Micro Finance Sector Grew Over 2,100 Pc In 12 Years, Reached Rs 3.93 Lakh Cr

(MENAFN- KNN India) New Delhi, Jan 9 (KNN) The microfinance industry in India has experienced remarkable growth, with its business volume surging from Rs 17,264 crores in March 2012 to Rs 3.93 lakh crore as of November 2024, representing an extraordinary growth of 2,176 percent over 12 years.

This information was shared during a high-level meeting between industry representatives and M Nagaraju, Secretary of the Department of Financial Services (DFS), Ministry of Finance, in New Delhi.

The microfinance sector has established a significant presence across India, operating in 723 districts, including 111 aspirational districts, spanning 28 states and 8 Union Territories.

The industry currently serves approximately 8 crore borrowers and contributes 2.03 percent to the gross value added to GDP while supporting 1.3 crore jobs.

During the meeting, which included senior DFS officials and representatives from industry bodies MFIN and Sa-Dhan, MFIs highlighted several challenges facing the sector.

Key concerns included difficulties in accessing low-cost long-term funding and portfolio quality issues stemming from reduced lending to the sector.

The institutions proposed several solutions, including the development of specialised credit guarantee schemes, creation of special funds for MFIs operating in the Northeast region, and relaxation of qualifying assets norms to enable risk diversification.

Secretary Nagaraju emphasised the need for MFIs to become more robust, vibrant, and financially sound to better serve rural communities.
He stressed the importance of developing a comprehensive roadmap to strengthen the sector's viability while encouraging the adoption of digital repayment systems alongside existing digital disbursement methods. The Secretary also highlighted the necessity of maintaining strong cybersecurity measures and resilient IT infrastructure.

The DFS acknowledged the crucial role played by MFIs in advancing financial inclusion and improving rural lives through accessible financial assistance.

The ministry emphasised its commitment to supporting the sector's growth while ensuring it maintains high governance standards and continues to serve its social objective effectively.

(KNN Bureau)

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