E Kumar Sharma, Associate Editor: India - Key Areas in Microfinance Budget 2015-...

Feb 2015
India, February, 20 2015 - Associate editor E Kumar Sharma lists the key points Finance Minister Arun Jaitley should focus on when he reads out his Budget speech on February 28.

  • Announce measures that provide a specific role for microfinance institutions (MFIs) in the financial inclusion agenda of the government. MFIs need not be just agents but could be direct players. This holds for both for-profit and not-for-profit MFIs.
  • Broaden the definition of priority sector lending to include different loan products, taking it beyond livelihood-related loans. It can include loans for education, health, water and sanitation, and even solar energy products. This should only be for low-income households. While it may be argued that the Reserve Bank of India has a greater role in this, the Budget can still look at this area.
  • Increase the fund allocation for Sidbi's India Microfinance Equity Fund beyond Rs 300 crore. It should have a corpus of at least Rs 1,000 crore so that it can extend more equity to MFIs. Plus, take measures to make its access easier for MFIs, with more equitable terms and conditions.
  • Exempt service tax on the processing fee charged by MFIs as it is the poor borrower who has to ultimately bear the cost.
  • Exempt service tax on micro insurance services offered by MFIs.
  • Provide tax holiday to MFIs. This will encourage more investments in the sector and benefit end borrrowers through lower interest rates.
  • Liberalise domestic/ foreign ownership norms for small and medium MFIs with total loan outstandings of less than Rs 100 crore.
  • Make a statement on the Microfinance Bill and its re-introduction.

  • Source : Business Today

    Research Analysis Tools

    The fund indexes, institution benchmarks and other market information displayed here are all Symbiotics designed analysis tools, created in-house by our analysts and experts. Symbiotics has one of the oldest track records in microfinance investment analysis dating back to the late 1990s; its indexes and benchmarks have been regularly used as markers by investors, asset managers, financial institutions and practitioners. These, as well as several other research products, are available through the Research Account. Click on the link below to find out more.

    Learn More