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NABARD considering financing MFIs

NABARD is planning to finance microfinance institutions (MFIs) to take care of their capital requirements. NABARD gad earlier operated a Rs 200-crore fund called Microfinance Development and Equity Fund with which it has funded several large microfinance institutions and also small finance banks. But the contribution was more in the nature of grant which NABARD, unlike equity investors, never encashed. NABARD is now thinking it can re-enter the equity funding space keeping in mind the capital requirement of MFIs emerging from the pandemic and the growth prospects of the sector. G.R. Chintala, Chairman, NABARD, said there is an informal discussion with people within the organization whether it can re-enter this segment. In the earlier instance, NABARD had given money, but never encashed it. At the same time, competing institutions made tons of money by converting grants into equity, he added. This time when it enters the field, it will put money as equity and also provide continuous oversight so that these institutions can grow and pay dividends, not just to the investors alone but to the society at large, he said.

 

 

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