Microfinance Industry Network (MFIN), a Self-Regulatory Organisation (SRO) recognised by RBI and the Association of Karnataka Microfinance Institutions (AKMI), jointly organised a press meet in Bengaluru to highlight the critical role of microfinance institutions in improving the lives of the underprivileged sections of the society in the state. Mr. Rama Kamaraju, Head – State Initiatives at MFIN along with Mr. Venkatesh N, Managing Director, IIFL Samasta and Mr. Anand Rao, JMD, Chaitanya India Fin Credit underlined the immense contribution of microcredit loans in fostering financial inclusivity and empowerment in both rural and urban Karnataka.
Microfinance has emerged as an impactful tool in ensuring that credit and essential financial services reach the remotest corners of India. In Karnataka, microfinance institutions have transformed the lives of more than 1 crore and currently serve over 63 lakh individuals (unique borrowers) through microcredit loans. The total gross loan portfolio of microfinance institutions in the state has surged from Rs 16,946 crore (Mar-2019) to an impressive Rs 42,265 crore in the last financial year (Mar-24), empowering, women, families, and communities to thrive.
Microfinance customers in Karnataka have shown an eagerness to explore interventions to ensure family well-being and start new businesses. They have shown similar alacrity in learning about good credit discipline, regular repayment of loans and respect for lending institutions' advice to borrow within their capacities.
Mr. Rama Kamaraju, Head, State Initiatives, MFIN stated that “Microfinance operations of RBI regulated entities in the state of Karnataka have traversed a smooth path all along even at the time of demonetisation and Covid pandemic. Women borrowers from the state have exhibited extraordinary resilience and maintained excellent credit discipline over the years. He mentioned in unequivocal terms that the loans offered by the regulated MFIs have helped changed the narrative from “women development” to “women led development”. Microfinance has received extensive recognition as a strategy for socio-economic empowerment of women, earning them a well-deserved and rightful role in decision making in the family. He further added that Microfinance, dovetailed with the efficient Govt schemes on the ground, has managed to alleviate them out of the poverty trap setting them on an upwards trajectory of sustainable livelihood.
Mr. Kamaraju stated that on the other hand, regulated MFIs (NBFC-MFIs, Banks, Small Finance Banks) operate under very stringent regulations & oversight both from RBI and MFIN SRO. All these Regulated Entities are governed by the RBI directions on microfinance and Fair Practices code of the RBI. In addition, MFIN has established robust infrastructure and mechanisms to ensure that member institutions operate responsibly, adhering to regulatory standards, and avoiding wrongful practices. To give an example, currently MFIN is undertaking 2,131 financial literacy workshops under the RBI’s Depositors Education and Awareness (DEA) project initiative across the country, over the next 2 years. MFIN also operates a toll free 24*7 Client grievance redressal system in Vernacular language.
He pointed out that the recent reports of protests against MFIs are from a small section of the ill-informed individuals with the aid of unauthorised entities, indulging in unscrupulous rumour-mongering. We wish to assure you all that we follow a very well calibrated advisory approach and have our eye on the ball at all times. He urged the media to carry out a thorough fact check of any issues being reported on the sector so that the MF ecosystem is shielded from any untoward rumours. Having said that, we are open to talk and engage on the right forum to address any genuine concerns with regard to the microfinance ecosystem and its operations.”
Mr Venkatesh N, MD IIFL Samasta Finance Ltd., said, "Microfinance Institutions have been instrumental in empowering women entrepreneurs and uplifting communities by providing crucial financial access to the unbanked.
Regulated Microfinance Institutions have played a pivotal role in driving women's entrepreneurship and empowerment, with far-reaching effects that uplift families and transform entire communities. With this access to the unbanked, we foster entrepreneurial growth and generate crucial local employment, fortifying grassroots economies.
In the past few months, there some stress has been noticed in collections from borrowers who have taken loans from multiple lenders. However, the field reports from December seem to show positive signals of a turnaround, and I feel confident in observing these positive trends over the next few quarters as things normalise. He added that microfinance institutions play a key role in giving Shishu loans under the MUDRA scheme”
Mr. Anand Rao, MD, Chaitanya India Fin Credit stated “Microfinance in Karnataka has a 20 plus years of history of being part of the rural development story of the state. RBI regulated entities are governed by a strong code of conduct. The challenge the sector faces is from unregulated entities.”
Microfinance is important for the socio-economic development of the nation as it provides resources and capital to marginalized groups and those in the informal economy. Microfinance institutions not only help in increasing the household income of the borrowers but also educate them about businesses and help them improve their financial conditions.
78 MFIN Member Microfinance Institutions (Regulated Entities) work across 36 states & union territories, and 721 districts, including 112 Aspirational Districts ensuring that credit and other crucial financial services reach rural and urban India. Primary customers of Microfinance services are 7.94 crore (around 80 million) women from low-income households.
Photo Caption: L-R : Mr. Rama Kamaraju, Head - State Initiatives, MicroFinance Industry Network (MFIN), Mr. N Venkatesh, Managing Director, IIFL Samasta Finance and Mr. Anand Rao, Joint Managing Director, Chaitanya India Fin Credit.
