Q. Are there any restrictions on Lending channels? A. There is no restriction on the MFIs as regards their lending methodology. MFIs may on-lend directly to SHGs / individuals or route their assistance through their partner NGOs and MFIs. Q. What are the eligible activities for which SFMC provides credit? A. The loans to ultimate borrowers would have to be utilized for financing micro enterprises and non-farm income generating activities including agri-allied activities. In view of the diverse needs of the poor, particularly in urban and semi-urban areas in service related activities where many of the NBFCs / new generation livelihood companies are working, the loan funds may be used for on-lending, inter alia, for activities such as to purchase / lease of renewable energy equipment, tool kits for masons/ servicemen, 2/3 wheelers for self-employed persons (for extending business reach, procurement of raw material, distribution of finished goods etc.). Further, a part of the loan to ultimate borrowers could also be utilised for consumption purpose. Integrated / group projects involving animal husbandry, poultry etc. along with related processing would also be eligible for assistance. In view of the composite requirements of the poor, loans to partner MFIs may also be used for on-lending for construction of new / renovation / expansion of dwelling units / dwelling unit-cum-work sheds etc. Q. What is the frequency and quantum of loan being provided to MFIs? ? A. SFMC may provide annual / need based, including repeat assistance to its partner MFIs. Loan assistance per MFI for on-lending is subject to a minimum of Rs. 10 lakh. Variations in the minimum loan limit may also be considered depending upon the merits of the case. Q. Are there any ceilings on individual loan amount per borrower? A. Normally, maximum amount lent by the MFIs to an individual borrower / SHG member must not exceed Rs. 25,000/-. In exceptional and extremely deserving cases, particularly for enterprise and housing, the amount per borrower may be further increased, say upto Rs. 50,000/-. Q. What is the repayment period of loans to MFIs? A. Repayment period (including moratorium) from 15 months to 4 years from the date of disbursement, depending upon the merits of case is considered in respect of loans to MFIs. The initial moratorium on the principal would range from 3-12 months from the date of first disbursement. However, in case of housing loans, MFIs would be required to repay the loan in 6 years excluding a moratorium, not exceeding 2 years from the date of first disbursement. Interest payments and principal repayments would be made on monthly basis on 10th of each month. Q. What are the main legal requirements for the MFIs? A. The Memorandum of Association and bye-laws of the MFI should have explicit powers with regard to the following :- Power to raise loans from banks and financial institutions. Power to offer security for loans raised from banks and financial institutions in such form as may be required by the lender. Power to carry on micro finance activities including on-lending to partner NGOs/MFIs / SHGs / individuals.