NABARD plans to finance NBFC MFIs

By its “Structured Finance and Partial Guarantee Programme to NBFC-MFIs,” a dedicated debt and credit guarantee product. 

To ensure the unhindered flow of credit to the last mile in COVID-19-affected rural areas.

NABARD said it has recently signed agreements with Vivriti Capital and Ujjivan Small Finance Bank to roll out the initiative, that will enhance access to sustainable finance for micro-enterprises and low-income households.

As per this programme, NABARD will provide partial guarantee on pooled loans extended to small and mid-sized MFIs. 

It will help facilitate ₹2,500 crore funding in the initial phase and is expected to be scaled up going forward. 

The program is expected to cover over 1 million households across 28 states and 650 districts, NABARD said in a statement.

The Pooled Loan Issuance (PLI) structure provides the lending bank adequate comfort through NABARD’s partial credit protection, reduces the cost of capital as the rating of the loans get notched up and helps lenders meet priority sector goals.

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