The union cabinet today approved a proposal to make a budget provision of Rs450 crore through a $100 million loan from the World Bank for on-lending to micro industries in the country.
The Cabinet Committee on Economic Affairs today approved the proposal for making a budget provision of Special Drawing Rights (SDR) equivalent of $100 million (approx Rs450 crore) of International Development Association (IDA) loan for on-lending to Small Industries Development Bank of India (SIDBI) through the budget of the department of financial services of the finance ministry, a government release said.
"The fund will be used to promote responsible and balanced growth of microfinance outreach, particularly in the under served areas where microfinance penetration is low, thereby serving the larger objective of promoting financial inclusion," the release said.
The growth in the microfinance sector has been very high in the last few years with some of the micro finance institutions registering 100 per cent year-on-year growth.
This decision is expected to address the attendant challenges like the need for a larger amount of credit.
SIDBI has had considerable success in fostering and catalysing growth and sustainability of the sector with a focus towards increasing financial inclusion, the release pointed out.