Big Boost For Microfinance Sector !

The government has approved a ₹20,000 crore credit guarantee scheme to support microfinance institutions facing funding challenges. The scheme will allow banks and other lending institutions to provide loans to eligible microfinance companies, ensuring better flow of funds. It comes at a time when the sector is under pressure due to rising non-performing assets and cautious lending by financial institutions.

Under the scheme, lending conditions have been clearly defined, including limits on interest rates and loan tenure. Microfinance institutions will also be required to pass on benefits to small borrowers by offering loans at reduced rates. The move is expected to improve liquidity and stability in the sector, with industry representatives welcoming it as a timely step to strengthen financial support for small borrowers.