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Microcredit institutions to double as rural banks ……Mini Joseph Tejaswi
Bangalore: The country’s micro credit landscape is likely to witness rapid growth with microfinance institutions (MFIs) increasingly expanding their service portfolio by adding insurance products, savings-linked schemes and credit facilities for rural dwellers and small entrepreneurs. That means a large number of MFIs will now double as full-fledged rural banks.
This is also expected to lead to a quantum jump in the micro-credit customer base from 70 million to over 500 million in the next couple of years, say industry experts.
Mary Ellen Iskenderian, CEO of Women’s World Banking (WWB), a microfinance apex body said, “Microfinancing is going to be remarkably buoyant in India. The country has a potential microfinance population of 600 million. MFIs will not be restricted to group loans, they will actively get into bigger and larger roles, almost on par with banks,” she said.
Currently, the average loan size in India is $42, compared to $955 globally. “India has the potential to get into the $500 bracket and beyond within a couple of years,” said Iskenderian.
Suresh Krishna, MD of Grameen Financial Services, said MFIs will expand their offerings by tailoring needbased products and services for clients. The current loan products will grow to be more flexible, and financial services will include remittance, insurance, pensions and other such products and services. Technology is expected to play a significant role in changing the way MFIs deliver services. Mobile banking and electronic cash will make transactions easier.
“MFIs will function as a channel that will link commercial markets to poor households. At the rate at which the sector is currently growing, it is only a matter of time before microfinance penetrates every corner of India,” said Krishna.
Small Money For Big Gains
* Microfinance institutions are offering insurance products, savings-linked schemes and credit facilities to small entrepreneurs
* Micro-credit customer base in India is expected to swell from 70 million to 500 million in the next couple of years
* Average loan size in the country is $42, much below the global average of $995
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