Small Industries Development Bank of India or Sidbi said it plans to disburse Rs 1,000 crore to microfinance companies this year, 20% higher than what it did in 2010-11, as a mark of its support to a sector which is slowly turning around.

"The government and Reserve Bank of India have laid out a long term growth path for the MFI sector. The MFIs should see orderly growth in the future," Sidbi chairman and managing director S Muhnot said.

The banking regulator has recently issued a detailed operational guidelines for MFIs and capped lending rates at 26% a year. The government, on the other hand, has prepared a draft MFI bill which proposed RBI as the central regulator for the sector.

Muhnot said the government will soon finalise a Rs 100-crore microfinance equity fund for smaller MFIs, in line with what was proposed by finance minister Pranab Mukherjee in the Union Budget. The development finance institution is however not keen to take fresh equities in MFIs of its own at this juncture.

Source: India Brand Equity Foundation
Date: September 19, 2011