The Covid-19 hit microfinance sector has urged Finance Minister Nirmala Sitharaman to increase the limit of credit guarantee scheme in the upcoming budget for 2022-23, Trend reports citing India today.
In the budget representation to the ministry, the self regulatory body (SRO) of MFIs stated the sector has been facing a few challenges in terms of higher credit costs and access to low-cost long term funds.
It urged the finance minister to extend the quantum of funds under the credit guarantee scheme to the Microfinance institutions (MFIs), PTI reported.
P Satish, executive director of Sa-Dhan, an SRO, said that the microfinance sector plays an important role in steering growth and consumption, which are crucial at this juncture, the PTI report says.
According to him, the capital of the smaller MFIs has been impacted due to the Covid-19 pandemic and he urged the government to support them with subordinated debt with tenure ranging from five to seven years.
The SRO also urged that a microfinance development fund of Rs 1,000 crore be set up within NABARD to support the not-for-profit MFIs with revolving financial support.
The Union Budget 2022-23 will be tabled on February 1.