Mumbai, Nov 7 (Bureau) RBI Deputy Governor M Rajeshwar Rao said the focus of revised microfinance regulations is customer protection and accordingly operational flexibility to institutions, which is expected to form transformational relationships with their customers and grow responsibly. “Customer protection lies at the core of microfinance regulation and it has been RBI’s guiding light while revamping the regulatory regime for the microfinance sector,” he said in his keynote address at the launch of MFIN’s India Microfinance Review here on November 4. Rao said the RBI strives to ensure an increase of economic well-being and financial inclusion reaches people at the bottom of the pyramid with the help of the steps taken by it. “In this context, microfinance serves as an important tool to assist the underprivileged in improving their economic and societal situation,” he said. “The focus of revised microfinance regulations is customer protection while providing operational flexibility to institutions. We expect the new regulatory changes would enable lenders to form transformational relationships with their customers and grow responsibly,” he said.
SIDBI Chairman and MD Sivasubramanian Ramann said SIDBI has contributed to the journey of the microfinance sector in the last 10 years by navigating various adverse events. “We are now geared to assist the sector in its next phase of progression through mainstreaming of informal micro-enterprises which could be the real engines of the growth,” he said. Starting with PM Svanidhi and help of MFIs, several informal micro-enterprises will soon have their Udyam numbers that will enable them to get access to formal financial services and benefitted under various government schemes for MSMEs, Ramann said. “The proposed new initiative of Vyapar Credit Card to provide easy access and regular flow of finance to MSMEs will further help the sector. As it is important to support the small and medium sized MFIs, SIDBI introduced the India Microfinance Equity Fund,” he added. MFIN also took various initiatives like the Impetus Platform to assist small MFIs raise funds, Ramann said. MFIN CEO and Director Dr Alok Misra said the second edition of this report is designed to provide 360-degree insight based on data and its experience as an industry SRO.
It shows a picture of resilience of microfinance clients and draws attention to the vast credit demand, likely to reach 17 lakh crore in a moderate scenario, he said. Findings of NCAER study show that microfinance contributes 2.3 percent to India’s GVA and sustains 1.2 crore jobs, Misra said. “In the new regulatory paradigm, it is imperative for lenders to adhere to code of conduct in letter and spirit and thereby further strengthen the building of a responsible finance industry,” he said. MFIN Chairperson Devesh Sachdev said for India and Bharat to progress together towards becoming a global powerhouse, financial inclusion or empowerment of every Indian with access to formal financial services is very critical. “Therefore, the future growth of the sector is an imperative for inclusive growth of India and our pursuit of a $5 trillion economy,” he said.