Finance Minister Nirmala Sitharaman on Monday announced a Rs 7,500-crore credit guarantee scheme to facilitate loans to small borrowers. Under the scheme, guarantee will be provided to scheduled commercial banks for loans to new or existing micro finance institutions (MFIs) of up to Rs 1.25 lakh per person, provided to approximately 25 lakh small borrowers. The maximum loan tenure will be three years and interest rate will be at least 2 per cent below the maximum rate prescribed by the Reserve Bank of India (RBI), Sitharaman said while announcing the Rs 6.29-lakh crore stimulus package for the economy hit by the second wave of COVID-19 pandemic. Also read: Aatmanirbhar Bharat Rozgar Yojana extended till March 2022; 21.42 lakh benefitted so far
The focus of the scheme will be on new lending, not repayment of old loans. MFIs will have to use 80 per cent of assistance for incremental lending. The loans under the scheme will be provided in line with the guidelines of the RBI such as ceiling on household income and debt, among others. All borrowers, including those who have defaulted on loans for not more than 89 days, will be eligible to get loans. The scheme will continue till March 31, 2022, or till guarantee for an amount of Rs 7,500 crore is issued, whichever is earlier, Sitharaman said.
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