As finance minister Nirmala Sitharaman on Monday announced a Rs 7,500-crore credit guarantee scheme for microfinance institutions (MFIs) as economic relief from the pandemic, microfinance players and industry bodies said the scheme would play a catalytic role in facilitating credit to MFIs and their customers as banks would have comfort to lend to the micro-lenders at reasonable rates during the present challenging times.
Village Financial Services MD & CEO Kuldip Maity said, “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 said the credit guarantee scheme to MFIs would play a catalytic role in facilitating credit to MFIs and their customers in these difficult times.
“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.”