Loan sanctions have been slow as banks exercise additional caution in lending to small non-banking financial companies-microfinance institutions (NBFC-MFIs), even as they need the assistance the most. Larger MFIs, meanwhile, are somewhat reluctant to borrow under the programme. Of the ₹3,300 crore disbursed, banks have lent about ₹1,000 crore to small and medium-sized MFIs while balance has gone to large ones for onlending.
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The government has already extended the deadline once, from June 30 to August 31. It has earmarked ₹3,000 crore for small and medium-sized MFIs and the remaining ₹17,000 crore for large ones with more than ₹2,000 crore of assets under management.
“Bank lending under the credit guarantee scheme is still slow mostly because the banks were trying to achieve their quota for small and mid segment ones,” Sa-Dhan executive director Jiji Mammen said. “As regards large MFIs who are eligible to receive a maximum of ₹17,000 crore out of ₹20,000 crore, many of them are not showing the interest as they are able to get funding outside the guarantee scheme with better terms.”
“On the other hand, banks are very cautious to lend to the small and medium-sized MFIs who need the assistance the most,” he said.
Microfinance companies can seek bank loans of up to 20% of their assets under management (AUM), subject to a category-wise ceiling. The cap for small MFIs with less than ₹500 crore of AUM is ₹100 crore, for medium ones with ₹500 crore-₹2,000 crore of AUM it is ₹200 crore, and for large ones it is ₹1,000 crore.Sources said about 60 micro lenders have received bank loans under the guarantee cover, with 44 of them being small and medium-sized MFIs.
Loans extended by banks under the special scheme are partially guaranteed by National Credit Guarantee Trustee Company, which operates the government’s various credit guarantee funds. The trustee offers a partial guarantee of 70% of the amount in default for large NBFC-MFIs, 75% for medium-sized entities and 80% for small ones for a period of three years.