(MENAFN- IANS) New Delhi, Nov 13 (IANS) The government is committed to supporting the Microfinance institutions (MFIs) in advancing financial inclusion, as they can play a role in bringing formal credit to the underserved, M Nagaraju, Secretary, Department of Financial Services, said on Thursday.

Existing MFIs have built a loyal customer base that has evolved into a financially mature segment, which may seek products beyond microfinance.

They are gradually shifting away from volume-led expansion towards a customer-insights-led approach.

“The number of MFI borrowers has reduced by over 1 crore, and the loan outstanding has reduced by over Rs 1 lakh crore, over the last 18 months, due to the self-regulation guardrails by MFIs," said Nagaraju at an event here.

According to Sa-Dhan, the organiser of the event, there are about 300 million people who are not covered by formal credit. MFIs can play a role in bringing formal credit to the underserved, he added.

MFIs alone serve over 6.72 crore customers, 95 per cent of whom are women, underscoring their vital role in extending credit to underserved and low-income households.

About 91 per cent of loans obtained through MLIs were used for income generation activities.

“NABARD has been supporting the farmers in agricultural activities, as the farmers expand their income sources to non-farm activities, MFIs can play a role in extending credit for non-farm related income opportunities," said Shaji KV, Chairman, NABARD.

Additionally, NABARD will continue to partner with the MFIs in building their capacity through training, he added.

The MFIs have shifted their strategy as they are now actively taking steps to understand the entire household's financial service requirements, which may include loans from moneylenders, secured loans against gold, rather than focusing on the customer.

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