Bhubaneswar, March 22 -- In a bid to strengthen the microfinance sector and improve access to credit for small borrowers, the Government of India has rolled out an upgraded Credit Guarantee Scheme for Microfinance Institutions, titled CGSMFI-2.0. The initiative is designed to encourage banks and financial institutions to increase lending to Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) and other MFIs by offering a safety net against potential losses.

Under the scheme, the National Credit Guarantee Trustee Company Limited (NCGTC) will provide guarantee cover to lenders for loans extended to MFIs, which in turn will be used to support small borrowers across the country. The government expects the scheme to enable cred...