No appeasement with microloan waivers, Assam thinks of rewards

The Assam government will provide ₹25,000 to every micro borrower repaying loans regularly, providing an incentive for maintaining a good credit culture.

Lenders across the spectrum have cheered the move. Assam pegged the size of the relief package at ₹5,000-6,000 crore.

In parallel, the state has identified that out of the ₹12,500 crore of micro-loans, about ₹4,000 crore was given to borrowers flouting the Reserve Bank of India's microfinance lending norms. Microfinance lenders would have to waive these loans and, therefore, that would hit their asset quality.


Alok Misra, chief executive of industry body Microfinance Institutions Network (MFIN), said that these loans will be settled by the lenders.

Lenders including universal banks, small finance banks, NBFC-MFIs and NBFCs cater to over 2.6 million low-income women clients in Assam through microfinance activities with a loan outstanding of ₹12,500 crore.

The state government will pay the incentive amount and loans that become overdue after the announcement of the loan waiver. This will make the borrowers regular with credit bureau records. “Once these overdue clients start repaying the lenders regularly, they could be even considered for a prompt payment reward,” MFIN said.

“The relief measure has focused on responsible borrowing, responsible repayment and responsible lending. This will enhance the flow of credit to the low-income households in these difficult times,” MFIN chairperson Manoj Kumar Nambiar said.

Chief Minister Himanta Biswa Sarma said that microloan waiver will revolve from incentive to relief and impact as many as 2.2 million women borrowers.

The state’s committee on microfinance loan waiver, formed after Sarma was sworn in as chief minister, is holding meetings with lenders.