Credit guarantee scheme for MFIs still stuck in low gear
GS3Economy · S&T · Environment · Security· Growth, inflation & macro indicators· Mains·
Why in news
NBFC-MFIs are anticipating a surge in loan disbursements before the credit guarantee scheme's scheduled closure on June 30, despite reports that rigid lending caps and margin rules have hindered its effectiveness.
Background
The credit guarantee scheme was launched in March and received an aggregate loan demand of Rs 10,000-12,500 crore. While large NBFC-MFIs are expected to benefit, smaller MFIs face challenges due to strict bank underwriting standards.
Facts for Prelims
- FactAggregate loan demand received under the credit guarantee scheme: Rs 10,000-12,500 crore
- FactScheme scheduled closure date: June 30
- FactPrimary beneficiaries: Large NBFC-MFIs
For Mains
Q. Critically analyze the limitations of credit guarantee schemes in facilitating credit flow to smaller Microfinance Institutions (MFIs) and suggest measures to improve their efficacy.
Dimensions to cover in your answer
- Credit accessibility gap: Strict bank underwriting standards and margin rules disproportionately affecting smaller MFIs
- Regulatory friction: Rigid caps on lending rates hindering the effective disbursement of credit to financially weaker entities
Keywords: Credit Guarantee · NBFC-MFIs · Underwriting Standards · Financial Inclusion · Lending Caps
More Economy notes
- Indians abroad sent home a record $110 billion. What it means for India's economy · 11 June 2026
- FACT, Chambal Fertilisers shares up to 5% as government eyes doubling fertiliser subsidy allocation · 10 June 2026
- Sebi proposes consolidated disclosure of executive pay at asset managers · 10 June 2026
- Afcons Infra shares soar over 9% on Rs 5,301 cr order to build world’s second-largest breakwater · 10 June 2026
- Rs 11 Lakh Crore: How India's Electronics Sector Is Weathering Middle East Storm · 10 June 2026
- Bombay High Court upholds homebuyers’ right to interest for every month of project delay · 10 June 2026
Something wrong, or something missing?
Spotted a mistake in a note, or want a topic, format or PDF that would help your preparation? Write to us. We read every mail and fix errors fast.
This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.