India Microfinance Equity Fund Framework Revised To Expand Support For Smaller Mfis

(MENAFN- KNN India) New Delhi, Mar 2 (KNN) The framework of India Microfinance Equity Fund (IMEF) has been revised to widen its reach and strengthen support for smaller and socially oriented microfinance institutions operating in underserved and unserved regions.

"The revised IMEF framework has been approved to enhance the scheme's reach and impact," SIDBI said.

The IMEF, a scheme of the Department of Financial Services (DFS) under the Ministry of Finance, is managed by Small Industries Development Bank of India (SIDBI).

The fund aims to promote poverty alleviation and financial inclusion by extending capital support to eligible microfinance entities. Applications for eligible entities are now open.

Enhanced Assistance and Wider Eligibility

Under the revised framework, the maximum assistance has been increased from Rs 5 crore to Rs 10 crore. In addition, Non-Banking Financial Companies (NBFCs) lending to the MUDRA segment have been included as eligible entities, among other changes, to promote broader financial inclusion.

Eligibility Criteria for NBFC-MFIs

For Non-Banking Financial Companies–Microfinance Institutions (NBFC-MFIs/MFIs), eligibility is capped at up to 3,75,000 borrowers, with a minimum outreach of 3,000 members. Eligible institutions must have a minimum MFI grading of Beta+ from Micro-Credit Ratings International Limited (M-CRIL) or an equivalent rating from other recognised agencies.

Norms for NBFC-Investment and Credit Companies

For NBFC-Investment and Credit Companies (ICCs), eligibility is limited to institutions with up to 50,000 borrowers. At least 60 percent of their portfolio should be in the 'MUDRA segment' as defined from time to time. These entities must have a bank loan rating of BBB or below, though unrated NBFCs are also eligible under the framework.

Both NBFC-MFIs and ICCs must have a track record of five years of existence or at least three years of successful microcredit operations. A capital adequacy ratio (CAR) of 15 percent, or as prescribed by the Reserve Bank of India from time to time, is required.

Instruments and Quantum of Support

The quantum of assistance will generally be Rs 5 crore, with the possibility of enhancement up to Rs 10 crore based on satisfactory performance. Support may be extended through instruments such as subordinated debt, optionally convertible preference shares (OCPs), cumulative redeemable preference shares (CRPS), equity and other approved mechanisms.

The revised framework is expected to deepen financial inclusion by strengthening the capital base of smaller microfinance institutions and enhancing their capacity to serve low-income borrowers.

(KNN Bureau)

MENAFN03032026000155011030ID1110810020