The Assam government on Tuesday signed an MOU with Microfinance Institutions for implementation of Assam Micro Finance Incentive and Relief Scheme (AMFIRS), 2021.
The pact was signed with a view to providing succour to poor women borrowers, who are not able to return the loan amount of Micro Finance Institutions (MFIs).
Altogether 38 MFIs and Banks signed the MoU with the state government, which will remain in force till March 31, 2023.
Amongst 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.
Assam Chief Minister Himanta Biswa Sarma said the government in its first cabinet meeting formed a committee under the chairmanship of Housing and Urban Affairs Minister Ashok Singhal to fulfil its election promise of waiving micro-finance loan to provide succour to poor women who are not able to return the loan amount.
“Accordingly, Assam Micro Finance Incentive and Relief Scheme have been devised with an objective to balance long term view of ensuring continuity of micro-finance 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 micro-finance sector due to various operational reasons,” the Chief Minister said.
Stating that upto June, 2021 there were 14 lakh microfinance borrowers in the state, he said the new scheme would involve Rs. 12,000 crore credit portfolio, out of which the State government would be required to expend around Rs. 7,200 crore.
He further said the scheme emphasizes responsible lending by financial institutions through compliance of RBI regulations and industry guidelines in letter and spirit while promoting responsible borrowing and timely repayment culture among customers.
Detailing the provision of the MoU, the CM said that relief under the scheme shall be extended to all borrowers to the extent of loans from up to 3 lenders and for a loan amounts of up to Rs. 1.25 lakhs only.
To become eligible for the scheme, the concerned borrower will have to fulfill eligibility or non-eligibility conditions as laid down in the guidelines.
Sarma further said that under the scheme borrowers who have been repaying regularly with Zero Days Past Due will be provided the 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 accounts that are overdue but not NPA, the state government will pay the overdue amount.
All such borrowers will be encouraged to make timely instalment payments so that their accounts remain standard and credit culture is reinforced.
To incentivize such credit discipline, the government, after observing such borrowers for a time period, as may be decided with mutual consultations, on a case to case basis, make a onetime 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 & certified by the lender.
The government will consider providing partial relief or full relief based on detailed evaluation.
The Chief Minister also said that many people in the state are stressed by private money lenders.
Keeping this in view, the state government decided to promote borrowing through MFI and Banks only that carry out their operations strictly adhering to RBI guidelines.