Waiver of microfinance loans
The scheme is for micro-finance support to economic activities of the poor: Chief Minister
GUWAHATI: The State Finance Department signed an MoU (Memorandum of Understanding) with microfinance institutions (MFIs) for the implementation of the Assam Micro Finance Incentive and Relief Scheme (AMFIRS), 2021, in the presence of Chief Minister Himanta Biswa Sarma here today.
Finance Minister Ajanta Neog, Agriculture Minister Atul Bora, Education Minister Ranoj Pegu, Housing and Urban Affairs Minister Ashok Singhal, WPT & BC Minister UG Brahma and Chief Secretary Jishnu Barua were also present at the MoU-signing ceremony.
Altogether 38 MFIs and Banks signed the MoU with the state government, which will remain in force till March 31, 2023.
The MFIs and banks that signed the MoU include Microfinance Institutions Network, North East Small Finance Bank, Association of Small Finance Bank of India, Nightingale Finvest Private Limited, Grameen Development and Finance Pvt. Ltd, North East Micro Finance Association, Bandhan Bank Ltd, Arohan Financial Services Ltd, HDFC Bank Ltd, Fusion Microfinance Pvt Ltd, L&T Financial Services and Asirvad Microfinance Ltd.
Sarma said that the Assam government had formed a committee under the chairmanship of Housing and Urban Affairs Minister Ashok Singhal in its first cabinet meeting to fulfil the election promise of waiving micro-finance loans.
"We have devised the Assam Micro Finance Incentive and Relief Scheme to balance the long-term view of continuing micro-finance for supporting economic activities of low-income and poor households in the state, besides providing relief to eligible customers to tide over the current stress in the micro-finance sector," the Chief Minister said.
The Chief Minister said that the new scheme would involve a Rs 12,000 crore credit portfolio, out of which the State government would require to expend around Rs 7,200 crore. The state had 14 lakh microfinance borrowers up to June 2021, the Chief Minister said.
According to the Chief Minister, the scheme emphasizes responsible lending by financial institutions through compliance with RBI regulations and industry guidelines in letter and spirit, while promoting responsible borrowing and timely repayment culture among customers.
The Chief Minister said that the relief under the scheme shall be extended to all borrowers to the extent of loans from up to 3 lenders and for a loan amount of up to Rs 1.25 lakh only. To become eligible for the scheme, the borrower concerned will have to fulfil eligibility conditions as laid down in the guidelines.
The Chief Minister further said that under the scheme borrowers who have been repaying regularly with zero days past due will get a one-time incentive to the extent of their outstanding balance, subject to a cap of Rs 25,000. Similarly, for borrowers whose payments are overdue, that is the overdue accounts but not NPA, the state government will pay the overdue amount. The government will encourage all such borrowers to make timely instalment payments so that their accounts remain standard, and the credit culture is reinforced. To incentivize such credit discipline, the government, after observing such borrowers for some time, make a one-time incentive payment of Rs 25,000 or equal to the outstanding balance, whichever is lower. Further, borrowers who are stressed, destitute and whose accounts have become NPA will need to apply through a format verified and certified by the lender. The government will consider providing partial relief or full relief based on the detailed evaluation.
The state government decided to promote borrowing through MFIs and banks only that carry out their operations strictly adhering to RBI guidelines. The CM also urged the MFIs and banks to maintain a fair practice code of RBI while disbursing loans in future.
Earlier, MFI representatives hailed the move as historic and affirmed the conviction that the move would go a long way in ensuring 100 per cent financial inclusion in the state, a press release said.
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