Assam collabs with MFIs to implement Assam Micro Finance Incentive and Relief Scheme

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Guwahati: The State finance department signed an MoU with MFIs for implementation of the Assam Micro Finance Incentive and Relief Scheme (AMFIRS), 2021 in the presence of Chief Minister Himanta Biswa Sarma at a programme held at Assam Administrative Staff College here on Tuesday, 24th August 2021.

State ministers Ajanta Neog, Atul Bora, Dr. Ranoj Pegu, Ashok Singhal, and UG Brahma, and Chief Secretary Jishnu Barua were also present at the MoU signing ceremony.

Among the prominent 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.

Altogether 38 MFIs and banks signed the MoU with the State government, which will remain in force till March 31, 2023.

During the MoU inking ceremony, the Chief Minister of Assam, Himanta Biswa Sarma said that the Assam government in its first cabinet meeting formed a committee under the chairmanship of Housing and Urban Affairs Minister Ashok Singhal to fulfill its election promise of waiving microfinance loan to provide succor to poor women who are not able to return the loan amount.

And according to that, the Assam Micro Finance Incentive and Relief Scheme have been devised to balance long term view of ensuring continuity of microfinance for supporting economic activities of low income and poor households in the State and providing relief to eligible customers for tiding over current stress in the microfinance sector due to various operational reasons.

There were 14 lakh microfinance borrowers in the State till June 2021 and the new scheme would involve a Rs 12,000 crore credit portfolio, out of which the State government would be required to expend around Rs 7,200 crore.

The Assam CM further said that the scheme emphasizes responsible lending by financial institutions through compliance with RBI regulations and industry guidelines while promoting responsible borrowing and timely repayment culture among customers.

Also, the financial relief under the scheme shall be extended to all borrowers to the extent of loans from up to three lenders and for a loan amount of up to Rs 1.25 lakh only, and to become eligible for the scheme, a borrower will have to fulfill eligibility conditions as laid down in the guidelines.

The Chief Minister said under the scheme, borrowers who have been repaying regularly with ‘zero days past due will be provided – 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.

All such borrowers will be encouraged to make timely installment payments so that their accounts remain standard and credit culture is reinforced.

Moreover, many people in the State are stressed by private money lenders, hence, the State government decided to promote borrowing through MFIs and banks only that carry out their operations strictly adhering to RBI guidelines. He also urged the MFIs and banks to maintain a fair practice code of RBI while disbursing loans in the future. At the same time, he called upon the people to ensure judicious utilization of borrowed money.

On behalf of the MFIs and banks, Arohan CEO Manoj K Nambiar, Bandhan Bank president Kumar Asish and MFIN CEO and director Dr. Alok Kumar spoke on the occasion.