Government Unveils ₹20,000 Crore Guarantee Fund for Small Businesses, Self-Employed

• Government to launch a ₹20,000 crore credit guarantee fund for microfinance companies, benefiting small businesses and self-employed individuals.
• The fund aims to provide cheaper and easier loans to microfinance companies, addressing their long-standing issues of high interest rates and funding scarcity.
• Banks will be encouraged to lend to microfinance companies with government guarantees, potentially generating up to ₹1.5 lakh crore in loans.
• A 2% cap on lending rates (MCLR) for banks providing loans to microfinance companies is also being considered to ensure affordable credit.
• This initiative is expected to boost the rural economy, support small borrowers, and accelerate growth in the microfinance sector.