Micro-finance institutions (MFIs) have urged Finance Minister Nirmala Sitharaman to allocate another ₹7,500 crore under the credit guarantee scheme announced for them in June as banks had exhausted the initial for the same amount.
In a letter to the Minister, Sa-Dhan, the self-regulatory body for MFIs, cited data aggregated from its members to flag that they had applied for ₹18,500 crore from 44 banks under the credit guarantee scheme.
“The additional amount will support the funds flow for MFIs with lower grading, which are smaller and cater to poorer sections and remoter areas,” the regulatory body said. MFIs also sought a tweak in the scheme’s norms to make a distinction between banks’ exposure to them and other non-banking finance companies (NBFCs).
“As the banks are accounting for this portfolio under NBFC category, once they reach the exposure limits under NBFCs, they are unable to approve more funding for MFIs,” Sa-Dhan said in the letter.
