Development Fund

The Union Finance Minister, Government of India in his Budget speech for the year 2010-11 announced the enhancement of the fund size from the existing Rs200 crore to Rs 400 crore. The additional amount of Rs 200 crore will be contributed by Reserve Bank of India, NABARD and the commercial banks in the same proportion as earlier (40:40:20).

Objectives

The objective of the redesignated Fund is to facilitate and support the orderly growth of the microfinance sector through diverse modalities for enlarging the flow of financial services to the poor particularly for women and vulnerable sections of society consistent with sustainability.

Activities to be supported from out of the mFDEF

The Fund will be utilised to support interventions to eligible institutions and stakeholders. The components of assistance will include, inter alia, the following purposes:

Capacity Building

(i) Training of SHGs and other groups for livelihood, skill upgradation and micro enterprise development.

(ii) Capacity building of staff of institutions involved in microfinance promotion such as Banks, NGOs, government departments, NABARD, etc.

(iii) Capacity building of MFIs.

Funding Support

(iv) Contributing equity/other forms of capital support to mFIs, service providers, etc.

(v) Providing financial support for start-up and on-lending for microFinance activities;

(vi) Supporting Self Help Promotion initiatives of banks and other SHPIs.

(vii) Meeting on a selective basis the operational deficit of financial intermediary NGOs/mFIs at the start up stage;

(viii) Rating of mFIs and self regulation

(ix) Enabling NGO-SHPIs desirous of working as BC / BF in offering deposit to banks, by way of soft loan.

MIS

(x) Supporting systems management in regard to MIS, accounting, internal controls, audits and impact assessment

(xi) Building an appropriate data base and supporting development thereof.

Regulatory & Supervisory Framework

(xii) Recommending regulatory and supervisory framework based on an on-going review.

Studies & Publications

(xiii) Commissioning studies, consultancies, action research, evaluation studies, etc, relating to the sector.

(xiv) Promoting seminars, conferences and other mechanisms for discussion and dissemination.

(xv) Granting support for research

(xvi) Documentation, Publication and dissemination of mF literature.

Others

(xvii) Any other activities recommended by the Advisory Board to Fund.

Eligible Institutions

Following types of structures, community based organizations and institutions, would be eligible for support from the Fund:

Training: SHGs, CBOs, NGOs/VAs, Banks, mFIs, NABARD, Training Establishments, networks, service providers

Funding support: NGOs/VAs, CBOs, mFIs, Banks

MIS: SHGs, NGOs/VAs, Banks, mFIs, NABARD

Regulatory and Supervisory Framework: Banks, mFIs, SROs, NGOs /VAs / mFI Networks, NABARD

Studies and Publications: Banks, mFIs, NABARD,Training and Research Organisations, Academic institutions and Universities

Any other organisation as may be decided by the Advisory Board from time to time
.

Mode of Assistance

Mode of assistance from the Fund will include the following:

• Promotional support for training and other promotional measures

• Loans and advances including soft loans

• Revolving Fund Assistance (RFA) to NGOs/ mFIs

• Equity and quasi equity support to mFIs

• Administrative subsidies and grants

• Administering Charges
  
  

Advisory Body to mFDEF

The Advisory Board shall guide and render advice on the various aspects relating to the micro finance sector. The Board may determine its own procedures for day-to-day working including constitution of committees, task forces etc, for examination of various issues. The advisory board will meet at such intervals as deemed necessary but in any case once in a quarter to review the status and progress of outflow and to render policy advice in respect of orderly growth and development of the sector

Members of Advisory Board

Annexure

Advisory Board of the microFinance Development and Equity Fund

List of members

Note: * since resigned