MFIs seek PM's intervention to secure repayment moratorium

Microfinance institutions have

requested Prime Minister Narendra Modi to ensure that they are able to avail the loan repayment moratorium offer announced in the wake of the coronavirus outbreak, alleging that some of their lenders have not been extending the benefit to them.

Sa-Dhan, an association of community development finance institutions, and Microfinance Institutions Network (MFIN), a self-regulatory organisation of the industry, have separately written to the prime minister, urging him to direct banks and other lenders to extend the moratorium offer to their members.

Microfinance institutions borrow from banks and development financial institutions - Nabard, Sidbi and Mudra

and lend to their clients.

 

Since MFIs have started offering a three-month moratorium to their customers, they are expecting similar benefit from their lenders, Sa-Dhan executive director P Satish said.

"Despite Reserve Bank of Indias circular pertaining to the moratorium on retail loans, some financial institutions are refraining from extending the same benefits to microfinance institutions.

"We have requested the prime minister to address the issue. According to the RBI's circular, MFIs are eligible for back-to-back moratorium," Satish told PTI.

Not extending the moratorium will cause MFIs to face significant cash flow issues, in the absence of any collection from their customers, he said.

The Reserve Bank of India had recently announced a three-month moratorium on loan repayments in the wake of COVID-19 crisis for dues to be paid between March and May, 2020 and left it to the banks to implement the same.

"We have given the moratorium benefit to our clients till the end of May, according to the direction of the apex bank. If the lenders from whom we have borrowed money are asking payments from us, how will we make it? There are no collections amid the lockdown," MFIN chairperson Manoj Kumar Nambiar told PTI.

"We request you to direct the RBI to instruct all banks and other lenders to kindly pass on the same moratorium to us, as all of us are giving to others. This simple step will go a long way to support the aspirations and livelihoods of millions of enterprising women across our nation," the MFIN said in its letter to the prime minister.