MFIs to be revitalised in UP, Bihar and North East

Small Industries Development Bank of India (Sidbi) is keen on revitalising micro-finance initiatives in the ‘under-served’ states of Uttar Pradesh, Bihar and North Eastern states of the country.

The Bank is mulling to promote prosperous micro-finance institutions (MFIs) from south to establish their operations in the northern states. It is also working to popularise this model in the urban cities. “The MFIs are doing very well down south. The model has been very successful there and has helped a lot of people to gain financial assistance,” Basant Seth, deputy managing director, Sidbi told Business Standard.

According to Seth, micro finance is not needed in rural areas alone. Even in urban towns there is a large population which needs small credit. It is this demand that we are inclined to fulfill. Currently, Sidbi has over 112 MFIs operating across the country and disseminates approximately Rs 1,000 crore.under micro finance.

Out of these many MFIs, UP has only 15 per cent of such institutions to its name.

“UP has the potential to absorb micro finance to the tune of Rs 10,000 crore. The potential of the state is still under-utilised,” he informed and added that it is this potential that we are eyeing upon and wish to cater to the needs of the people as early as possible.

Sidbi plans to increase UP’s share from 15 per cent to over 30 per cent by the end of this year.

On being asked as to how good is the repayment ability of the small borrowers under micro-finance in the state, Seth responded that the track record of Uttar Pradesh in repayment of loans has been tremendous.

According to him, UP’s track record has been superior when compared to other states across the country.

“The poor are very bankable in the state and we have approximately 99 per cent repayment track record,’ he asserted.

Under the micro-finance scheme, SIDBI gives loan upto Rs 50,000 for a period of one year to eighteen months.