Microfinance institutions in Karnataka show 10% portfolio growth
MFI) in Karnataka have a loan portfolio of Rs 46,000 crore as on March 2023, showing more than 10% in year-on-year growth, according to an impact report by the Association of Karnataka Microfinance Institutions (AKMi). The association released a sector report for fiscal year 2022-23 in the Microfinance Karnataka Summit – 2023 on Tuesday.
The study, which claimed to cover 16,000 customers in seven districts across the state, said that 89% of the surveyed customers preferred MFIs over other lenders and 90% of the loans were for income-generating purposes, like starting a small business.
On the other hand, the study revealed that product structures were unsustainable in case of micro-loans, as businesses which used them did not necessarily generate a regular monthly income.
It also found that innovations in business, which may help reduce costs, are limited to technology adaptations.
Former chief general manager of NABARD N Srinivasan, who put together the survey report, said there is a need to innovate, diversify products and reduce interest rates to the extent feasible. “Government and regulator support would be vital for lower cost of funds and subsidization of microfinance loans,” he said.
MFIs, he added, bring the most vulnerable people into the mainstream of the Indian economy. “Microfinance sector has the potential to serve 10% to 15% of the population living in India’s rural areas and is likely to build infrastructures to serve up to 30% of the populations in the future,” he said.
Microfinance Institutions Network (MFIN) chairman Uday Kumar Hebbar said the microfinance network in Karnataka is serving close to 10 million women clients including self-help groups (SHG).
