It also gave nod to increase in maximum loan amount capped to Large Sized Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) and MFIs from Rs 300 crores to Rs 1,000 crores under the overall ceiling of 20% of Assets under Management (AUM).
Under the extension in validity and increase in maximum loan amount, it now expects better utilisation of the scheme and facilitate increased credit flow to the MFI sector.
Earlier in March this year, the Centre had introduced the CGSMFI-2.0 scheme to provide guarantee cover to Banks/ FIs through National Credit Guarantee Trustee Company Limited (NCGTC) against expected losses on the financial assistance extended by them to NBFC-MFIs/MFIs for on lending to small borrowers.
As on June 10, the government informed that loans totalling to Rs 770 crore have been sanctioned under the scheme.
Under CGSMFI-2.0, all existing or new small borrowers within the regulatory definition of micro finance are eligible borrowers. The guarantee coverage us 80% of amount in default for small, 75% for medium and 70% for large NBFC-MFIs/ MFIs.
The interest rate is capped at EBLR or MCLR + 2% per annum, on loans by MLIs to NBFC-MFIs or MFIs. While on-lending to small borrowers, these MFIs/NBFC-MFIs shall cap the interest rate at 1% below the average rate of lending in past 6 months.