The Assam government signs letters of intent with 38 MFIs and banks to waive microfinance loans from poor borrowers

The government of Assam has signed an MoU with 38 microfinance institutions and banks to implement the Assam Micro Finance Incentive and Relief Scheme (AMFIRS) in 2021.

The government of Assam signed a Memorandum of Understanding (MoU) with 38 microfinance institutions and banks on Tuesday to offset and remit microfinance loans from economically weaker women in the state.

The MoU was signed to implement the Assam Micro Finance Incentive and Relief Scheme (AMFIRS) in 2021. The MoU will remain in force until March 31, 2023.

The Prime Minister of Assam, Dr. Himanta Biswa Sarma, in her first cabinet meeting, said the state government had formed a committee chaired by the Minister of Housing and Urban Development Ashok Singhal to fulfill its election promise to forego microfinance loans to support women who fail to meet the loan amount can repay.

According to this, the Assam Micro Finance Incentive and Relief Scheme was developed with the aim of creating a long-term perspective to ensure the continuity of microfinance in support of the economic activities of low-income and poor households in the state and to relieve eligible customers in bridging current Stress in the microfinance sector for various operational reasons, ”said CM Himanta Biswa Sarma.

CM Himanta Biswa Sarma said there were 14 lakh microfinance borrowers in the state as of June 2021. He said the new program would include a loan portfolio of Rs.12,000 billion, of which the state government would have to spend approximately Rs.7,200 billion.

CM Himanta Biswa Sarma said the program emphasizes responsible lending by financial institutions through verbal and written compliance with RBI regulations and industry guidelines, while promoting responsible borrowing and a timely repayment culture among customers.

Outlining the terms of the MoU, Himanta Biswa Sarma said the relief under the program would be extended to all borrowers for loans from up to three lenders and for loan amounts up to Rs 1.25 lakh.

Under the program, borrowers who have regularly repaid with zero days past due are granted a one-time incentive equal to their outstanding balance, subject to a limit of Rs 25,000.

Likewise, for borrowers whose payments are overdue, the state government will pay the amount. All of these borrowers are encouraged to make timely installment payments so that their accounts remain standard and the credit culture is strengthened.

To encourage such credit discipline, after observing these borrowers for a period of time, the government would make a one-time incentive payment of Rs 25,000 or the balance outstanding, whichever is lower.

Additionally, borrowers who are stressed and penniless and whose accounts have become NPA must apply through a lender verified and certified format. The government will consider partial or full discharge based on a detailed assessment.

CM Himanta Biswa Sarma also said that many people in the state are stressed by private moneylenders. “Against this background, the state government has decided to promote borrowing only through MFIs and banks that conduct their business strictly in accordance with the RBI guidelines,” he said.

CM Himanta Biswa Sarma also called on the MFIs and banks to adhere to the RBI’s Fair Practice Code when disbursing loans in the future.

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