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Indian Banks form core team for microfinance loan restructuring
Submitted by admin on Tue, 02/01/2011 - 13:57
in
Microfinance Focus February 1, 2011: According to a TOI report, under the Indian Banks Association (IBA) bankers met recently to set up a core team of lenders to decide on the restructuring loans to micro-finance institutions (MFIs).
The decision to restructure the MFI loans was taken after a few MFIs approached the banks for restructuring their loan portfolio. The Reserve Bank of India had also earlier permitted banks to restructure loans to MFI sectors even if they were not secured.
In the first phase only 10 MFIs, including SKS Microfinance, Spandana Sphoorty, Asmita and Share Microfinance with operations in Andhra Pradesh, have been called for discussions. According to a banker, the restructuring of loans would be done on the basis of the “projected cash flows of the MFIs”, to be calculated and suggested by charted accountants.
Banks can restructure a loan either by extending the time for repayment, by repayment holidays and by interest rates rebate.
Re scheduling for defunct groups and the dropouts
Re-scheduling would facilitate Banks-MFIs for their portfolio management and their growth. But who will reschedule loan portfolio of drop outs/putouts of the poor clients from MFI'-SHG system? The Microfinance status report Indian points out that 43% percent of SHGs reported drop outs besides mortality/defunct groups. How to restructure these collapsed groups for their revival and financial status of these drop out customers who once were ceremoniously included under ' financial inclusion’ mission . The policy makers and the Apex institutions need to probe this dropout events in MFI-SHG system and workout strategy for their re entry into the system simultaneously with rescheduling exercise. Otherwise financial inclusion will follow financial exclusion invisibly in the form of drop outs in MFI-SHG system
Dr.V.Rengarajab
Consultant -Microfinance
Re-scheduling of loan.
The re-scheduling is not going to help the social cause.
The proposal will strengthen only the hands of MFIs.
The for profit MFIs will never work for the cause of poor.
They will expand the business and exploit the poor further.
Encourage SHG-Bank linkage and not JLGs practiced by MFIs.
Profit out of poverty is the main motto of MFIs.
Don't do rescheduling.Don't encourage money thirsty MFIs.
Write off the unrecovered money.
Let the people benifit atleast.
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