The Credit Guarantee Scheme for Microfinance Institutions- 2.0 (CGSMFI-2.0) will cover loans disbursed by member lending institutions (MLIs), including banks and other lenders to non-banking finance company-MFIs and MFIs till end-June, the government-run National Credit Guarantee Trustee Company (NCGTC) said in a circular.
Mumbai:The government on Friday approved a limited-period Rs 20,000-crore credit guarantee scheme to aid microfinance institutions (MFIs), which have been complaining about challenges in accessing funds.
The Credit Guarantee Scheme for Microfinance Institutions- 2.0 (CGSMFI-2.0) will cover loans disbursed by member lending institutions (MLIs), including banks and other lenders to non-banking finance company-MFIs and MFIs till end-June, the government-run National Credit Guarantee Trustee Company (NCGTC) said in a circular.
It can be noted that the MFIs, which serve people at the bottom of the pyramid, have been facing challenging times due to a surge in non-performing assets (NPAs), which has, in turn, made their lenders wary of extending further exposure.
The NCGTC said MLIs shall provide funding to the MFIs or NBFC-MFIs, as per their assessment, for on-lending to eligible small borrowers and also put certain conditions on interest rates.
To qualify for the benefits under the credit guarantee scheme, the interest rate on the loans sanctioned by MLIs to NBFC-MFIs/MFIs is capped at External Benchmark Lending Rate (EBLR) or 1-Year marginal cost of funding based lending rate plus two per cent, it said.