The microfinance industry seeks higher credit guarantee schemes
The microfinance sector has urged Finance Minister Nirmala Sitharaman to increase the limit for credit guarantee schemes in the budget for 2022-23.
In budget representation to the Ministry of Finance, the Self-Regulatory Body (SRO) of Microfinance Institutions (MFIs) stated that the sector faces some challenges in terms of higher credit costs and access to low-cost long-term funds.
He urged the Minister of Finance to extend the amount of funds under the credit guarantee program to MFIs. P Satish, Executive Director of Sa-Dhan, an SRO, said the microfinance sector plays an important role in directing growth and consumption which are crucial at present. this moment.
According to him, the capital of small MFIs has been affected due to the pandemic and he urged the government to support them with subordinated debt with a duration ranging from five to seven years. The SRO also urged that a microfinance development fund of Rs 1,000 crore be established within NABARD to support non-profit MFIs with revolving financial support.
India’s SIDBI/Mudra Microfinance Private Equity Fund could be appropriately complemented by increased support for MFIs, he insisted.