Microfinance Supervisory Committee has asked the microfinance institutions (MIs) not to collect the loan repayments from borrowers in November and December, and that two-month repayment amount will be suspended until April 2021. However, the borrowers from COVID-19 stricken Yangon and Bago regions and Rakhine State are entitled to this relaxation only, according to the decision of the Central Committee on Prevention, Control and Treatment of COVID-19 meeting held on 23 October 2020.
The committee stated that the lenders are asked not to collect the interest rate during the suspension time and the repayment to be made between May and October 2021 in instalment. The State-owned Myanma Economic Bank will give loan (equals to two-month repayment amount of the borrowers) to the MIs, with zero interest rate instead. Otherwise, the government pay the loan repayment to the MIs on behalf of those borrowers. It is one -year grace period. The MIs must collect the loan in the second half (six months) from their borrowers and repay the government’s loan. The MIs are experiencing difficulties in collecting the loans from borrowers hit hard by the COVID-19 during the coronavirus crisis. The committee also notified that the MIs not to collect the loan repayments from borrowers by force.
In 2011, the Microfinance Law was enacted to promote rural development, and the MIs play a pivotal role in financing firms for rural people. MIs can help support Myanmar’s small businesses as SMEs constitute 90 per cent of companies in Myanmar and plays a crucial role in creating jobs.
There are 4.6 million borrowers from the microfinance institutions across the country. Additionally, the government is providing the loan from the COVID-19 funds to ease the economic burden faced by the virus-stricken businesses.
Source: The Global New Light of Myanmar