Page 33 - Banking Finance July 2021

ARTICLE

channels such as universal banks, small finance banks, micro
finance institutions, BCs, etc.

Therefore, as a country that is determined to achieve
universal financial inclusion at affordable cost, this is a
defining moment, and we should seize the opportunity to
be marked specifically among others in the world. A co-
origination model, which enables the scheduled commercial
banks (excluding Regional Rural Banks and Small Finance
Banks) to co-originate loans with the non-deposit taking
systemically important NBFCs has also been rolled out for
credit delivery to the priority sector- booster for lending to
micro enterprises, small and marginal farmers, Self Help
Groups (SHGs), etc.

Reserve Bank of India has also opined to all SCBs (excluding (NSFI) 2019-24 has been framed by RBI. It gives the vision
Regional Rural Banks and Small Finance Banks) that credit to make financial services available, accessible, and
by them to registered NBFCs(other than MFIs) for on-lending affordable to all citizens in a safe and transparent manner
will be classified as priority sector subject to certain to support inclusive and resilient multi-stakeholder led
conditions. RBI has adopted a planned and structured growth.
approach to address the issues of financial inclusion by
focusing both the supply and demand side. The potential of microfinance is immense and will ease the
track to achieve the objectives of financial inclusion. A major
With the growing formalization of financial services, focus demographic change is taking place in our country with a
is on enhancing capabilities so that individuals in the low huge and growing working population. There is a big chunk
income groups are in a position to not merely avail the aspiring to grow into the middle class with the support of
offered services, but are also capable of demanding institutional credit. Therefore, microfinance can play a big
preferred products and services suitable to their needs / role in building the economy towards uphill.
choices. MUDRA has also set an example to lift many
beneficiaries out of the poverty although it is not only the In today's world, technology is framing the future of finance.
financial assistance but banks should focus to lower down All the key players are harnessing technology to provide an
the growing bad loans. efficient experience to the end user. In the Indian scenario,
improving the accessibility of financial platforms using
Microfinance Institutions are adding to the growth of the FinTech is the key to grow. Therefore, suitable financial
economy and also the counts are expanding into newer products that caters to specific needs of the financially
territories for reducing their concentration risk. According excluded population, and provides digital on-boarding, is vital
to The Bharat Microfinance Report 2019 prepared by Sa- in achieving the objective of financial inclusion. Synergy
Dhan, MFIs operate in 29 States, 5 Union Territories and between the mainstream financial entities and other players
570 districts in India. Tailored products for providing credit like MFIs, FinTech etc will lead to the goal of financial
to those without a credit score, entrepreneurial and inclusion and each will play a complementary role in
consumption credit, handholding, financial literacy, social reaching the heights.
occasion credits and insurance (life and non-life), are all
waiting to be tapped in scale and size. Therefore, banks and NBFCs need to explore the possibility
of establishing business collaboration among themselves, and
Limited forays have been made but are yet to achieve their with FinTech firms as it could be pivotal in accelerating the
full potential. The National Strategy for Financial Inclusion agenda of financial inclusion through innovation. In addition

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