Govt clears Rs 450-cr WB loan proposal for microfinance

The government today approved a a proposal to draw a loan of $100 million (about Rs 450 crore) from the World Bank to promote microfinance in the country.

The Government today approved a a proposal to draw a loan of $100 million (about Rs 450 crore) from the World Bank to promote microfinance in the country.

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The Cabinet Committee on Economic Affairs (CCEA) cleared the proposal for on-lending to the Small Industries
Development Bank of India (SIDBI), which -- in turn -- would disburse the funds to the microfinance sector.

"The fund will be used to promote responsible and balanced growth of microfinance outreach, particularly in
under-served areas where micro finance penetration is low, thereby serving the larger objective of promoting financial
inclusion," Home Minister P Chidambaram told reporters after the CCEA meeting.

The decision is expected to help broad-base credit disbursals.

Growth in the microfinance sector has been very high in the last few years, with some of the institutions registering
100 per cent year-on-year growth.

Market reports peg the current size of the sector to almost $1.5 billion, with the global market size being
about $50 billion.