DFS Secretary chairs meeting with Micro Finance Institutions
Published: Jan 09, 2025
By TIOLCorplaws News Service
NEW DELHI, JAN 09, 2025: M Nagaraju, Secretary, DFS, M/o Finance chaired a meeting with major Micro Finance Institutions, in New Delhi, today. The meeting was also attended by senior officials of DFS including industry bodies namely MFIN & Sa-Dhan.
The engagement with MFIs was designed to foster an open exchange of ideas aimed at elevating the MFI sector. The emphasis was on reaching the low income households in villages and uplifting their lives by providing them hassle-free financial assistance, if needed.
Participating MFIs apprised that the business of MFI industry has risen from Rs. 17,264 crores in March'12 to Rs. 3.93 lakh crore as on November'24. The industry operates in over 723 districts including 111 aspirational districts across 28 states and 8 Union Territories. They also cater to the financial needs of almost 8 crore borrowers. MFIs contributes 2.03% of the gross value added to GDP and supports 1.3 crore jobs.
During the meeting, challenges & issues being faced by MFIs were also discussed. It was informed that MFIs are facing difficulties in raising low cost long term funds. The quality of MFI portfolio is being impacted on account of various issues including reduction in lending to the sector.
The MFIs requested for formulating credit guarantee scheme(s) suiting MFIs/borrowers, creation of special fund/facility for MFIs operating in North East region and relaxation in qualifying assets norms applicable to MFIs so that their risk can be diversified to other lending avenues.
Secretary, DFS emphasised that MFIs in India need to be more robust, vibrant and financially sound, catering to the needs of rural masses. MFIs need to draw a roadmap to strengthen the sector and become more viable, he said. It was also pointed out that like digital disbursements, MFIs should encourage repayment of loans digitally while at the same time focus on cybersecurity & resilient IT infrastructure. They should also strengthen their governance standards.
During the meeting, Secretary, DFS recognized the work done by MFIs in impacting the lives of people in rural areas. He stated that DFS value the efforts put in by MFIs in supporting financial inclusion.
