Assam govt signs MoU with MFIs/banks to waive off loans taken by women

The state's expenditure is likely to be around Rs 7,200 crore, CM Sarma said

The BJP-led government in Assam signed an MoU on Tuesday with 38 Micro Finance Institutions (MFI) and banks to waive off loans taken by economically weaker women in the state.

Before the Assembly elections held in March-April, BJP had promised that microfinance loans taken by women lenders would be waived off if it was elected again to power. After winning the elections for the second time, the government led by Sarma prepared a scheme, Assam Micro Finance Incentive and Relief Scheme, 2021.

A cabinet committee headed by cabinet minister Ashok Singhal was also formed to take forward the scheme with discussion with the microcredit institutions operating in the state.

Talking about the scheme, Chief Minister Himanta Biswa Sarma said an estimated Rs 12,000 crore are likely to be spent by the government, the MFIs and banks for the loan waiver scheme. The state's expenditure is likely to be around Rs 7,200 crore, he said.

As per the criteria, the state government would waive off the loans taken by the financially weaker women belonging to the lower middle class and BPL families, who are unable to repay the loan.

The MFIs and banks will waive off the loans, which were given in violation of the Reserve Bank of India (RBI) guidelines. In the third category, the state government would pay a maximum of Rs 25,000 as an incentive to the women who had taken loans and are repaying without much problem.

"We decided to give the incentives to encourage such people to take loans again and do their business properly. This will help microfinance organisations also. There are nearly 14 lakh such lenders. March 31, 2021, will be the cut-off date to avail benefit of the scheme," Sarma said.

Those who could not repay the amount will have to submit application forms seeking benefits of the loan waiver scheme, Sarma said.

He added that according to RBI guidelines, maximum of three MFIs or banks can give a maximum loan of Rs 1.25 lakh to a lender.

"But in the competition, MFIs had violated the RBI fair practices and so we need to bring such organisations back to the guidelines. We want the MFIs and banks to operate well as per the RBI guidelines," said the CM.

The MFIs and banks which 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.

The scheme will remain in force till March 31, 2023.