Guwahati: Financial institution North East Development Finance Corporation Limited (NEDFi) is all set to enter the Microfinance (MF) sector in the region to make formal credit facilities available to the last mile at low interest rates.
Talking exclusively to UNI, NEDFi chairman and Managing Director PVSLN Murty said there is large scope available in the Microfinance space but interest rates are very high so we are planning to bring down the interest rates.
In many areas formal credit facilities are not available and people depend on money lenders who charge high interest rates.
Murty said NEDFi’s intervention in to Microfinance would bring down the high interest rates. “We are upgrading our technology and through banking correspondents’ model we will come directly into MFI lending with an affordable cost of funds,” he said. The proposal to enter the MF sector has already been approved by the board of NEDFi and Request For Proposal (RFP) has been floated for the technology provider. The MF service will be launched within the next three months, he added.
Through MFI, NEDFi will also embark into the co-lending space that will increase the loan amount to Rs 1 lakh.
Existing MFIs have a limit of Rs 50,000 which it can lend to borrowers at one time. “We will try to bring down the interest rates to 12 per cent. Most of the existing MFIs charge interest rates of around 20 per cent. Our mandate is to bring down the interest rates for the common man,” Murty said.
Murty has experience of serving the Northeast region for over three years as Chief General Manager and Regional Head during the period of 2015-18 while in SBI. He was instrumental in bringing up APONGHAR a popular Housing Loan scheme for the Assam government employees.
Murty is hopeful that the NEDFi’s direct entry into the Microfinance sector will bring down the interest rates in far-flung areas where formal lending has not been a reality till now.
It may be mentioned here that in 2020, the Assam Assembly passed the Assam Microfinance Institutions (Regulation of Money Lending) Bill, 2020 which aims to “protect and relieve the economically vulnerable groups and individuals from the undue hardship of usurious interest rates and coercive means of recovery” by microfinance companies.
