The role of Microfinance has been critical in driving financial inclusion in India. The microfinance lenders have been providing easy access to formal credit to customers particularly in semi-urban and rural geographies through a branch, business correspondent model. Microfinance lenders have transformed themselves to deliver beyond lending to the clients – they have leveraged the relationship with clients and the community to offer insurance, savings, services around health, environment, education & financial literacy, water, energy and a host of other relevant services. We are seeing opportunities for MFIs to grow through credit plus products, leveraging data & analytics to drive efficiencies and fostering partnerships to cater to customers needs at an optimal cost.

At the same time, the sector is also being followed closely by the regulator to ensure customer interests are protected. This report highlights the opportunities and challenges faced by the microfinance lenders and suggests key initiatives to be undertaken to sustainably continue being the torch bearers of financial inclusion in the country.