Microfinance institutions (MFIs) have agreed to restructure loans from 50 weeks to 75 or even 100 weeks for those who find it difficult to repay the same, according to Microfinance Institutions’ Network (MFIN) president, and founder of Basix, Vijay Mahajan. The interest rates, however, would be only for 50 weeks.
According to Mahajan, five members of MFIN – who account for 60 per cent of all loans disbursed – agreed to restructure the loans. These members are SKS, Spandana, Basix, Share and Trident. More members are expected to follow suit.
“Any household can get in touch with MFIN if they are burdened with repayments. We will decide how much restructuring is needed,” Mahajan said. Typically, for a Rs 10,000 loan, the repayment is for 50 weeks at Rs 225 a week. It could be reduced to Rs 175 or even less, depending on paying capacity. This is for the first time that MFIs are talking about allowing a delay in repayment or extending the loan’s tenure without increasing the interest component.