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“SHG
S
,
SAVING
FOR
THE
PRESENT
,
SECURING
THE
FUTURE
”
MFI-BANK LINKAGE
PROGRAMME
5 .
MFI – BANK LINKAGE PROGRAMME
Micro Finance Institutions
(MFIs) act as an important conduit for extending financial services to the
microfinance sector in the country by raising resources from Banks and
other institutions and extending loans to individuals or members of SHGs/
JLGs. The Indian Microfinance Sector has witnessed a phenomenal growth
over the past few years. The number of Institutions providing microfinance
services has gone up from a few to several hundreds. The quantum of credit
made available to the poor and financially excluded clients has gone past
R
60,000 crore and number of clients benefitted is close to 40 million as of
March 2017.
Post Andhra crisis, the Reserve Bank of India has notified guidelines
for the lending operations of MFIs based on the Malegam Committee
recommendations. A new class of financial organizations named as NBFC–
MFIs have been created subject to satisfying certain conditions regarding
the capital to be employed, lending to members, cap on interest to be
charged and margin to be retained, etc. As the loans extended to the MFIs
by banks qualify for priority sector category subject to fulfillment of similar
conditions, other MFIs have also strive to follow these guidelines. RBI’s
upgraded regulations and guidelines on NBFC-MFIs and inclusion of loans
to MFIs by banks under priority sector have resulted in phenomenal growth
of MFIs during the last three years.
In addition to their internal resources, MFIs have been allowed to mobilize
resources through various ways including obtaining of bulk loans from
Banks/ other Financial Institutions, NCDs, securitization of portfolio etc.
These institutions generally adopt various models of delivery like JLGs,
Grameena Bank and directly to individuals and have grown at a much faster
pace after suitable policy and institutional support. MFIs are more aggressive
and innovative in reaching out to the rural poor with well-oiled distribution
channels as compared to the formal banking system, however, the cost of
delivery is higher. During the year 2016-17 apart from demonetization of
SBNs, the repayment performance of many MFIs was hit also due to rumors
of loan waiver announcements.
PROGRESS UNDER MFI-BANK LINKAGE PROGRAMME
The Progress under MFI-Bank linkage programme during the last 3 years is
shown in Table 5.1:
The Agency-wise details of loans extended to MFIs are shown in Table 5.2.
5.1
5.2