New Delhi, March 21: The government announced on Saturday that approximately 3.6 million borrowers are expected to benefit from the newly launched Microfinance Credit Guarantee Scheme 2.0.
This initiative, named the ‘Credit Guarantee Scheme for Microfinance Institutions-2.0,’ aims to provide guarantee coverage to banks and financial institutions. The guarantees will be administered through the National Credit Guarantee Trustee Company Limited, covering potential losses on loans extended to microfinance institutions.
The scheme is designed to encourage banks and financial institutions to increase lending to Non-Banking Financial Companies-Microfinance Institutions (NBFC-MFIs) and other microfinance entities, enabling them to offer more loans to small borrowers.
The target is to enhance loan flow by up to ₹20,000 crores under this scheme.
According to an official statement, guarantee coverage will be provided for lending to small borrowers, with guarantees of up to 80% for small institutions, 75% for medium, and 70% for larger institutions in case of defaults.
This initiative will cover both new and existing small borrowers, adhering to the microfinance regulations set by the Reserve Bank of India.
The microfinance sector plays a crucial role in financial inclusion in the country, reaching out to economically weaker sections of society.
The government noted that recent financial pressures in the microfinance sector have led banks to slow down lending, creating challenges for small institutions in accessing loans.
The primary goal of this scheme is to incentivize banks and financial institutions to lend to microfinance institutions, ensuring that funds reach small borrowers more easily.
This scheme will remain in effect until June 30, 2026, or until guarantees are provided for loans up to ₹20,000 crores, whichever comes first.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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