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World Bank loan to boost Indian microfinance


The government on Tuesday approved a a proposal to draw a loan of $100 million (about Rs 450 crore) from the World Bank to promote microfinance in the country.

The Cabinet Committee on Economic Affairs (CCEA) cleared the proposal for on-lending to the Small Industries Development Bank of India (Sidbi), which -- in turn -- would disburse the funds to the microfinance sector.

“The fund will be used to promote responsible and balanced growth of microfinance outreach, particularly in under-served areas where micro finance penetration is low, thereby serving the larger objective of promoting financial inclusion,” home minister P. Chidambaram told reporters after the CCEA meeting.

The decision is expected to help broad-base credit disbursals.

Growth in the microfinance sector has been very high in the last few years, with some of the institutions registering 100% year-on-year growth.

Market reports peg the current size of the sector to almost $1.5 billion, with the global market size being about $50 billion.