The micro credit programme of the Corporation is aimed at delivering credit to Self Help Groups (SHGs ) through Micro Finance Institutions (MFIs ). The guidelines for assistance under this scheme are as follows:
i) the MFI has been in existence for at least five years and/or it has a demonstrated track record of running a successful micro-credit programme at least for the last three years. However, any new MFI desirous of initiating a micro credit programme may also be considered for assistance if it has been promoted and managed by experienced micro finance professionals with experience of at least three years in micro credit;
ii) the MFI has achieved minimum outreach of 3000 poor members (through individual lending/SHGs/partner NGOs or MFIs) or demonstrates the capability to reach this scale within a period of next twelve months or so;
iii) it should choose clients irrespective of class, creed and religion and its activities should be secular in nature;
iv) it maintains a satisfactory and transparent accounting, MIS and internal audit system or is willing to adopt such practices with KFC assistance;
v) it has a relatively low risk portfolio or has a definite plan to further improve its recovery performance.
Types of eligible intermediaries
i) Societies registered under Societies Act, 1860 or similar State Acts; ii) Trusts Registered under Public Trust Act, 1920 or similar Acts; iii) Companies registered under the Companies Act, 1956 including Section 25 Companies; iv) Non Banking Finance Companies providing financial services to the poor; v) Specialized and other Co-operatives such as Mutually Aided Co-Operative Societies etc.; vi) Any other type of institutions that offer micro finance and related services may be considered on merit.
MFIs may on-lend directly to SHGs/individuals or route their assistance through their partner NGOs and MFIs. They may also adopt any other lending channel
so as to effectively reach financial assistance to the poor clients.
The loans to ultimate borrowers is to be utilized for financing micro enterprises and non-farm activities including agri-allied income generating activities.
Frequency and quantum of loan
i) Annual or need based repeat assistance.
ii) Loan assistance per MFI for on-lending is subject to a minimum of Rs.10 lakh and maximum of Rs.5.00 Crore.
iii) Maximum amount lent by the MFIs to an individual borrower/ member in general may not exceed Rs.50,000/-.
Rate of interest
Loans are available to MFIs @12.5% p.a. (subject to revision). MFIs, in turn, may determine the interest rates for on-lending keeping in view the cost of operation and in consultation with their partners/SHGs/clients. 2% penal interest will be charged for the defaulted period.
MFIs are required to repay the loan to KFC generally within a period of 4 years on quarterly basis including an initial moratorium on the principal of 6-12 months from the date of first disbursement. Interest payments and principal repayments are required to be made on quarterly or monthly basis on March 01, June 01, September 01 and December 01 of each year.
- Term Deposit Receipts (TDRs) equivalent to 10% of the loan amount together with interest accrued thereon, are required to be pledged as security. The TDRs should be for a minimum duration of 4 years or currency of the loan, whichever is later.
- Assets created, if any, out of the assistance are held in trust by MFI on behalf of KFC.
The assistance will be subject to satisfactory Capacity Assessment Rating of the MFI by an accredited rating agencies like CRISIL, M-CRIL, SMERA etc. prior to each assistance above Rs.50 lakhs. The cost of such rating expenses will be borne by the MFI.
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