MICRO-LENDERS CAN NOW RAISE UP TO $10 MILLION A YEAR OVERSEAS

Micro Finance Institutions (MFIs) may soon be able to borrow up to $10 million in a year overseas. Reserve Bank of India (RBI) has said that Micro Finance Institutions (MFIs) may be permitted to raise funds through External Commercial Borrowing (ECB) under the Automatic Route. According to the Reserve bank of India (RBI) guidelines, Micro Finance Instructions (MFIs) should have a satisfactory borrowing relationship for at least three years with a scheduled commercial bank authorised to deal in foreign exchange. Reserve Bank of India (RBI) has also said that, the bank would also require to issued a certificate of due diligence on 'Fit and proper' status of the board or
committee of management of the Micro Finance Institutions (MIFs) that is borrowing. The External
Commercial Borrowing (ECB) funds should be routed through normal banking channels. NBFC-MFIs will also be permitted to borrow from multilateral institutions, such as International Finance Corporation and Asian Development Bank. Other Micro Finance Intuitions (MFIs) will be permitted to avail themselves of External Commercial Borrowing (ECBs) from international banks, multilateral financial institutions, Export Credit Agencies, Overseas Organisations and Individuals, subject to certain conditions. The RBI has also increased the ECB limit of Non-Government Organisations (NGOs), engaged in Micro finance Activities, to $10 million in a financial year, as against the current $5 million.