Archive · 12 Aug 2025
Indian MFIs Seek Credit Guarantee Scheme for Funding
Microfinance institutions (MFIs) want the government to help them get loans from banks.
They are asking for a guarantee scheme, which means the government will promise to pay back some of the loans if the MFIs can't.
MFIN proposes a large scheme, while Sa-Dhan wants a scheme to help smaller MFIs.
Banks have become cautious about lending to MFIs because some borrowers are having trouble paying back loans.
The MFIs are hoping a new scheme will be like the one during the COVID time which was very successful.
They hope to get more loans at better terms soon.
MFIN and Sa-Dhan propose a credit guarantee scheme to the Finance Ministry.
MFIN suggests a ₹15,000–20,000 crore scheme, while Sa-Dhan proposes a suitable size for small and mid-sized NBFC-MFIs.
Banks tightened lending to NBFC-MFIs due to asset quality deterioration.
The 2021 ₹7,500 crore Covid scheme is cited as a successful precedent.
MFIN and Sa-Dhan are working to improve liquidity for MFIs.
- Who
- MFIN and Sa-Dhan, and NBFC-MFIs.
- What
- MFIN and Sa-Dhan propose a credit guarantee scheme for NBFC-MFIs.
- When
- The article was published on August 12, 2025; details of the proposal's timing are not specified.
- Where
- India
- Why
- To encourage bank lending and address liquidity issues.
- Proposed Scheme
- Credit guarantee
- Proposing Parties
- MFIN and Sa-Dhan
- MFIN's Suggested Amount
- ₹15,000–20,000 crore
- Previous Scheme
- ₹7,500 crore Covid scheme
