2010-11 will go down as the worst year in the young history of the microfinance industry…it was a year, when the country’s biggest market for micro loans shut down for business, and new rules came into place to govern the industry. The MFIs’ travails were captured by its only listed company SKS microfinance, which has lost 90 per cent of its market value this year. Amidst all the soul searching within the industry is the realization that the microfinance model must be reinvented. ET Insight has this report on the MFIs’ battle for survival.
Part 1 : Reinventing Indian Microfinance
Allegations of usurious lending have meant that the government has turned to regulations to rein in predatory practices. The new set of rules introduced by the Reserve Bank of India will go a long way in regulating the sector and reducing the cost of capital, but they don’t cover MFI’s of all shapes and sizes. ET Insight has more on the good and bad of the new regulatory norms.
Financial inclusion or access to financial products and services by the poor is a grand idea. An idea that MFIs have delivered on by bringing in more than 23 million underprivileged people into the financial system. But with the RBI clipping the wings of MFIs, the big question now is who will lend money to the poor? The RBI is pushing banks to drive financial inclusion. But is it the best solution for the poor and banks? ET Insight gets you the details.