Mumbai : Small Industry Development Bank of India (SIDBI) Chairman Shri Sushil Muhnot elucidated how SIDBI has attended to the agenda of inclusive growth by strengthening the support framework which reaches out to bottom of pyramid. SIDBI has been a pioneer of   MFI based Micro Finance model and over the years has nurtured 140 plus MFIs.

Participating in a seminar on “Sustainable Financial Inclusion: Need for Governance, Regulation and Capacity Building” organized by FICCI here, Shri Muhnot said, “MFIs and Self-help Groups(SHGs) should focus on bringing about a customer-centric business model  to develop products to suit the needs of their customers and ensure its application in a cost-effective manner”.

Mr Muhnot spoke on responsible finance agenda and apprised that over past few years when market corrections had been happening in MF domain, SIDBI, in association with stakeholders of the domain, again took lead in the direction of responsible agenda which include promoting transparency through “Lenders’ Forum” platform, launch of  India Microfinance Platform through World banks help, Institute and validate the code of conduct assessment thus attending to governance aspects, facilitate the Credit Bureau framework to avoid multiple lending and encourage sharing of information among MFIs

While sharing the lessons learnt, Mr Muhnot emphasized that both credit and non credit needs of  MFIs has all along been the need and in future these would continue.  The key lessons have been over indebtedness (which has been attended through regulatory measures of RBI as also attending to information needs such as credit history), getting adequate returns on investment ( covering the cost of operation and having margin is important for sustainability) & bridging equity gaps (to enable scale up is a must).

While answering to audience expectations, he mentioned that main challenges are of aligning the interplay of different boxes of stakeholders, enhancing revenue streams as also cutting down operational costs, instilling efficiency, promoting thrift and savings model etc.  He mentioned on the likelihood of only sustainable MFIs continuing and  tier II and III MFIs who do not find themselves viable, looking at other viable options like becoming banking correspondents (taking steps to penetrate among unserved population), catering to  insurance needs etc. He emphasized that industry stakeholders need to come forward and prioritize their capacity building requirements (structure wise, stage wise growth) such that standardized and customized approach to attend these can be brought about.

Earlier, in his address, Reserve Bank of India (RBI) Deputy Governor Shri Anand Sinha said, a strong internal control under the guidance of Self Regulatory Organization (SRO) is necessary to scale-up growth of Micro Finance Institutions. The success of the MFIs would henceforth depend on the application of technology which can  bring down their cost of operation and make them sustainable, he added

  Source : Sachin Murdeshwar