A database containing credit and repayment history of over 65 lakh borrowers in the state, computing their worthiness as potential borrowers, was today announced as the key to solving the crisis in the micro-finance sector in Andhra Pradesh.
Starting this week, Micro-finance Institutions (MFIs) in the state will be required to double check with this database and ensure that a potential borrower has repayment capability and does not get multiple loans. MFIs operating in other states will have to follow the database from January 1, according to the Microfinance Institutions Network (MFIN). Read more on Indian Express
AP ordinance to be a damp squib for MFIs this Diwali
It’s likely to be a low-key Diwali for subprime borrowers in Andhra Pradesh this year. The festival season is typically the peak season for microfinance institutions (MFIs) in this southern state, but the controversial ordinance from the state government has unsettled the situation on the ground. Read more livemint
Getting regulation right
Capping interest rates and reducing flexibility of microfinance institutions will not resolve the current issues in the sector
Microfinance in India is undergoing an upheaval that may determine the future of the sector— one that can go some distance in furthering financial access. In itself, such churn isn’t bad—it helps redirect and strengthen business processes, and checks the entry of unscrupulous players. But it is important that this nascent sector be channelled in the right direction. Read more on Live Mint