It will not be preposterous to say that there is perhaps no other sector that has weathered crisis the way Microfinance has. Over the years, Microfinance Institutions have reinvented themselves every time a crisis hits them. Also, the Indian credit information system is far superior to what it was a few years ago. MFIN has been supporting and guiding the sector in overcoming these challenges.

As the microfinance borrowersrepresent low-income households, any unprecedented national happenings with a potential to have an economic impact on their lives, can be detrimental to the whole existence of the borrower. A few cases which needed careful handling were:


November 2016 and the period thereon were tumultuous for the NBFC-MFI sector with ground level implications that affected the smooth flow of the business seen over the previous years. Post the discontinuation of High Value Currency Notes (HCVNs) with effect from midnight of 8th November, the industry was thrown out of gear initially. This was to be expected in a sector which is 99% cash intensive and has a unique doorstep delivery model specifically for the unbanked and underbanked. MFIN identified the risk factorsand designed and developed strategies &policies to measure and mitigate risks that had severely impacted microfinance industry.

The first effort was reaching out to the concerned Ministries and RBI to allow the NBFC-MFI sector to collect old notes for a specified period with a suitable cap per borrower as a sizeable part of the borrower base was from peri urban or rural India where access to banking was low or unavailable.

Issues further aggravated with promises of loan waivers to borrowers. Despite this, a collection of 80%-85% during the period was demonstrative of the value micro credit had in the lives of borrowers. They were aware of the importance of strong credit histories and made their effort to repay the instalments.

MFIN engaged with State Governments at both the Ministerial level as well as the Bureaucracy, the RBI and extensive engagement with the press to quell the surge of disinformation regarding microfinance practices.


Like most industries that were impacted, Microfinance was no exception to COVID-19. Economic activities were stalled, and India went into the world’s biggest lockdown. Microlenders faced disruptions as their operations is highly field intensive, including home visits, conducting centre meetings and physical collection of cash.

MFIN had to step up its work immediately after the lockdown as Members needed the support with immediate interventions. Simultaneously representations were made to the RBI, Regulatory Authorities, Government, and other stakeholders to seek their support in addressing key industry issues. MFIN took several steps to address the emerging challenges and mitigate the adverse impacts.

MFIs swiftly shifted to digital modes to maintain client contact. As per RBI policy, the MFIs gave moratorium to clients, but faced an adverse situation as there was no moratorium on their repayments to lenders. This led to liquidity stress. MFIN took up the issue with the RBI and their response was swift. Policy support came to the rescue of the sector with the RBI announcing Targeted Longer-Term Refinancing Operations (TLTRO 2.0) for NBFCs and MFIs along with refinance facilities through NABARD and SIDBI for on-lending/refinancing. As despite these measures, the smaller MFIs remained starved of funds, MFIN actively took up the idea of providing guarantee for banks’ wholesale lending to MFIs with the Department of Financial Services. The Credit Guarantee Scheme was launched in July 2021, benefitting 38 MFIN Member NBFC-MFIs. It provided much needed relief and ensured that the credit flow to clients did not stop.

With MFIN’s proactive intervention and the support of the policy maker and the Government, the sector’s recovery was much faster.

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