The program consists of providing a partial guarantee on grouped loans granted to small and medium-sized MFIs. It will help facilitate funding of Rs 2,500 crore in the initial phase and is expected to be expanded. The program is expected to cover more than one million households in 28 states and 650 districts.
“The partially secured loan facility will catalyze much-needed financing to millions of households, agricultural and commercial markets to sustain themselves in the post-COVID-19 environment,” said GR Chintala, Chairman of Nabard.
The Pooled Loan Issuance (PLI) structure is expected to provide the lending bank with adequate comfort through NABARD’s partial credit protection, reduce the cost of capital as loan ratings increase, and help lenders achieve priority sector objectives. The Nabard guarantee has helped attract a large number of traditional banks and smaller financial banks to participate, officials said.
NABARD collaborated with Vivriti Capital, a technology-driven credit platform, as the structurer of the facility. Vivriti Capital manages and operates CredAvenueTM, a marketplace for corporate debt, which enables companies to raise debt in the loan, bond and securitization markets. For the first transaction under the program, NABARD and Vivriti partnered with Ujjivan Small Finance Bank, one of the leading lenders in this space.
Nabard has led efforts to roll out special liquidity lines since the start of the pandemic and has disbursed around Rs 2,000 crore to MFIs and NBFCs. The bank emphasized the ability of MFIs to secure access to credit to meet credit demand to rebuild livelihoods.