Banks have fully utilized Rs 7,500 crore under this scheme credit guarantee scheme For micro finance institute (MFI) to benefit the smallest of the borrowers, the Finance Ministry said on Wednesday. The plan was announced by Finance Minister Nirmala Sitharaman in June as part of a Rs 6.29 lakh crore package to provide relief to various sectors affected by the second wave of the COVID-19 pandemic.

In a tweet, the ministry said, “Credit guarantee for MFIs fully utilized within 75 days. Rs 7500 crore sanctioned to #MFIs under #CGSMFI for lending to small borrowers. Big boost to consumption and livelihood. ”

Loan up to Rs 1.25 lakh was provided under the scheme.

“#CGSMFI supports 92 NBFC-MFIs/MFIs through 20 lenders. MFIs of MFR-2 and below received around 45% of the sanction amount at reasonable rates. The scheme has helped pyramid borrowers in these difficult times. Played a catalytic role in facilitating credit to the bottom line,” it added.

The loan limit from banks is the marginal cost of funds based lending rate (MCLR) plus 2 per cent. The maximum loan tenure is three years, and 80 per cent of the assistance is to be used by MFIs for incremental lending.

The interest rates will be at least 2 per cent lower than the maximum rate set by the RBI.