Indian Microfinance Sector: 2,100% Growth in 12 Years
Over the past 12 years, India’s microfinance sector has experienced an extraordinary expansion, with its business increasing from ₹17,264 crore in March 2012 to ₹3.93 lakh crore by November 2024—a growth of over 2,100%. This significant rise underscores the sector’s pivotal role in promoting financial inclusion and supporting economic development across the nation.
Nationwide Expansion: Microfinance institutions (MFIs) now operate in 723 districts, including 111 aspirational districts across 28 states and 8 Union Territories, serving nearly 8 crore borrowers.
Economic Impact: The sector contributes 2.03% to India’s gross value added (GVA) and supports approximately 1.3 crore jobs, highlighting its substantial role in the economy.
Challenges and Recommendations: Despite this growth, MFIs face challenges such as difficulties in raising low-cost long-term funds and portfolio quality concerns. Industry representatives have called for credit guarantee schemes tailored to MFIs, creation of special funds for those operating in the North East, and relaxation of qualifying asset norms to diversify risk.
Digital Transformation: Emphasis is placed on enhancing digital infrastructure, including digital loan disbursements and repayments, to improve efficiency and reach.
The Indian microfinance sector’s evolution from a modest ₹17,264 crore in 2012 to ₹3.93 lakh crore in 2024 reflects its critical role in financial inclusion and economic empowerment. Addressing current challenges and embracing digital advancements will be essential for sustaining this growth trajectory.
| Why in News | Key Points |
|---|---|
| Indian Microfinance Sector Growth | – Over 2,100% growth in the last 12 years (from ₹17,264 crore in 2012 to ₹3.93 lakh crore in 2024). |
| Contribution to GVA | – Contributes 2.03% to India’s gross value added (GVA). |
| Borrowers & Geographic Reach | – Serves approximately 8 crore borrowers across 723 districts, including 111 aspirational districts. |
| Job Support | – Supports about 1.3 crore jobs. |
| Industry Challenges | – Challenges include difficulties in raising low-cost long-term funds and portfolio quality concerns. |
| Sector Recommendations | – Calls for credit guarantee schemes for MFIs and relaxation of qualifying asset norms. |
| Digital Transformation | – Emphasis on digital loan disbursements and repayments to improve efficiency. |
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