Micro Lending

Micro Lending Development

Mission & Approach

Mission: To create a national network of strong, viable and sustainable Microfinance Institutions (MFIs) for providing microfinance services to the economically disadvantaged people, especially women.
Approach:Complete Range of Financial and Non-Financial Services- Financial Support to MFIs-

  • Loan
  • Capacity Building Grant
  • Equity/Quasi Equity
Non-financial Services
  • Advocating Appropriate Policies and Regulations
  • Enhancing Corporate Governance of MFIs
  • Promoting Responsible Lending Practices
  • Creation of Lender’s Forum
  • Code of Conduct Assessment (COCA)

Micro Lending Development

  • Developed the capacity of 100+ MFIs
  • Cumulative Sanctions: ₹17571 cr
  • Cumulative Disbursements: ₹16234 cr
  • Impacted more than 38.1 million beneficiaries
  • SC/ST/ backward classes accounting for approx. 73% of the total beneficiaries.
  • Women proportion was 96-98% among the beneficiaries.
  • Brought out changes in the livelihood pattern by giving impetus to enterprise activity
Launched in April 2000 under collaboration with Department for International Development (DFID), UK to bring in best microfinance practices in India.
Collaboration was made with International Fund for Agricultural Development (IFAD), Rome in April-2002 for on lending support to MFIs.
  • Out of10 entities having received the SFB license from RBI, eight were partner MFIs of SIDBI
  • Need based interventions to facilitate smooth transition from MFI to SFBs.
  • Equity investment and resource support with provisions for conversion

Responsible Finance Initiatives

Key Initiatives

  • Capacity Building of MFIs
    Adequate and customized package of Capacity Building grant to MFIs on the basis of Annual Capacity Building Need Assessment Exercise
  • Transformation Loan to Scale up and Transform
    Support to NGOs/ MFIs to transform from ‘non-profit’ to ‘for-profit’ i.e. Corporate Structure viz. Companies/ NBFCs. Introduced in 2004, proved one of the successful innovations by MLDD.
  • Capacity Assessment Rating(CAR)
    CAR pioneered by SIDBI in microfinance sector got wide recognition & acceptance in microfinance sector CAR now become a pre-requisite for getting assistance from Banks/FIs
  • Creation of Portfolio Risk Fund
    In collaboration with GoI, Portfolio Risk Fund launched to meet the security deposit requirement of the MFIs.
  • Covered underserved pockets/ districts/ states (with emphasis on OBC, SC, ST, minority &women beneficiaries).
  • Creation of Risk Fund
    Fund created out of DFID grant support to expand micro lending operations to underserved regions of the country To address the concentration risk and the issue of regional

Responsible Finance Initiatives

Responsible Finance Initiatives
Comprising key MFI Funders with a view to promoting cooperation and responsible lending practices among MFI lenders for leveraging support to MFIs across all the stakeholders.

  • COCA, a third party independent assessment of the status of compliance of an MFI with the Common Code of Conduct.
  • COCA measuresMFI’s adherence to ethical and sound lending practices Developed, piloted and rolled out Harmonised COCA Tool (HCT). HCT of 36 MFIs have been hosted on SIDBI’s website.

  • A MIX market database – meant to provide & disseminate valuable information on Indian MFIs.
  • MFIs submit financial and operational data, at periodic intervals-enabling transparency

Beyond Microfinance

Beyond Microfinance – Moving to Micro enterprise

  • To facilitate access of credit to the clients graduating from microfinance to micro enterprise for higher ticket size loans at an affordable rate.
  • Launched a pilot programme in partnership with Not-for-Profit MFIs to extend loans in the range of `50,000 - `5 lakh to micro entrepreneurs.
  • The model is successfully running in Eastern Uttar Pradesh and Karnataka and loans are being extended at 15.40 % - 16.95% p.a, which is well below the current rates offered by MFIs.
  • To further bring down the cost for the microborrowers, SIDBI is working with World Bank and UN Women for launching ‘Women Livelihood Bond’- a low cost impact bond for making available credit to poor women for entrepreneurial activities at a cost ranging between 13-14%.
  • On successful completion of pilot, the initiatives would be expanded to the other parts of the country.

Beyond Microfinance

  • Organized first ever SIDBI National Microfinance Congress during October 26-27, 2018 at New Delhi focusing on emerging challenges in the mF Sector.
  • Objective of the Congress was to analyze and bring to fore the emerging challenges in the mF sector and making policy advocacy recommendations to address those challenges.
  • The Congress was attended by about 300 participants from various stakeholders
  • Created in Union Budget 2011-12, with corpus of `100 crore Fund with SIDBI, which subsequently enhanced to Rs.300 crore
  • Primary objective to provide Equity/Quasi equity to smaller MFIs to help them maintain growth and achieve scale and efficiency in operation with focus on under-served states
  • As on September 30, 2018, SIDBI committed 198 crore to 66 MFIs.

Eligibility Criteria
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Support to IIM, Lucknow for setting up of “SIDBI Centre for Innovation in Financial Inclusion (SCI-FI)” Objective:
  • To develop new age financial products and innovative business models and spread FinTech led innovative financing models for rapid expansion of financial inclusion in India.
  • To support new start-ups, thereby helping the sector in setting standards and best practices for a more responsible growth.
Objective: To develop participants as ‘Digital Financial Literate’ and equip them with various skills to use digital financial services and familiarizes with various government initiatives in digital finance space. 1st phase:
  • Programmes Conducted: 112
  • Geographies: 07 States. 107 Micro-business Clusters
  • Beneficiaries: 6500 artisans, out of which 40% were female. Around 40% women artisans are now using digital applications for financial transactions.
2nd phase:
  • Programs conducted: 25
  • Geographies: Uttar Pradesh, Bihar and Odisha
  • Beneficiaries: Around 1000 micro businesses, with focus on women.