Budget 2022: Micro Finance Industry Seeks Higher Credit Guarantee Schemes

Micro finance institutions have urged finance ministry to hike limit of credit guarantee schemes


The microfinance sector has urged finance minister Nirmala Sitharaman to increase the limit of credit guarantee schemes in the budget for 2022-23.

In the budget representation to the finance ministry, the self regulatory body (SRO) of micro finance institutions (MFIs) said the sector is facing a few challenges in terms of higher credit costs and access to low-cost long term funds.

It urged the finance minister to extend the quantum of funds under the credit guarantee scheme to the MFIs P Satish, executive director of Sa-Dhan, an SRO, said that the microfinance sector plays an important role in steering growth and consumption which are crucial at this juncture.

According to him, the capital of the smaller MFIs has been impacted due to the pandemic and he urged the government to support them with subordinated debt with tenure ranging from five to seven years. The SRO also urged that a microfinance development fund of Rs 1,000 crore be set up within NABARD to support the not-for-profit MFIs with revolving financial support.

The India microfinance equity fund at SIDBI/Mudra may be suitably augmented with enhanced support to MFIs, it urged. 

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