Banks seek microloan guarantee extension
Banks have petitioned the government to prolong the Credit Guarantee Fund for Micro Units (CGFMU) program. The initiative, aimed at providing collateral-free loans to micro enterprises, concluded on March 31, 2026, leaving banks uncertain about risk pricing, capital provisioning, and the future of unsecured lending to borrowers at the lower end of the spectrum.
IDFC First Bank and other small finance banks, including AU, Jana, and Suryoday, heavily relied on the scheme to mitigate credit risk, setting aside the guarantee fee for the current fiscal year, anticipating its imminent reopening, according to informed sources.
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