High costs, rigorous audits deter MFIs from taking credit cover

Microfinance lenders hesitate to adopt the Centre’s credit guarantee cover due to high costs and stringent audit processes. While some lenders find the current stress transient, others seek a tailored scheme. High premiums and partial coverage make the scheme unattractive unless NPAs exceed 6%. Some banks, facing higher NPAs, utilize the cover as risk mitigation.

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