Page 35 - Banking Finance December 2022
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ARTICLE











          MICRO FINANCE



          IN INDIA-




          EMERGING




          CHALLENGES














                                                              inclusion by considering three dimensions namely, access,
          Introduction:
                                                              usage and quality. While the micro finance sector grew over
          Microfinance in India can be traced back to Self Help Group
                                                              the years, certain inadequacies and failures were observed
          - Bank Linkage Programme (SBLP) which was started as a
                                                              in micro finance. For instance, Andhra Pradesh micro finance
          pilot project in 1992 by National Bank for Agricultural and
                                                              crisis in 2010 was attributed to  lack of due diligence in
          Rural Development (NABARD). Later, the SBLP proved to
                                                              lending  and  unethical  recovery  practices.  And,  over-
          be  successful for building  financial  and  technological
                                                              indebtedness  of  the  borrowers  led  to  difficulties  in
          capabilities in rural India In the 1990s, microfinance gained
                                                              repayments and forced recoveries by some of the MFIs. In
          prominence when Reserve Bank of India (RBI) recognized it
                                                              the wake of the growing number of irregularities in micro
          as a new paradigm with immense potential and supportive
                                                              finance, in 2021, RBI introduced a comprehensive regulatory
          of its growth.
                                                              framework for NBFC-MFIs.
          In  2015,  a  vision document  for  financial inclusion was
                                                              Recent Regulatory Framework:
          prepared by RBI. Thereafter in 2020, RBI came out with
          National Strategy for Financial Inclusion (NSFI)  for India  The present Framework for Regulation of  Microfinance
          2019-2024, which suggests the measurement of financial  which mandates all lenders to have a board approved policy
                                                              on all-inclusive interest rate charged to the micro finance
                                                              borrowers and disclose minimum, maximum, and average
                              About the author                interest rates charged by them. It does not permit more
                                                              than two NBFC-MFIs to lend to the same borrower and,
                       Dr. V. S. Kaveri                       there is also a ceiling on amount to be lent  to a borrower.
                       Former Faculty                         And, the payment of interest and repayment of principal for
                       NIBM, Pune
                                                              all outstanding loans of the household at any point of time

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