New Delhi, January 8, 2025 Shri M. Nagaraju, Secretary, Department of Financial Services (DFS), Ministry of Finance, chaired a crucial meeting with major Micro Finance Institutions (MFIs) in New Delhi. Senior DFS officials and representatives from industry bodies such as MFIN and Sa-Dhan were also in attendance.
The meeting emphasized expanding financial outreach to low-income households in rural areas, particularly focusing on aspirational districts and the North East region. It also aimed to address challenges faced by MFIs and explore strategies to strengthen the sector.
Key Highlights:
1. Sector Growth:
Participating MFIs highlighted that the industry’s loan portfolio has grown significantly, from ₹17,264 crore in March 2012 to ₹3.93 lakh crore as of November 2024. The sector serves nearly 8 crore borrowers across 723 districts, including 111 aspirational districts, in 28 states and 8 Union Territories. It also contributes 2.03% to the gross value added (GVA) to GDP and supports 1.3 crore jobs.
2. Challenges Faced by MFIs:
Difficulty in raising low-cost, long-term funds.
Portfolio quality concerns due to reduced lending to the sector.
Request for credit guarantee schemes tailored for MFIs/borrowers.
Proposal for a special fund for MFIs in the North East and relaxation in qualifying asset norms to diversify risks.
3. Focus Areas Discussed:
Strengthening the governance and financial soundness of MFIs.
Promoting digital loan disbursement and repayment mechanisms while ensuring robust cybersecurity measures.
Creating a roadmap for making the sector more viable and resilient.
Secretary’s Remarks:
Shri M. Nagaraju commended the efforts of MFIs in driving financial inclusion and improving rural livelihoods. He stressed the need for MFIs to become more robust, vibrant, and financially sustainable to cater effectively to the rural population. He also encouraged MFIs to adopt digital solutions for loan repayments and focus on enhancing IT infrastructure and governance standards.
The Secretary assured continued support from DFS and acknowledged the critical role of MFIs in achieving broader financial inclusion goals.
This meeting reinforces the government’s commitment to strengthening the microfinance sector and empowering underserved communities across the country.
