MFIs told to lend one third of loan in agriculture sector

Micro Finance companies are now required to lend one third of their total loan towards the agricultural sector. The Central Bank has made the mandatory lending provision — through the Monetary Policy announced on Wednesday — for Micro Finance institutions (MFIs) as the companies have been recently leaning towards unproductive sectors to get more profit. 
Central Bank’s recent research has found that MFIs have been heavily investing in the business and trading sectors. According to its survey, some 50.71 percent of their loan goes to the business sector, whereas some 22.14 percent of the loans are devoted towards the agricultural sector, some 14.29 percent towards animal husbandry and some 11.43 percent investments are towards other professions.
The Monetary Policy 2019-20 has also incentivized them to merge together by providing them income tax exemption and extension provided in meeting the paid-up capital requirement. Some of the other facilities include, expansion in the loan limit provided for operating micro enterprises, and the provision of employee benefits in salary and facilities.
The Monetary Policy has also tightened restrictions regarding opening branches.
The Monetary Policy has also directed the Banks and financial institutions (BFIs) to sell insurance policy under ‘bancassurance’.