Credit guarantee scheme for MFIs still stuck in low gear

Banks have received an aggregate loan demand of Rs 10,000-12,500 crore under the scheme, according to people familiar with the matter. While the credit guarantee provides 70-80% default coverage, its rigid caps on bank lending rates and strict margin rules for microfinance companies have made it a non-starter so far in terms of loan disbursement, they said.

Raccontata daeconomictimes.indiatimes.com