Secretary of DFS Chairs Meeting with Micro Finance Institutions, Read Meeting Highlights
Shri M. Nagaraju, Secretary of the Department of Financial Services (DFS), Ministry of Finance, chaired a meeting with major Micro Finance Institutions (MFIs) in New Delhi today. The meeting was attended by senior officials from DFS and industry bodies such as MFIN and Sa-Dhan.
The main goal of the meeting was to foster an open exchange of ideas and strategies aimed at improving the MFI sector. The focus was on how MFIs can better serve low-income households in rural areas, providing them with easy access to financial assistance when needed.
During the meeting, representatives from MFIs shared impressive growth statistics. The MFI industry has expanded significantly, growing from a business volume of Rs. 17,264 crores in March 2012 to Rs. 3.93 lakh crore as of November 2024. MFIs now operate in over 723 districts, including 111 aspirational districts across 28 states and 8 Union Territories. They provide financial services to nearly 8 crore borrowers. The sector contributes 2.03% of the gross value added to India’s GDP and supports 1.3 crore jobs.
However, the meeting also addressed several challenges faced by MFIs. One of the key issues discussed was the difficulty in raising low-cost, long-term funds. Additionally, the quality of MFI portfolios has been impacted by various factors, including a reduction in lending to the sector.
MFIs raised several requests during the meeting. They called for the creation of credit guarantee schemes tailored to the needs of MFIs and their borrowers. They also proposed the establishment of a special fund or facility for MFIs operating in the North East region. Furthermore, they requested a relaxation in the qualifying asset norms applicable to MFIs to allow them to diversify their risks across other lending avenues.
In response, Secretary Nagaraju emphasized the need for MFIs in India to become more robust, vibrant, and financially sound. He encouraged MFIs to develop a roadmap to strengthen the sector and ensure its long-term viability. He also highlighted the importance of digital transactions, urging MFIs to promote digital loan repayments while prioritizing cybersecurity and resilient IT infrastructure. Additionally, he stressed the need for stronger governance standards within the sector.
At the end of the meeting, Secretary Nagaraju acknowledged the significant impact MFIs have had on improving the lives of people in rural areas. He commended their efforts in promoting financial inclusion and reaffirmed the DFS’s support for their work.
