NABARD has introduced debt and credit insurance product to help rural markets hit by the pandemic
National Bank for Agriculture and Rural Development (NABARD) on Monday said the company, has introduced a loyal debt and credit assurance product to make sure unrestricted flow of credit in rural areas hit by the pandemic.
NABARD, earlier this month had entered in an agreement with Ujjivan Small Finance Bank and Vivriti Capital a technology credit platform to supply Rs 25,000 crore funding support within the initial phase to low-income households and is predicted to scale it. The program predicted to cover over ten lakh households across the length and breadth of the country.
The program necessitates providing a partial guarantee on pooled loans extended to small and mid-sized Micro Finance Institutions (MFIs).
G R Chintala, Chairman, NABARD, announced the partially guaranteed loan facility, will act as a catalyst for much-needed financing to a lot of households, agricultural and business markets to endure the post-pandemic environment.
The Pooled Loan Issuance (PLI) arrangement is envisioned to fulfil the lending bank sufficient comfort through NABARD’s limited credit protection, lowers the cost of capital, ratings of the loans go up and benefits lenders to meet priority sector goals.
NABARD guarantee in the past has helped and drawn the bulk of the mainstream banks and small finance banks.
Vivriti Capital operates and controls CredAvenueTM a marketplace for enterprise debt and aids enterprises to boost debt from a loan, bond and securitisation markets.
NABARD and Vivriti have partnered with Ujjivan Small Finance Bank, a leading lender in this space and are beginning the pilot project.
NABARD since the start of the pandemic has led the efforts in rolling out distinctive liquidity plans and till date have disbursed around Rs 2000 crore to Micro Finance Institutions MFIs and the Non-Banking Financial Company NBFCs. The bank has emphasised on enabling MFIs to make sure credit access for meeting the demand for credit to rebuild livelihood.