The Microfinance Review

Deepmala Ghosh ¹

Affiliations
1 BIRD, Lucknow, IN

Abstract

The Micro Enterprises (ME) sector employ approximately 10.76 crore (97%) of the 11.10 crore people engaged in the Micro, Small and Medium Enterprises sector. Given its potential for employment generation and providing livelihood to millions of artisans service providers and small traders, there has been a slew of policy initiatives and enabling provisions by the Government and financial institutions to foster their growth which include setting up specialised institutions like Micro Units Development and Refinance Agency (MUDRA) Bank and credit guarantee funds. It led to spurt in financing them through Pradhan Mantri MUDRA Yojana and Stand-up India. However, the sector faces challenges on many counts including access to information, markets, technology and credit from formal sources. It has specific life cycle needs and characteristics which call for niche products and services. This article examines the enabling environment, state of the sector, the assessed credit gap, life cycle needs of the MEs, factors impeding growth, causes of non-performing assets and suggest measures to overcome them.

Keywords

SIDBI, MUDRA, CGTMSE, NABARD, RBI, PMMY, UAM.

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Shankar A. Pande ¹, Deepmala Ghosh ²

Affiliations
1 Director, BIRD, Lucknow, IN
2 Deputy General Manager and Faculty Member, BIRD, Lucknow, IN

Abstract

The pandemic and the resultant lockdown unleashed a world-wide crisis in terms of disruption in supply chains and economic activities, life and job losses, jeopardising small enterprises, creating liquidity crisis and asset — liability mismatch in the financial sector, weakening of demand and an overall slump in the economies. Governments and central banks world over responded to this with emergency measures to protect lives and livelihoods. The initiatives ranged from injecting liquidity into the system to cash transfers and digital outreach. This article explores the response of the Government of India, Reserve Bank of India, National Bank for Agriculture and Rural Development and state governments and its impact on microfinance sector, financial inclusion and rural livelihoods.

Keywords

Microfinance Sector, Financial Inclusion.

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Deepmala Ghosh ¹

Affiliations
1 Deputy General Manager and Faculty Member BIRD, Lucknow, Uttar Pradesh, IN

Abstract

The microfinance sector is characterised by small loans, low- income clientele, innovative practices and a high touch business model. However, black swan events like the COVID– 19 pandemic had led to the deterioration in portfolio quality, inability to service clients and put up with income losses of clients due to frequent lockdowns and the disruptions in operations. This article explores how the sector can leverage technology to ensure business continuity in such extenuating circumstances, service clients without losing their unique selling proposition of a client-centric approach and how the Fintechs are providing innovative products to differentiated clients.

Keywords

Microfinance, Non-profit Organisations

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