Credit guarantee fund for small units extended by five years

Eligible borrowers can secure loans of over ₹10 lakh and up to ₹1 crore to set up new enterprises

New Delhi: The Union Cabinet on Wednesday approved a five-year extension of the Credit Guarantee Fund for Micro Units and the Stand-Up India scheme until 2031, alongside an 8.5-km extension of the Noida-Greater Noida Metro corridor.

Announcing the decisions, Union information and broadcasting minister Ashwini Vaishnaw said the Cabinet had approved a ₹5,000-crore corpus for the micro units fund and a ₹4,111-crore credit guarantee corpus for Stand-Up India.


"Several changes have been made, such as reducing the guarantee fee to lower costs and ensuring an increase in the total amount of credit available," he said. The extension of the micro units fund is expected to facilitate ₹12.6 lakh crore in loans under the Pradhan Mantri Mudra Yojana over the next five years, read an official statement.

The fund provides lending institutions protection against default risks through the National Credit Guarantee Trustee Company. Eligible credit facilities include Mudra loans of up to ₹20 lakh to micro enterprises, overdrafts of up to ₹10,000 under Pradhan Mantri Jan Dhan Yojana accounts and specified self-help group loans ranging from ₹10 lakh to ₹20 lakh.

"The annual guarantee fee will be reduced from 1% to 0.75%. Self-help groups will continue paying 0.25% in the first year and 0.50% in subsequent years. Coverage will reflect lenders' actual risk exposure, based on disbursements for working capital and outstanding amounts for term loans," the statement said. The continuation of Stand-Up India aims to support at least 250,000 additional women, Scheduled Caste and Scheduled Tribe entrepreneurs over the next five years. Since its launch in April 2016, the scheme has facilitated loans to more than 275,000 entrepreneurs from these groups.

Eligible borrowers can access loans above ₹10 lakh and up to ₹1 crore to set up new enterprises in manufacturing, services, trading and agriculture-allied activities. The assistance can be in the form of a term loan or a composite loan combining working capital and term finance, covering up to 85% of project costs. Credit guarantee coverage under Stand-Up India will be 85% of the loan amount, with a standard guarantee fee of 0.50%.

The Cabinet also approved an 8.5-km extension of the Aqua Line Metro Rail Corridor from Noida Sector 51 to Greater Noida Sector 4. The extension, part of the Noida Metro Rail Project, will have five elevated stations.

"On operationalisation of this corridor, Noida and Greater Noida city will have 71.878 km of active metro rail network," another statement said.

The new corridor aims to improve public transport connectivity between the two cities and provide access to high-demand routes, including an interchange with the Blue Line at Noida Sector 61, the statement said.