Union Cabinet Approves Extension of Credit Guarantee Funds for Mudra and Stand-Up India Schemes

The Union Cabinet on Wednesday approved the continuation of credit guarantee funds for micro units under the Pradhan Mantri Mudra Yojana (PMMY) and the Stand-Up India scheme. These credit guarantee funds will remain available until March 31, 2031, to support entrepreneurship and job creation.

Under the Credit Guarantee Fund for Micro Units (CGFMU), credit guarantee coverage is provided to lending institutions through the National Credit Guarantee Trustee Company Ltd (NCGTC) to protect against default risks. The scheme features a ₹5,000 crore corpus designed to facilitate over ₹12.5 lakh crore in Mudra loans over the next five years. The framework supports collateral-free loans of up to ₹20 lakh under the PM MUDRA Yojana, alongside lower guarantee fees intended to encourage lending to micro-enterprises.

Since the launch of the PM Mudra Scheme in January 2016, lending institutions have sanctioned more. As of September 2026, over 60.36 crore loans amounting to ₹43.34 lakh crore have been sanctioned under the PM Mudra Scheme.

In a separate decision, the Cabinet approved the continuation of the credit guarantee fund for Stand-Up India. This scheme provides guarantees for loans ranging from above ₹10 lakh to ₹1 crore specifically for women, SC, and ST entrepreneurs establishing greenfield enterprises. The scheme has a duration of five years with a corpus of ₹4,111 crore toward credit guarantee, targeting an average of two loans per bank branch.

According to government details, the guarantee fee is standardized at 0.50 percent per annum without extra risk premiums, while the guarantee cover rises to 85 percent for all loan sizes alongside handholding support throughout the loan process and business cycles.

Additionally, the Cabinet approved the extension of the aqua line metro rail corridor from Noida Sector 51 to Greater Noida Sector 4. Estimated at ₹2,390 crore, the 8.449 km project includes five elevated stations and is scheduled to be completed over four years, according to Union Minister for Information and Broadcasting Ashwini Vaishnaw.

"The continuation of credit guarantee funds under the Mudra and Stand-Up India schemes until 2031 provides long-term stability for micro-enterprises and aspiring founders in India. By lowering financial barriers, enabling collateral-free loans up to ₹20 lakh, and targeting women and marginalized entrepreneurs, these initiatives reduce risk for lenders and directly foster grassroots job creation. This policy continuity is a positive step for inclusive business growth across the ecosystem." — Dr. Shishir Gupta, Founder & CEO, StartupLanes