MUMBAI: In a bid to ensure unhindered flow of credit to the last mile in rural areas hit by COVID-19 pandemic, National Bank for Agriculture and Rural Development (NABARD) has tied up with Ujjivan Small Finance Bank and Vivritti to provide Rs 25000 crore funding support to low income households.
The program entails providing partial guarantee on pooled loans extended to small and mid-sized MFIs. It will help facilitate Rs 2,500 crore funding in the initial phase and is expected to be scaled up. The program is expected to cover over 1 million households across 28 states and 650 districts.
“The partially guaranteed loan facility will catalyse much-needed financing to millions of households, agricultural and
business markets to sustain in the post COVID-19 environment" said G R Chintala, Chairman, Nabard.
The Pooled Loan Issuance (PLI) structure is expected to provide the lending bank adequate comfort through NABARD’s partial credit protection, reduces cost of capital as the rating of the loans get notched up and helps lenders meet priority sector goals. The Nabard guarantee has helped attract a large number of mainstream banks and small finance banks to participate, officials said.
NABARD has collaborated with Vivriti Capital, a technology-led credit platform, as the structurer for the facility.
Vivriti Capital manages and runs CredAvenueTM, a marketplace for enterprise debt, which enables enterprises to raise debt from loan, bond and securitisation markets. For the rst transaction under the programme, NABARD and Vivriti have partnered with Ujjivan Small Finance Bank, a leading lender in this space.
Nabard has led the eorts in rolling out special liquidity lines since the beginning of the pandemic and has disbursed
around Rs 2000 crore to MFIs and NBFCs. The bank has emphasised on enabling MFIs to ensure credit access for
meeting the demand for credit to rebuild livelihood.