Business Other News 06 Oct 2021 Sa-Dhan seeks additi ...

Sa-Dhan seeks additional Rs 7.5K crore credit guarantee

DECCAN CHRONICLE. | SANGEETHA G
Published Oct 6, 2021, 7:28 am IST
Updated Oct 6, 2021, 7:28 am IST
The guarantee cover was available up to March 31, 2022 or until the guarantees for Rs 7,500 crore loans were used up
The additional funds will support the MFIs with lower grading. (Photo: PTI/Representational)
 The additional funds will support the MFIs with lower grading. (Photo: PTI/Representational)

Chennai: Self-regulatory organisation of micro finance institutions, Sa-Dhan has sought allocation of an additional Rs 7,500 crore under the credit guarantee scheme so that the smaller MFIs also receive the benefits of the scheme.

The finance minister in June had announced a Rs 7,500-crore credit guarantee scheme to facilitate concessional loans to 25 lakh small borrowers through micro-finance institutions. The guarantee cover was available up to March 31, 2022 or until the guarantees for Rs 7,500 crore loans were used up.

 

As the allocated amount has been exhausted, Sa-Dhan, which represents 229 MFIs, has asked the ministry to allocate another Rs 7,500 crore under the scheme. According to Sa-Dhan, MFIs have applied for Rs 18,500 crore from 44 banks. However, once the banks reach the exposure limits under NBFC-MFIs, they are unable to approve more funding for smaller MFIs. So the smaller MFIs are left without funds.

The additional funds will support the MFIs with lower grading, which are smaller and cater to poorer sections and remote areas. It will also help smaller MFIs and non-NBFC MFIs to reach out to the most vulnerable people of the country.  

 

The Ministry of Finance too has been keen on ensuring that the scheme is availed of by all MFIs across the country and not a select few.

“The Ministry of Finance has been eager to track the scheme and understand the overall impact. The additional Rs 7,500 crore will help smaller MFIs and non NBFC MFIs to reach out to the most vulnerable people of the country in the government’s endeavour of financial inclusion,” said P. Satish, executive director, Sa-Dhan.

Sa-Dhan also wants banks to be instructed to book this portfolio under a separate head of MFIs with suitable exposure norms. The current exposure norms largely favour the large NBFC-MFIs with better ratings.

 

...




ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
-->