SIDBI-SKDRDP sign MoU to enhance credit delivery to micro enterprises
Published: Sep 12, 2018
By TIOLCORPLAWS News Service
NEW DELHI, SEPT 12, 2018: In a bid to enhance the credit delivery to micro enterprises, an Memorandum of Understanding was signed between Small Industries Development Bank of India (SIDBI) and Shree Kshetra Dharmasthala Rural Development Project (SKDRDP), Dharmasthala on Tuesday, in the presence of Mr Mohammad Mustafa, CMD, SIDBI.
The target of SIDBI is to facilitate the flow of credit to micro enterprises promoted by the poor at affordable rates. It is pertinent to mention that the micro credit which has emerged as a tool for empowerment of poor has grown in terms of volume over the years. However, the cost of credit for the poor has not come down significantly in this segment. It is observed that MFIs are still lending at a rate of around 20-24% p.a. to micro enterprises. Another significant problem in this market was that those micro-finance or self-help group borrowers, who were aspiring to scale up their operations and graduate to enterprise level, were finding it difficult to access finance because MFIs generally do not lend beyond Rs. 50,000/- and banks were also largely staying away from lending of higher ticket size loans. Thus, there is a critical gap in the market for the aspiring entrepreneurs to take it to the enterprise level.
The proposed arrangement between SIDBI and SKDRDP would facilitate flow of affordable credit to micro enterprises needing credit up to Rs.3 lakh and help in enterprise promotion. SKDRDP, which is a leading not-for-profit Trust having a client base of more than 4.2 mn micro entrepreneurs, is targeting to deploy around Rs.500 cr under the present arrangement over the next two years for this enterprise building initiative of SIDBI.
