Microfinance Industry Network Seeks Government Support for Liquidity Boost

Microfinance Industry Network (MFIN) requests government credit guarantee support to encourage banks to lend to MFIs, alleviating liquidity issues and promoting economic growth. A similar scheme was successful in 2021. MFIN's Alok Misra emphasizes the potential for renewed economic activity with enhanced bank lending support.

The Microfinance Industry Network (MFIN) has urged the government to provide a credit guarantee scheme to comfort banks in lending to the sector. This move aims to boost economic activity and financial stability by ensuring adequate funding for Microfinance Institutions (MFIs).

MFIN's Chief Executive, Alok Misra, highlighted the sector's dependency on bank lending, which accounts for nearly two-thirds of resources. He addressed current reluctance from banks, resulting in a severe liquidity crunch. A credit guarantee scheme, similar to one used during the Covid period in 2021, could alleviate these constraints.

Misra noted improvements in the sector, with reduced non-performing assets and increased collection efficiencies. Discussions are ongoing with Finance Ministry officials to further assess support options amid challenging conditions and ensure sustainable economic contributions from the sector.

(With inputs from agencies.)