Microfinance institutions (MFIs), which have micro enterprises and daily wage earners as its borrowers are happy that the fund disbursement process can now get restarted. The process has been severely hampered and has almost come to a standstill since the lockdown. "The demand of MFIs to enhance the liquidity flow from the banks to the MFIs has been met to some extent with the finance minister Nirmala Sitharaman announcing the special liquidity scheme and the partial guarantee scheme, though our only hope is that a reasonable part of this will be for the MFIs because the non-banking financial companies (NBFCs) and housing finance companies (HFCs) have also been included in this," says P Satish, executive director of Sa-dhan, the leading association of MFIs and Self Help Group (SHG) promoting institutions. He says, the MFIs of all types today make monthly disbursements to the tune of around Rs 18,000 crore and less than 10 per cent of it has been possible since the lockdown. "Now there is hope that the process will get restarted."
MFIs share the similar view. Take, for instance, Spandana, a leading microfinance institution headquartered in Hyderabad. It has not been able to make disbursement since March 25 and is now hopeful of restart the process and provide the much needed funds its clients need. About 40 per cent of its borrowers are micro enterprises with disbursements to the tune of Rs 300 crore to Rs 350 crore per month and the balance 60 per cent of its portfolio is made up of borrowers who are either self employed, labourers, dairy farm labourers and construction labour, getting total disbursements to the tune of around Rs 500 crore to Rs 550 crore.
Overall, the MFI makes monthly disbursements of between Rs 800 crore to Rs 900 crore. She feels the impact would proportionately be much larger for the MFI sector as a whole. Particularly, MFI sector hailed the move of making it available to the MFIs rated below AA. Many MFIs, she says, including Spandana, have rating of either A-minus or below that. However, their big concern of lack of clarity on their share in the package still persists. One of the founding members of Sa-dhan and a veteran micro-credit sector expert Jayshree Vyas, who is also the managing director of SEWA Bank in Ahmedabad, is happy that on the first day of the announcement of the financial stimulus, at least the MFI sector has been taken note of and has figured in the government's package of support measures.
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