As finance minister Nirmala Sitharaman on Monday announced a Rs 7,500-crore credit assure scheme for microfinance institutions (MFIs) as financial relief from the pandemic, microfinance players and sector bodies stated the scheme would play a catalytic part in facilitating credit to MFIs and their prospects as banks would have comfort to lend to the micro-lenders at affordable prices for the duration of the present difficult instances.
Village Financial Services MD & CEO Kuldip Maity stated, “We welcome the initiative announced by the finance minister to facilitate loans to bottom of the pyramid borrowers through microfinance institutions. The move will benefit both the NBFC-MFIs and their borrowers in these tough times as the disbursements by MFIs have taken a hit because of cash flow issues, which eventually left borrowers in distress as they were unable to carry on their income generating activities due to lack of funds. .”
MFIN CEO and director Alok Misra stated the credit assure scheme to MFIs would play a catalytic part in facilitating credit to MFIs and their prospects in these challenging instances.
“Of special mention is the coverage of term loans from scheduled commercial banks to MFIs unlike only CPs/NCDs in last year’s scheme, which will allow smaller MFIs to be covered. Other specific measures introduced in the scheme in terms of eligibility of standard customers, pricing directions, focus on new lending and guarantee up to 75% of default amount will ensure that scheme benefits the micro-finance customers in a substantive way.”