Millions of micro-entrepreneurs across India just got a bigger safety net. Maharashtra Chief Minister Devendra Fadnavis on Wednesday, November 11, 2026, welcomed the Union Cabinet's decision to extend the Credit Guarantee Fund for Micro Units (CGFMU) for another five years, backed by a fresh corpus of ₹5,000 crore — a move he credited to the leadership of Prime Minister Narendra Modi.

What the Cabinet cleared — and what it means for micro businesses

The extended CGFMU, running through March 31, 2031, is designed to unlock collateral-free credit of up to ₹20 lakh for eligible micro enterprises — double the original ₹10 lakh ceiling when Pradhan Mantri Mudra Yojana (PMMY) was first launched in April 2015. The scheme targets non-corporate, non-farm micro businesses that have historically struggled to access formal credit without pledging assets.

The Cabinet also approved a reduction in the annual guarantee fee — from 1 per cent to 0.75 per cent — lowering the cost of borrowing for small business owners. Over the next five years, the government expects ₹12.6 lakh crore in Mudra loans to be facilitated through this framework. That is a staggering pipeline of credit pointed squarely at the informal economy's backbone.

CGFMU's role inside the Mudra architecture

The CGFMU was established as the guarantee engine powering PMMY — it absorbs default risk on behalf of lenders, which is precisely what makes collateral-free lending viable at scale. Without it, banks and micro-finance institutions face unhedged exposure when lending to borrowers who have no land or machinery to pledge. The fund's continuation signals that the Centre views this guarantee mechanism as structural, not temporary.

Since its 2015 launch, PMMY has been a central pillar of the government's financial-inclusion agenda for the informal sector — one of the largest in the world by number of participants. Maharashtra, home to a dense cluster of small traders, artisans, and service-sector micro units, stands to be among the larger beneficiaries of expanded disbursements through 2031.

Fadnavis frames it as a Viksit Bharat building block

CM Fadnavis tagged the announcement under #PradhanMantriMudraYojana and #ViksitBharat, framing the CGFMU extension as part of the broader 'Viksit Bharat' (Developed India) vision. His post underscores a pattern that has defined BJP's political communication: state leaders amplifying central economic decisions to link grassroots beneficiaries to the national government's brand.

The fee cut to 0.75 per cent per annum and the raised loan ceiling to ₹20 lakh will be the two numbers small business owners and their lenders watch most closely as the extended scheme rolls out.

With ₹12.6 lakh crore in projected Mudra lending on the table and a guarantee fund topped up through 2031, the question now shifts from intent to execution — and Maharashtra's implementation record will be one of the first real tests.