## Report on Amendments to the Credit Guarantee Fund for Micro Units (CGFMU) Scheme
**1. Executive Summary:**
This report analyzes amendments to the Credit Guarantee Fund for Micro Units (CGFMU) Scheme, as detailed in Notification S.O. 2668(E) dated July 1, 2021. The amendments, made by the Ministry of Finance, Department of Financial Services, primarily concern the eligibility criteria for borrowers under the scheme and payout caps. Key changes include the removal of interest rate stipulations, broadening the definition of eligible borrowers to include certain Self Help Groups (SHGs), and specifying the applicability of payout caps concerning credit management by MLIs on the SHG portfolio. These changes aim to refine the scheme and potentially broaden its reach to SHGs.
**2. Introduction:**
This report provides an overview and analysis of the amendments to the Credit Guarantee Fund for Micro Units (CGFMU) Scheme, based solely on the information presented in Notification S.O. 2668(E) dated July 1, 2021, issued by the Ministry of Finance, Department of Financial Services, Government of India. The purpose of this report is to inform stakeholders about the specific changes introduced to the scheme and their potential implications.
**3. Policy Overview:**
This report focuses on amendments to the existing Credit Guarantee Fund for Micro Units (CGFMU) Scheme, originally established through Notification S.O. 1443(E) dated April 18, 2016, and subsequently amended by notification number S.O. 1261(E), dated the 16th April, 2020. The core objective of the CGFMU Scheme, as inferred from the context, is to provide credit guarantees to financial institutions lending to micro units, thereby encouraging lending to this sector.
**4. Background and Rationale:**
The amendments likely aim to address perceived limitations or inefficiencies within the existing CGFMU Scheme. Specifically, the removal of interest rate stipulations suggests a desire for greater flexibility in lending rates. The broadened eligibility criteria for borrowers, particularly the inclusion of SHGs with loan amounts between Rs. 10 lakh and Rs. 20 lakh, indicate an intention to expand the scheme's coverage and cater to a wider range of microfinance needs. The amendment regarding payout caps for SHG portfolio hints towards addressing challenges faced by MLIs dealing with credit management for SHGs.
**5. Key Provisions / Changes:**
The following key changes are introduced by the amendment:
* **Change 1: Removal of Interest Rate Stipulation:** Subparagraph xi of paragraph 2a in the original scheme, which stipulated interest rates as determined by Mudra (not exceeding 12% p.a.), has been removed.
* **Effect:** This eliminates the mandated interest rate cap, providing lending institutions with greater autonomy in determining interest rates for eligible borrowers.
* **Change 2: Revised Definition of "Eligible Borrower":** Subparagraph xii of paragraph 2b has been replaced with a new definition.
* **New Rule:** An "eligible borrower" now includes:
* New or existing micro unit enterprises under PMMY or as defined in the MSMED Act, 2006, meeting Fund-prescribed eligibility criteria and with credit requirements not exceeding the PMMY limit (Rs. 10 lakh or an amount decided by the Fund).
* Overdraft loans of Rs. 10,000 sanctioned under PMJDY accounts.
* Self Help Groups (SHGs) meeting Fund-prescribed eligibility criteria with loan amounts above Rs. 10 lakh and up to Rs. 20 lakh.
* **Effect:** The definition is expanded to include SHGs with larger loan amounts, potentially bringing a new segment of micro-enterprises under the scheme's umbrella.
* **Change 3: Payout Cap Applicability:** The amendment inserts text clarifying that payout caps related to credit management by MLIs are *not* applicable on the SHG portfolio.
* **New Rule:** Payout caps are not applicable on the SHG portfolio.
* **Effect:** This provision likely aims to incentivize lending to SHGs by removing potential limitations on payouts related to credit management, thereby encouraging MLIs to increase their SHG portfolio.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders affected by these amendments include:
* Micro unit enterprises, particularly those seeking loans under the PMMY scheme or defined by the MSMED Act, 2006.
* Self Help Groups (SHGs) seeking loans between Rs. 10 lakh and Rs. 20 lakh.
* Microfinance Institutions (MFIs) and other lending institutions (MLIs) that provide credit to micro units and SHGs under the CGFMU scheme.
