Now Reading: Only 17% of Rs 20,000-crore MFI credit guarantee disbursed
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Only 17% of Rs 20,000-crore MFI credit guarantee disbursed
Banks have disbursed only Rs 3,300 crore of the Rs 20,000-crore credit guarantee scheme for microfinance companies, just 17% of the target. The scheme's deadline ends this month after a previous extension…
The Story in Brief
Banks have disbursed only Rs 3,300 crore of the Rs 20,000-crore credit guarantee scheme for microfinance companies, just 17% of the target. The scheme's deadline ends this month after a previous extension from June 30 to August 31. Lending has been slow because banks are cautious with smaller NBFC-MFIs, while larger MFIs are reluctant to borrow under the programme as they can get funding outside on better terms, Sa-Dhan executive director Jiji Mammen said. Of the amount disbursed, Rs 1,000 crore went to small and medium MFIs and the rest to large ones.
The government set aside Rs 3,000 crore for small and medium MFIs and Rs 17,000 crore for large ones with assets over Rs 2,000 crore. About 60 micro lenders have received loans under the guarantee cover, 44 of them small and medium-sized entities. The National Credit Guarantee Trustee Company offers a partial guarantee of 70-80% of defaulted amounts for three years.
The Indian Opinion
The credit guarantee scheme is being spun as a lifeline for microfinance, but the numbers tell a different story. Banks are wary of small MFIs, and large ones can get cheaper funds elsewhere, so who is this scheme actually for? The narrative of government generosity meets cautious lenders ignores a basic mismatch: the guarantee is too short (three years) and too conditional. Watch whether the government extends the deadline again, or if it restructures the guarantee tenure to match the loan cycle.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
