After the Budget 2016-17 has been announced several changes in the small saving schemes have been observed including the factors on taxes. The Finance Ministry has now announced the possible provisions for microfinance institutions (MFIs) to be able to distribute pension products, including the  Atal Pension Yojana (APY), based on an Interview published in Business Line on March 8, 2016. Mrs. Anjali Chib duggal who is the secretary for the Departmental of Financial Services under the Finance Ministry where she mentioned that MFIs would be now enabled to offer Atal Pension Yojana to help increase the distributional channels for the scheme.

Earlier, MFIs were permitted to offer the which is also backed by the government. This is also a pension scheme which targeted the section that was not organised sector. Now, Atal Pension Yojana, which is a newer and more known pension scheme will be channelised for availability through MFIs, which was not the case earlier.

About Atal Pension Yojana (APY)

This is a pension scheme backed by the Government, which is meant to target the unorganised sector. It had been  mentioned in the Budget 2015-16 speech and was initiated by the Indian Prime Minister Narendra Modi by May, in the same year.

This  scheme basically is a pension scheme, for Indian citizens especially for the unorganised sector labour force. Under this scheme people are guaranteed a minimum pension of Rs. 1,000/ 2,000/ 3,000/ 4,000 & 5,000 each month over the age of 60 years based on the contributions made by the subscribers. The eligibility for this scheme is minimal as the individual needs to be between the age of 18 to 40 to apply and has to have a savings account in their name. Also, they should have a cell phone number in their name, which has to be mentioned when  applying for the loan. The application process for this plan is simple at the bank. However, with inclusion MFIs, the channels for distribution of this product will be higher.

Chief Executive Officer of MFIN Ratna Vishwanathan, said that there have been talks with the DFS negotiating for MFIs  to be a distributional channel for the  Atal Pension Yojana (APY) scheme. The teams are expected to collect authorisations from banks and then channelize it through the banks.

About MFIs

By the end of  2015, MFIs were said to cover 30 States and Union Territories & counting. They provided micro-credit to approximately 2.6 crore clients of which a high percentage in demographics were women. The approximate aggregate gross loan that was given through MFIs is said to stand at Rs. 42,331 crore.