* The Credit Guarantee Fund itself, responsible for administering the scheme and setting eligibility criteria.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency:** The Ministry of Finance, Department of Financial Services, is responsible for the overall administration of the scheme. The Credit Guarantee Fund (referred to as "the Fund") is responsible for setting specific eligibility criteria and administering the credit guarantees.
* **Procedures:** The amendment does not specify new procedures. However, it is inferred that the Credit Guarantee Fund will need to update its internal guidelines and eligibility criteria to reflect the changes outlined in the notification.
* The SHG portfolio will now be subject to different payout caps relative to the other portfolios.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of these amendments are:
* Increased flexibility in lending rates for micro units.
* Expanded access to credit for SHGs with loan requirements exceeding Rs. 10 lakh and upto Rs. 20 lakh.
* Incentivized lending to SHGs by removing potential payout limitations related to credit management by MLIs
* Overall, a broader reach and increased effectiveness of the CGFMU scheme in supporting micro-enterprises.
**9. Conclusion:**
The amendments to the CGFMU Scheme represent a targeted effort to refine the scheme's operation and broaden its scope. By removing interest rate stipulations, expanding eligibility criteria to include SHGs with larger loan amounts, and removing payout caps on the SHG portfolio, the amendments are expected to enhance the scheme's effectiveness in facilitating credit access for micro units and SHGs. These changes underscore the government's commitment to supporting the micro-enterprise sector and promoting financial inclusion.
Key Entities Referenced
Credit Guarantee Fund for Micro Units: A scheme (CGFMU) to provide credit guarantees for micro units.
MSMED Act, 2006: Micro, Small and Medium Enterprises Development Act, 2006
PMMY: Pradhan Mantri Mudra Yojana
PMJDY: Pradhan Mantri Jan Dhan Yojana
LALIT KUMAR: Economic Adviser in the Ministry of Finance.
Self Help Groups: Group of people that help each other, in this case to get loans
Ministry of Finance: The Indian government ministry responsible for financial matters.
Department of Financial Services: A department within the Ministry of Finance.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-01072021-228069
xxxGIDHxxx
CG-DL-E-01072021-228069
xxxGIDExxx
असाधारण
EXTRAORDINARY
भाग II—खण् ड 3—उप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 2471] नई दिल्ली, बहृ स्ट्प जतिार, िुलाई 1, 2021/आर्ाढ़ 10, 1943
No. 2471] NEW DELHI, THURSDAY, JULY 1, 2021/ASHADHA 10, 1943
जित्त मत्रं ालय
(जित्तीय सिे ाएँ जिभाग)
अजधसचू ना
नई दिल्ली, 1 िुलाई, 2021
का.आ. 2668(अ).—भारत सरकार, जित्त मंत्रालय (जित्त्त्तीय सेिाएँ जिभाग) की 18 अप्रैल, 2016 के
का.आ.1443(अ) के माध्यम से प्रकाजित अजधसूचना म ें आजं िक संिोधन करते हुए, केन्द्रीय सरकार, एतिद्वृ ारा, सूक्ष्म
इकाइयों के जलए क्रेजडट गारंटी जनजध (सीिीएफ़एमयू) (जिसे इसके पश्चात उक्त योिना के रूप में संिर्भित दकया िाएगा) के
रूप म ेंिानी िान े िाली योिना में जनम्नजलजखत संिोधन करती ह,ै नामत: :-
1. उक्त योिना म,ें पैराग्राफ 2 म,ें --
(क) उप-पैराग्राफ (xi) म,ें कोष्ठक और िब्ि “(मुरा द्वारा यथा जनधािररत ब्याि िरें; ितिमान में 12% प्रजत िर्ि स े
अनजधक)” का लोप दकया िाएगा;
(ख) उप-पैराग्राफ (xii) को जनम्नजलजखत उप-पैराग्राफ स ेप्रजतस्ट्थाजपत दकया िाएगा, नामत: --
