Shri M. Nagaraju, Secretary, Department of Financial Services (DFS), Ministry of Finance, chaired a crucial meeting with major Microfinance Institutions (MFIs) in New Delhi. The meeting, attended by senior DFS officials and representatives from industry bodies MFIN and Sa-Dhan, focused on fostering dialogue to strengthen the MFI sector and expand its outreach to low-income households in rural areas.
The discussions highlighted the significant growth of the MFI sector, which has seen its business rise from ₹17,264 crore in March 2012 to ₹3.93 lakh crore as of November 2024. Operating across 723 districts, including 111 aspirational districts, the industry serves nearly 8 crore borrowers across 28 states and 8 Union Territories. The sector contributes 2.03% to the gross value added (GVA) of the GDP and supports 1.3 crore jobs.
Key challenges faced by MFIs were brought to the table, including difficulties in raising low-cost, long-term funds and portfolio quality issues due to reduced lending to the sector. MFIs also sought government intervention in the form of tailored credit guarantee schemes, a special fund for MFIs in the Northeast, and relaxation in qualifying asset norms to diversify lending risks.
Shri Nagaraju emphasized the need for MFIs to adopt a robust and resilient roadmap to enhance their financial soundness and viability. He urged MFIs to encourage digital loan repayments while ensuring cybersecurity and strengthening IT infrastructure. Governance standards were also stressed as a priority for the sector’s sustainability.
Acknowledging the sector’s critical role in promoting financial inclusion, Shri Nagaraju commended the efforts of MFIs in uplifting rural communities and improving lives. He reaffirmed the government’s commitment to supporting the MFI sector in its mission to empower underserved populations and bolster economic development in rural India.
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