Financial Inclusion White Paper - NCR

Major Challenge
Adressed
Affordability of
account:
Limitations Solution Roadmap
Dormant Account: Negligible
frequency of access in most cases
Absence of Linkages: Absence of
links with other financial services
Zero/negligible
balance required for
operating account Absence of Credit scores:
5.1.2 Microfinance/Microcredit
Absence of credit rating system for
further financial services
Microbanking, financial
literacy campaigns
Self-service solutions,
Business Correspondent
(BC) Models
There are about 750 MFIs registered with the Reserve Bank of India (RBI),
serving a client base of 10.5 million of which, ninety percent of this client base is
served by the top 40 MFIs. This includes SKS Micro finance Pvt. ltd, Bandhan,
Microcredit foundation of India, Saadhan Microfin society and Grameen koota
amongst others.
Microcredit creates an opportunity for a source of income for the lending institute
and for the borrower a prospect for alleviation of his poor financial situation.
Microcredit is the basis for the formation of various non-banking financial
companies (NBFCs) including Bangladesh’s oft-cited Grameen Bank and a tool for
the permanent eradication of financial exclusion. Microfinance institutions operate
in small volumes and have deeper penetration than banks due to local networks
knowledge and presence, adoption of better delivery models and optimum
technology usage. Due to the small enterprise size, flexibility in their operations
and a profit-oriented approach, MFIs have shown better results than banks in
reaching out to the financially underserved population and providing access to
financial services.
Major Challenge
Adressed
Affordability of Loan:
Microfinance and
microcredit
Limitations Solution Roadmap
Absence of Credit
history: Absence/Improper
repayment record
Cost of Service: Micro size
of transaction
Self-service Solutions,
Joint Liability Groups (JLG)
and Self Help Groups
(SHG)
Shared service, Selfservice
solutions, BC
model
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