Bengaluru: Microfinance Industry Network (MFIN), a Self-Regulatory Organisation (SRO) recognised by RBI and the Association of Karnataka Microfinance Institutions (AKMI), jointly organised a press meet in Bengaluru to highlight the critical role of microfinance institutions in improving the lives of the underprivileged sections of the society in the state. Rama Kamaraju, Head – State Initiatives at MFIN along with Venkatesh N, Managing Director, IIFL Samasta and Anand Rao, JMD, Chaitanya India Fin Credit underlined the immense contribution of microcredit loans in fostering financial inclusivity and empowerment in both rural and urban Karnataka.

Microfinance has emerged as an impactful tool in ensuring that credit and essential financial services reach the remotest corners of India. In Karnataka, microfinance institutions have transformed the lives of more than 1 crore and currently serve over 63 lakh individuals (unique borrowers) through microcredit loans. The total gross loan portfolio of microfinance institutions in the state has surged from Rs 16,946 crore (Mar-2019) to an impressive Rs 42,265 crore in the last financial year (Mar-24), empowering, women, families, and communities to thrive.

Microfinance customers in Karnataka have shown an eagerness to explore interventions to ensure family well-being and start new businesses. They have shown similar alacrity in learning about good credit discipline, regular repayment of loans and respect for lending institutions' advice to borrow within their capacities.

The Head, State Initiatives, MFIN, Rama Kamaraju stated that “Microfinance operations of RBI regulated entities in the state of Karnataka have traversed a smooth path all along even at the time of demonetisation and Covid pandemic. Women borrowers from the state have exhibited extraordinary resilience and maintained excellent credit discipline over the years. He mentioned in unequivocal terms that the loans offered by the regulated MFIs have helped changed the narrative from “women development” to “women led development”. Microfinance has received extensive recognition as a strategy for socio-economic empowerment of women, earning them a well-deserved and rightful role in decision making in the family. He further added that Microfinance, dovetailed with the efficient Govt schemes on the ground, has managed to alleviate them out of the poverty trap setting them on an upwards trajectory of sustainable livelihood.

Kamaraju stated that on the other hand, regulated MFIs (NBFC-MFIs, Banks, Small Finance Banks) operate under very stringent regulations & oversight both from RBI and MFIN SRO. All these Regulated Entities are governed by the RBI directions on microfinance and Fair Practices code of the RBI. In addition, MFIN has established robust infrastructure and mechanisms to ensure that member institutions operate responsibly, adhering to regulatory standards, and avoiding wrongful practices. To give an example, currently MFIN is undertaking 2,131 financial literacy workshops under the RBI’s Depositors Education and Awareness (DEA) project initiative across the country, over the next 2 years. MFIN also operates a toll free 24*7 Client grievance redressal system in Vernacular language.

He pointed out that the recent reports of protests against MFIs are from a small section of the ill-informed individuals with the aid of unauthorised entities, indulging in unscrupulous rumour-mongering. We wish to assure you all that we follow a very well calibrated advisory approach and have our eye on the ball at all times. He urged the media to carry out a thorough fact check of any issues being reported on the sector so that the MF ecosystem is shielded from any untoward rumours. Having said t…