xii. “पात्र उधारकता”ि से पीएमएमिाई के तहत आने िाली अथिा एमएसएमईडी अजधजनयम, 2006 (समय-
समय पर यथा संिोजधत) म ें यथा पररभाजर्त नया अथिा मौिूिा सूक्ष्म इकाई/उद्यम अजभप्रेत होगा, िो जनजध द्वारा
जनधािररत पात्रता मानिण्डों को पूरा करता हो तथा जिसकी णण आि्यकता पीएमएमिाई के अंतगित जिजन्ि्ट ि सीमा स े
अजधक न हो। णण की जिजन्ि्ट ि सीमा 10 लाख रुपए अथिा कोई अन्द्य ऐसी राजि होगी िो जनजध द्वारा समय-समय पर
जनधािररत की िाएगी। इसके अजतररक्त, पीएमिेडीिाई खातों के तहत स्ट्िीकृत 10,000 रुपए की ओिरड्राफ्ट णण राजि भी
क्रेजडट गारंटी जनजध के अंतगित किर दकए िान े हते ु पात्र होगी। पात्र उधारकताओंि से िैसे स्ट्ियं सहायता समूह भी अजभप्रेत
3664 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
होंगे िो जनजध द्वारा जनधािररत पात्रता मानिण्डों को पूरा करत े हों तथा जिनकी णण राजि 10 लाख रुपए स े ऊपर तथा 20
लाख रुपए तक हो।
2. उक्त योिना म,ें अनलु ग्नक की रटप्पणी म ें “एमएलआई द्वारा क्रेजडट प्रबंधन” िब्िों और पिों के बाि जनम्नजलजखत
िब्िों को अंतर्िि्ट दकया िाएगा, नामत: --
“तथाजप, यह प-े आऊट सीमा (कैप) एसएचिी पोटिफोजलयो पर लाग ूनहीं होगी।”
3. उक्त योिना की अन्द्य सभी जनबंधन और ित ें पूििित रहगें ी।
[फा.सं. 21/1/2020/आईएफ-II]
लजलत कुमार, आर्थिक सलाहकार
नोट : मूल योिना 18 अप्रैल, 2016 के का.आ.1443(अ) के माध्यम से भारत के रािपत्र, असाधारण, भाग II खंड 3,
उप-खंड (ii) म ें प्रकाजित हुई थी और तिनंतर उक्त को 1 अप्रलै , 2020 के का.आ.12 1(अ) की अजधसूचना के माध्यम स े
संिोजधत दकया गया था।
MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 1st July, 2021
S.O. 2668(E).—In partial modification to the notification of the Government of India in the Ministry of
Finance (Department of Financial Services), number S.O. 1443(E), dated the 18th April, 2016, the Central
Government hereby makes the following amendments to the Scheme known as the Credit Guarantee Fund for Micro
Units (CGFMU) (hereinafter referred to as the said Scheme), namely:—
1. In the said Scheme, in paragraph 2,—
(a) in sub-paragraph (xi), the brackets and words “(Interest rate as stipulated by Mudra; presently not to
exceed 12% p.a.)” shall be omitted;
(b) for sub-paragraph (xii), the following sub-paragraph shall be substituted, namely:—
‘xii. “Eligible borrower” means new or existing micro unit / enterprise falling under any sector covered
under PMMY or as defined in the MSMED Act, 2006 (as amended from time to time), who meets
eligibility criteria prescribed by the Fund and whose credit requirement does not exceed the specified limit
under PMMY. Specified limit of the loan shall be Rs.10 lakh or such other amount as may be decided by
the Fund from time to time. Further, Overdraft loan amount of Rs.10,000/- sanctioned under PMJDY
accounts shall also be eligible to be covered under Credit guarantee Fund. Eligible borrower would also
mean Self Help Groups who meet eligibility criteria prescribed by the Fund and whose loan amount is
above Rs.10 lakh and upto Rs.20 lakh.’.
2. In the said Scheme, in the notes to the attachment, after the words and letters “credit management by MLIs”,
the following words shall be inserted, namely:—
“This payout cap shall, however, not be applicable on the SHG portfolio.”
3. All other terms and conditions of the said Scheme shall remain unchanged.
[F. No. 21/1/2020/IF-II]
LALIT KUMAR, Economic Adviser
Note: The principal Scheme was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)
vide number S.O. 1443(E), dated the 18th April, 2016 and subsequently amended vide notification number S.O.
1261(E), dated the 16th April, 2020.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.