You are here: Home » Economy & Policy » News
Business Standard

MFIs seek extension of credit guarantee scheme till FY2023

The industry body said smaller MFIs are finding it difficult to mobilise additional/new investment

MFIs | credit market | micro finance

Press Trust of India  |  Mumbai 

Representational image

Microfinance institutions (MFIs) have written to Finance Minister Nirmala Sitharaman seeking extension of the credit guarantee scheme for micro lenders till FY 2022-23 with an amount of Rs 15,000 crore.

Of the amount, at least 75 per cent should be earmarked for small and medium-sized MFIs, Sa- Dhan, a self-regulatory organisation for the microfinance sector, wrote to the finance minister in its pre-Budget expectations.

The government is scheduled to present the Budget 2022-23 next month.

The industry body said smaller are finding it difficult to mobilise additional/new investment and hence requested support with subordinated debt having 5 to 7 years of tenure.

It also said SIDBI and NABARD should be allowed to issue tax-free social bonds for five years to exclusively provide debt /equity to operating in semi urban or rural areas.

Around 30 per cent of these funds can be in the form of equity and rest being debt.

Besides, the micro lenders have requested setting up of a Microfinance Development Fund of Rs 1,000 crore in NABARD to support not-for-profit with grant as well as revolving fund/refinance support.

"The Microfinance sector disbursed Rs 2,03,262 lakh crore last fiscal, which is close to 1.5 per cent of India's GDP. Therefore, the sector, if supported adequately in the upcoming Union Budget, can play pivotal role in reviving and steering growth and consumption, Sa-Dhan Executive Director P Satish said.

He said the government has supported the sector through various measures, including the credit guarantee scheme, during the challenging times of the ongoing pandemic.

However, the sector still faces few challenges in terms of higher credit costs and access to low-cost long-term funds, Satish added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, January 05 2022. 20:12 IST