The Micro Finance programmes in India visions to create abundant self-employment opportunities. Thus, aiming to transform small firms into creditworthy companies. Acknowledging the need, this financing is primarily run by NABARD (agriculture) and SIDBI (industry, service, business), and through NGOs and SHG.
The Necessity of Micro Finance Programme
Destitution (more than 24 crores) is basically one of the most remarkable glitches looked by India.Hence, it is significant to counter the hurdles periodically to ensure advancement. Similarly, micro-financing is considerably a positive step in the right direction. Subsequently, the Microfinance program helps to address the following:
- The below poverty line community
- The nation’s Rs 50,000 crore requirement
- The existing scheme caters only to 5 to 10% of the necessity
Further, a 98% recovery is suspected via SIDBI’s micro finance program. Additionally, the DC-MSME can overcome the problems of under financing due to the reduced interest rate on dispositions. Hence, the new advancement in the exiting SIDBI’s financing has a better reach comparatively. Also, the involvement of the government has an improved impact on the scheme’s success.
The Impact of SIDBI’s Micro Finance Programme
Since January 1999, over 191 crores have been released till December 2003. Further, it was advantageous to 9 lakhs recipients.
Micro Finance Programme Focuses on
- Small entrepreneurs, businesses, and trades
- Cottage industries or service activities
- Artisans
- Agricultural and related sectors
- Transport units
Types of Micro Finances
- Microloans– No collateral requirement
- Micro savings– No minimum balance necessary
- Micro Insurance– This is for borrowers of Microloans.
The Activities Undertaken by the Scheme
Assisting with deposits (fixed) to MFIs and NGOs
- Government of India provides fund to SIDBI (Portfolio Risk fund), this acts as the security deposit for loan amount from Micro Finance Institutions (MFIs) and National Government Organisations (NGOs)
- Accordingly, the 25% will be the share from MFIs and NGOs fund, while the 75% will be from GoI.
- Further, GoI gives loans in 4 years on a half-yearly basis. Nevertheless, from the Rs 6 crore allotted, the scheme can benefit over 1.60 lakh recipients (average Rs 5000 per recipient).
- Further, the SIDBI will pay interest on the security deposit. Also, the recovery of the loan is sole responsibility of SIDBI
- Additionally, SIDBI will monitor the scheme that includes manufacturing, services, and non-farming activities.
Training, Workshop, and studies
The GoI will helps SIDBI to give the fundamental preparing to NGOs, SHGs, go betweens, and business people. Additionally, National Level Entrepreneurship Development Institutes (EDIs) and Small Industries Service Institutes (SISIs) will conduct awareness programs.
Intermediates Training
Primarily includes the institutional building of the same. Consequently, focuses on product identification, project report preparation, forward and backward connections, marketing, and associations with technologies.
Financial Plan of the Micro Finance Programme (Xth edition)
A sum of Rs 7 crore is assigned under the plan. Meanwhile, for the year 2003-04, the Rs was 0.25 crore that is given as Portfolio risk fund. Subsequently, for training, studies, workshops, and awareness the scheme allot Rs 1 crore.
Nodal Agencies and their Roles
Ac and DC-MSME will form a committee that will monitor the functioning of the scheme. Besides, other members are DC and EA, director of IFW, chairman cum Managing director of SIDBI, Director of EA. Additionally, the GoI will have a crucial role to play.
Who can Apply?
MFIs and NGOs that source loans to MSMEs can apply under the scheme. As mentioned earlier, the MSMEs sector-focused are includes manufacturing, services, and non-cultivation activities.
Application Process
MFIs and NFOs must submit their proposals to SIDBI in a prescribed manner.