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In a major boost for microfinance institutions, the government has approved the extension of the Credit Guarantee Scheme for Microfinance Institutions (CGSMFI) - 2.0 up to August 31, 2026, or till guarantees for an amount of Rs 20,000 crore are issued, whichever is earlier. The scheme was valid till June 30, 2026 or loans up to Rs 20,000 crore are guaranteed, whichever is earlier.

Moreover, the government has approved an increase in the maximum loan amount capped to large-sized NBFC-MFIs/MFIs from Rs 300 crore to Rs 1,000 crore under the overall ceiling of 20 per cent of assets under management (AUM). The extension in validity and increase in maximum loan amount capped to large-sized NBFC-MFIs/MFIs is expected to result in better utilisation of the scheme and facilitate increased credit flow to the MFI sector.