Sa-Dhan, an association of Microfinance Institutions (MFIs), has asked the Government to exempt the microfinance industries of GST as this industry offers its services to the low- income group. The Association Executive Director, P. Satish said that imposing GST will be against the government’s policy on financial inclusion.
Mr. P Satish Reiterated that in case of loans from the banks, there is no GST (Goods and Services Tax). So, why should we charge GST from the financially backward section of the society? The industry expects that in this budget the government should show a roadmap in accelerating the process of lending from public sector banks to the MFIs.
This is coming in the form of gradual progression with steps aiming in the direction of inclusion of the economically backward section of the country. The Government is aiming to help MFIs to gradually take over the borrowing from the Public Sector Banks. Earlier the PSBs had a share of 22% of the total borrowing made in the industry to microlenders. This number has been reduced to 12% in FY 2018-19.
Financial Inclusion Funds of Rs 2000 Crore is being made accessible to commercial banks, RRBs and few other commercial institutions. Sa-Dhan has asked NABARD, SIDBI, and other subsidiaries to increase lending to MFIs.
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It has asked for a special fund for the sector’s SRO and had asked the allocation of funds to SROs will help in spreading awareness in the microfinance sector. They can also conduct a workshop for the purpose of spreading awareness about lending through the microfinance sector.
As per data by Sa-Dhan, the credit portfolio of all such microfinance lenders stood at Rs 1,99,441 crore as on September 30, 2019.
