Microfinance stocks are in focus after the government extended the Credit Guarantee Scheme for Micro Finance Institutions (CGSMFI-2.0), a move aimed at supporting credit flow to the sector.
The scheme will remain in force until August 31, 2026, or until guarantees amounting to ₹20,000 crore are issued.
The extension is expected to improve funding availability for lenders serving low-income and underserved borrowers.
Stocks to watch
Listed microfinance players that could benefit include:
- Satin Creditcare Network Ltd.
- CreditAccess Grameen Ltd.
- Spandana Sphoorty Financial Ltd.
Improved liquidity and greater access to funding could support loan growth and strengthen earnings visibility for these companies.
Higher borrowing limits
The government has increased the maximum loan amount available to large NBFC-MFIs and MFIs under the scheme.
The limit has been raised to ₹1,000 crore from ₹300 crore earlier.
The higher ceiling could provide additional capacity for expansion and support business growth.
Guarantee cover remains at 70%-80%
Under the scheme, guarantee coverage ranges from 70% to 80% of default amounts.
The cover lowers credit risk for lenders providing funds to microfinance institutions.
This could help ease funding constraints, particularly during periods of stress in the sector.
Scope for lower borrowing costs
Loans extended to MFIs under the scheme are capped at:
- EBLR plus 2%, or
- MCLR plus 2%
Competitive funding costs could help support margins and profitability over the medium term.
Government support seen as positive for sentiment
The latest decision signals continued policy support for the microfinance industry.
According to the source copy, guarantees worth ₹770 crore had been sanctioned under the scheme as of June 10.
Greater utilisation of the programme could improve growth visibility and support sentiment toward microfinance stocks.
TL;DR:
Microfinance stocks such as Satin Creditcare, CreditAccess Grameen and Spandana Sphoorty are in focus after the government extended the ₹20,000 crore CGSMFI-2.0 scheme and raised borrowing limits for large NBFC-MFIs and MFIs to ₹1,000 crore.
AI summary:
- The Centre extended the ₹20,000 crore CGSMFI-2.0 scheme.
- The scheme will remain open until August 31, 2026.
- Funding limits for large MFIs have been raised to ₹1,000 crore.
- Guarantee coverage ranges from 70% to 80%.
- Satin Creditcare, CreditAccess Grameen and Spandana Sphoorty are among the stocks in focus.