The Credit Guarantee Fund for Micro Units (CGFMU) is a flagship initiative by the Government of India under the Pradhan Mantri MUDRA Yojana (PMMY). Operated by NCGTC, this scheme offers credit guarantees to Member Lending Institutions (MLIs) providing collateral-free loans to micro-enterprises and SHG Borrowers. 

CGFMU plays a key role in de-risking MUDRA loans, which are targeted at small and micro units including street vendors, artisans, service units, and rural businesses. The fund encourages formal lending by covering default risks for banks, NBFCs, MFIs, and other qualified lenders.

Key Features:

Eligible Borrowers-Micro units under MSMED Act (manufacturing, services, trading), SHGs, and PMJDY-owned overdraft accounts.

Loan Limits:

“Shishu”: ≤ ₹50,000

“Kishor”: ₹50,001–₹5 lakh

“Tarun”: ₹5–₹10 lakh

“Tarun Plus”: ₹10–₹20 lakh 

SHGs-₹10–₹20 lakh

PMJDY overdrafts up to ₹10,000

No collateral or third-party guarantee

Enables financial inclusion of first-time, underserved micro-entrepreneurs

This scheme empowers small-scale business owners by improving credit access and supporting entrepreneurship at the grassroots level.