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  • To sanction the loans to the MFIs for onlending to SHG/MicroCredit Groups(MCG)

The following conditions are to be fulfilled by MFIs:

  • MFI should be a registered body. The memorandum of association and bye laws of the MFI should have an explicit power to raise loans from banks and financial Institution, to offer security for loans availed from the banks and financial institutions in such forms as may be required by the lender and to carry on micro finance activities.
  • In existence for a reasonable time and/or run successfully micro- credit Programme at least for the last 3 years
  • Minimum outreach of 3000 poor members (through individual lending /SHGs/partner NGOs or MFIs.
  • Rated by an accredited rating agency – CARE/ ICRA /Indian Ratings (Fitch India)/CRISIL/ Brick work Ratings India Private Ltd and SMERA.
  • Formulated a realistic business plan for the next 3-5 years demonstrating the financial sustainability of its operations.

Quantum of Loan As per project
Margin Cash margin of 10% be stipulated for lending to intermediaries for on lending to MCGs.
Security

Prime: The loans sanctioned to NGOs / MFIs / MFI-NBFCs are also to be treated as clean loans. Personal guarantee of the promoters /book debts of the company may be taken as security wherever possible. Margin of 10% shall be stipulated for book debts if taken as security.

Hypothecation of Book-debts/receivables may be stipulated as security to the MFIs/NBFC-MFIs, wherever possible. In respect of loans to NGO- MFI/NBFC-MFI registered as a company, the charges on Book debts and fixed assets(if stipulated as security) owned by them FI shall be registered with Registrar of Companies (ROC), as perstatute.

Collateral: Cash Margin of 10% may be stipulated as a general rule. However this may be permitted to be relaxed by 5% to the deserving cases by sanctioning authority

Other Criteria
  • Micro Finance model – Group lending through financial intermediaries
    • Finance to MFIs for On lending to the Self Help Groups /Joint Liability Groups (NABARD MODEL )
    • Finance to MFIs for on lending to Micro Credit Groups/ Joint Liability Groups
  • Micro Finance institutions compromises of:
    • Micro Finance Organisations (MFOs)
  • Micro Finance Institutions – NBFCs (Non Banking Financial Companies)
Repayment Period

The loans permitted under the scheme is to be treated as Single Transaction Term loans and should be repaid in monthly/quarterly/half yearly installments, with repayment holiday of three months in the beginning. The maximum repayment period that can be generally permitted is 48 months inclusive of moratorium period. The terms of repayment can be extended up to 60 months depending upon the income generation. The interest is to be recovered as and when debited. The entire interest debited to the account during the repayment holiday is to be recovered along with the first six installments.

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Last updated on 24-06-2024 05:17 AM

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