Micro finance firms to see 100 crore equity fund

Micro finance firms to see 100 crore equity fund

The Finance Minister announced in the Union Budget for 2011-12  creation of “India Microfinance Equity Fund”, with state-run Small Industrial development bank (SIDBI).

“The micro finance institutions (MFIs) have emerged as an important means of financial inclusion. Creation of a dedicated fund for providing equity to smaller MFIs would help them maintain growth and achieve scale and efficiency in operations,” he said.

Industry unhappy

The budget is a disappointing one for micro-finance (MFI) sector as finance minister could have done more than few announcements which were made, head of umbrella body of MFIs-MFIN said.

“Overall it is a very disappointing budget from the MFI perspective...there are a couple of announcements but those are either old issues or very insufficient allotments,” Vijay Mahajan, Chairman of MFI, BASIX, told PTI here.

He said budgetary announcement of creating a Rs 100- crore India Microfinance Equity Fund is barely sufficient for the sector and the amount announced is lower than what is required.

Similarly, creation of Rs 500-crore Women’s SHG’s Development Fund is an “old story” which has been in the making since the late 1990s, he said.

“The FM could have announced making of a comprehensive legislation for MFIs so that states do not make their own laws,” he added.

However, SKS Microfinance, welcomed the budget saying it “will augment flow of credit to the sector” through various measures like increasing total farm sector credit target.