agency: National Credit Guarantee Trustee Company (NCGTC).
• Credit Flow: ₹20,000 crore, benefiting ~36 lakh small borrowers.
• Guarantee Coverage: Small MFIs (80%), Medium MFIs (75%), Large MFIs (70%).
• Interest Caps: Bank→MFI at EBLR/MCLR + 2%, MFI→Borrower at least 1% below average lending rate.
• Validity: Till 30 June 2026 or until ₹20,000 crore limit is reached; loan tenure max 3 years (1‑year moratorium + 2 years repayment).

Question:

Q.1 The guarantee coverage for medium MFIs under the Credit Guarantee Scheme for Microfinance Institutions 2.0 (CGSMFI-2.0) is:
a) 70%
b) 75%
c) 80%
d) 85%

Answer: b) The guarantee coverage for medium MFIs under the Credit Guarantee Scheme for Microfinance Institutions 2.0 (CGSMFI-2.0) is 75%.