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  1. MFIN wants RBI to raise lending cap from Rs 50,000

MFIN wants RBI to raise lending cap from Rs 50,000

Micro Finance Institutions Network (MFIN) has urged the RBI to lift the R50,000 lending cap and set a higher limit.

By: | Kolkata | Published: March 3, 2015 3:53 AM

Micro Finance Institutions Network (MFIN) has urged the RBI to lift the R50,000 lending cap and set a higher limit.

In his Budget speech, finance minister Arun Jaitley announced setting up of Mudra Bank and said the government will create a refinance agency with a corpus of R20,000 crore and credit guarantee corpus of R3,000 crore to fund small entrepreneurs, especially those in the socially backward category, through microcredit facilities.

MFIN, however, feels the full benefit of Mudra Bank would be available only if RBI lifts R50,000 lending cap on the microfinance firms and set a higher limit. “We had discussions with RBI over raising the lending limit for MFIs. RBI had indicated that it would consider the matter. But now with the government deciding to create Mudra Bank, the game has changed. We would request RBI to re-examine the matter and come up with fresh guidelines to allow MFIs lend more,” MFIN CEO Alok Prasad told FE.

“Micro entrepreneurs and small businesses with credit requirement of R50,000-10 lakh are, typically, unable to access bank funding,” he added.

Hailing the finance minister’s decision to create the refinance agency, Chandra Shekhar Ghosh, chairman and managing director of Bandhan, said the initiative would help the microfinance industry better connect with the small entrepreneurs. “It is a very good initiative and it would help the last-mile connectivity with small entrepreneurs,” Ghosh said.

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