MFIN and CESS conclude the Microfinance and Financial Empowerment Colloquium
Microfinance Focus, August 21, 2012:Microfinance Institutions Network (MFIN) and Centre for Economic and Social Studies (CESS) organized the Colloquium on Microfinance and Financial Empowerment today. The conference was conceptualized with the intent to bring together a wide spectrum of financial inclusion and microfinance sector stakeholders to discuss and debate current and emerging issues in microfinance.
Welcoming the delegates to the colloquium, Dr. Manoj Panda, Director, CESS, commenced the event by highlighting the pertinent role that microfinance can play in enabling financial inclusion. He said, “Empowerment of the poor can only be made possible through provision of financial services. For this, a viable business model needs to be established for scalable and sustainable operations and a strong regulatory framework needs to be implemented.”
Speaking on the occasion, Mr. Alok Prasad, CEO, MFIN, said, “Microfinance was one of the largest sources of formal credit in Andhra Pradesh for those at the bottom of the pyramid. However, the regulations introduced by the State Government resulted in stoppage of all lending by NBFC-MFIs in the past 18 months. As a result, a credit gap to the tune of over Rs. 5,000 crores has emerged and the un-banked and underserved sections of the society have resorted to moneylenders for funds.
It is imperative that a central microfinance law is instituted to ensure that appropriate legal framework is put in place to achieve the National Financial Inclusion agenda of the Government of India. The RBI has made considerable efforts towards addressing the issues of microfinance companies including the Andhra portfolios. However, given the nature of the Andhra situation the issue remains alive. For dealing with it systemically, the Andhra Pradesh government has to be brought into the equation. We hope that the discussion at the colloquium today will contribute to achieving this objective.”
The Colloquium on Microfinance and Financial Empowerment consisted of panel discussions around microfinance as a facilitator for financial inclusion and role of microfinance institutions towards enabling those at the bottom of the pyramid, the impact of microfinance on the economy and the way forward. The speakers included key stakeholders of the industry including Mr. Sridhar S, Former Chairman – National Housing Bank and Central Bank of India, Prof. R. Radhakrishna, Chairman – National Statistical Commission, Prof. P. Purushotham – NIRD, Ms. Jayshree Venkatesan, CEO – IFMR Mezzanine Finance, Ms. Veena Mankar, MD – Swadhaar FinServe, Mr. Ajaykumar Tannirkulam, Executive Director, CMF, Prof. S. Galab, CESS, Hyderabad, Ms. Shamika Ravi, Assistant Professor of Economics – The Indian School of Business & Fellow – Microfinance Management Institute, Mr. Sanjay Sinha, MD, M-CRIL, among others.
The Colloquium discussed the role and impact of Microfinance on its clients and the importance of product design and diversification in ensuring its efficacy. The panelists agreed that NBFC-MFIs have established a commercially viable and sustainable business model for delivery of financial services to the economically underserved/un-served segments of the population. Hence, there is a need to establish the regulatory and operational framework for allowing MFIs to provide the full range of financial services to this segment of the population.
The ‘Microfinance Institutions (Development and Regulation) Bill 2012’ not only provides an overarching regulatory framework for the entire sector, but also has a developmental orientation. As such, enactment of the Bill is essential so that a full framework of regulations is put in place, at the earliest. Microfinance is a proven tool to empower the economically weak. Hence, there is a critical need to build consensus on the way forward for the industry so that we can establish systems and processes that will promote the healthy development of the industry; catalyze the microfinance sector; and, allow MFIs to better serve the national agenda of financial inclusion and inclusive growth.
