Microfinance sector in a letter seeks RBI to hike the support amid battle against second wave of Covid

The microfinance industry has sought additional support, including an extension of the emergency credit line, from the Reserve Bank of India to combat the challenges arising out of the second COVID-19 wave.
Sa-Dhan an association of the microfinance sector, in a letter to the RBI, asked for the Partial Credit Guarantee Scheme 3.0, emergency credit line, special liquidity facility in addition to the recently announced support measures by the central bank.
RBI timely intervention for the sector and its recent announcement of special long-term repo operations (SLTRO) of Rs 10,000 crore for Small Finance Banks and categorization of lending by SFBs to MFIs under Priority Sector Lending has been of immense help,” Sa-Dhan executive director P Satish said.
Last week, the RBI has decided to conduct SLTRO of Rs 10,000 crore at the repo rate for the small finance banks (SFBs), to be deployed for fresh lending of up to Rs 10 lakh per borrower to provide further support to small business units, micro and small industries, and other unorganised sector entities adversely affected during the current wave of the pandemic.
In view of the fresh challenges brought on by the pandemic and to address the emergent liquidity position of smaller microfinance institutions (MFIs), SFBs are now being permitted to reckon fresh lending to smaller MFIs with an asset size of up to Rs 500 crore for on-lending to individual borrowers as priority sector lending. The RBI extended this up to March 31, 2022.

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