“We would like to take this opportunity to request you to sanction an additional amount of Rs 7500 crore for Credit Guarantee Scheme for MFIs,” the letter said. “The additional amount will support fund flow to low-grading MFIs, which are smaller and cater to poorer sections and remote areas.”
Sa-Dhan submitted that since the banks are accounting for MFI under portfolio NBFC Category, once they reach the exposure limit under NBFCs, they are unable to approve more funding.
“The finance ministry is keen to track the scheme and understand the overall impact,” said P Satish, executive director, Sa-Dhan. “The additional Rs 7,500 crore will help small MFIs and non-NBFC MFIs reach out to the most vulnerable in the country in the government’s financial inclusion effort.”
Small, low-rated and non-NBFC-MFIs have also applied for loans worth Rs 18,500 crore from 44 banks, according to finance ministry data.