A historic decision: Assam signs MoU to waive off micro-finance loans


Guwahati:  In a historic decision, the Assam Government on Tuesday signed a Memorandum of Understanding (MoU) with microfinance institutions (MFI) active in the state as promised earlier to compensate and waive off microfinance loans taken by women of the economically weak sections. 

Fulfilling its promise to waive off micro-finance loans to provide succor to poor women who are not able to return the loan amount, the Finance Department of the Government of Assam signed an MOU with Microfinance Institutions (MFI) for implementation of the Assam Micro Finance Incentive and Relief Scheme (AMFIRS), 2021 in the presence of Chief Minister Dr. Himanta Biswa Sarma at a programme held at Assam Administrative Staff College in Guwahati today.

Finance Minister Ajanta Neog, Agriculture Minister Atul Bora, Education Minister Dr. Ranoj Pegu, Housing and Urban Affairs Minister Ashok Singhal, WPT&BC Minister UG Brahma and Chief Secretary Jishnu Barua were also present.

Altogether 38 MFIs and Banks signed the MoU with the state government. The MoU shall remain in force till March 31, 2023.

Speaking to the media CM Sarma said that the scheme has been devised with an objective to balance long term view of ensuring continuity of micro-finance for supporting economic activities of low income and poor households in the state and providing relief to eligible customers for tiding over current stress in the micro-finance sector due to various operational reasons.

He said the scheme emphasizes responsible lending by financial institutions through compliance with RBI regulations and industry guidelines in letter and spirit, while promoting responsible borrowing and timely repayment culture among customers.

The CM further said the scheme aims in various  at:

i) Providing relief to stressed borrowers to encourage and help them to regularise their repayments
ii) Providing partial/full relief from repaying loans to destitute borrowers with no capacity to repay.
iii) Incentivising borrowers for making regular repayments and maintaining good credit discipline.

Dr. Sarma also informed that the relief under the scheme shall be extended to all borrowers to the extent of loans from up to 3 lenders and for loan amounts of up to Rs. 1.25 lakhs only. To become eligible for the scheme, the concerned borrower has to fulfill eligibility/non-eligibility conditions as laid down in the guidelines.

Borrowers who have been repaying regularly with Zero Days Past Due will be provided a one-time incentive to the extent of their outstanding balance, subject to a cap of Rs. 25,000/-.

Borrowers whose payments are overdue, that is the accounts that are overdue but not NPA, the state government will pay the overdue amount. All such borrowers will be encouraged to make timely installment payments so that their accounts remain standard and credit culture is reinforced. To incentivize such credit discipline, the government, after observing such borrowers for a time period, as may be decided with mutual consultations, on a case-to-case basis, makes a one-time incentive payment of Rs. 25,000/- or equal to the outstanding balance, whichever is lower.

Borrowers who are stressed, destitute and whose accounts have become NPA will need to apply through a format verified & certified by the lender. The government will consider providing partial relief or full relief based on the detailed evaluation.

The CM also urged the MFIs and Banks to maintain the Fair Practice Code of RBI while disbursing loans in the future.