Though the concept of microfinance is not entirely new as it has existed in different forms in different parts of the world for ages, however, its emergence as an organized business is of nascent origin as far as India is concerned. The business of making the tiniest loans, as it is widely referred to, has achieved a phenomenal growth in India in a very short span of time. But the promise of huge opportunities has attracted, as it is being alleged, even vested interests who are eager to exploit hapless debtors, mostly poor peasants, to make quick bucks. Besides, there have also been allegations of lack of corporate governance and other malpractices on the part of the microfinance lenders in the country. To understand the ground reality as to how far these allegations are true and what measures need to be taken so as to bring the real benefits to the needy, The Analyst invited eminent experts to share their views on the subject. Read on.

Subhra Jyoti Bharali: It is the only way out to reach the rural population of India to provide financial services. It is going to play a vital role to maintain the stability of the economy of our country.

Kishore Puli: Though the industry is in a nascent stage, considering the rate at which it is growing i.e., 125% p.a., one can safely conclude that within a period of about five years, the industry is going to occupy a significant space in the financial sector. As on date, the industry is catering to about 7 crore households as beneficiaries. The total outstanding portfolio is about Rs 60,000 cr.

Thanks to the excellent recovery rate of 99% on an average, almost all the banks—public sector, private sector and foreign sector are enthusiastically extending finance to the MFIs. Since the banks themselves were not in a position to achieve such recovery rates, it is but natural that they would support the MFIs in this regard and also achieve their priority sector lending targets.

Several initiatives taken by the MFIs, NBFC MFIs, more specifically are going to make the sector achieve maturity and respectability in a short period.

The Analyst Magazine, Microfinance, Corporate Governance, Microfinance Lenders, Financial Services, Financial Sectors, Foreign Sectors, Microfinance Portfolio, Women Empowerment, Financial Inclusion, Micro Finance Institutions Network, Self Regulatory Organization, Fair Recovery Mechanisms, Microfinance Information Exchange Network, MFIN.