Microfinance, also called microcredit, is the provision of small credit to the low-income individuals or groups who otherwise would have no other access to financial services. The term ‘missing middle’ is often used for this section of our society who lost out on formal credit for want of a collateral support. It is here that Microfinance steps in, providing ‘micro’ credit with no collateral whatsoever.
The last few years saw the micro-credit industry mainstreaming with the broader financial sector. Some of the largest NBFC-MFIs became Banks or Small Finance Banks (SFBs) and some were bought over by Banks and large NBFCs. Banks and NBFCs also started building their own micro-credit portfolio, through Business Correspondent partnerships. As a result of mainstreaming, micro-credit sector today is competitive and served by a diverse set of players - Banks, SFBs, NBFC-MFIs, BCs and NBFCs.
Outside of these microfinance providers, there exists a strong ecosystem of other stakeholders including the regulators, the Government, financial institutions, credit bureau, employee bureau, rating agencies and others which play an important role in the delivery of Microfinance.
Key Microfinance Data
Source : Micrometer, Issue 42 (Data as on 30 June 2022)