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August 14, 2023

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Introduction

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In the world of measuring success in terms of money, microfinance is a service that makes financial aid such as small loans and insurance available to individuals who are denied financial support from conventional banking services. The main objective of a microfinance service is to empower individuals to break the shackles of poverty and lead a confident and satisfying life in society. It also supports small businesses and ambitious individuals to action their ideas and achieve their business goals.

Social Impacts Created by Microfinance

Measuring success is not only in terms of finance but it is beyond the scope. Although the focus of micro finances is to cater to financial needs, the social and macro-economic impacts are high. Quantifying the impacts of microfinance programs can be done by the social and developmental outcomes. Some of the social impacts created by microfinance are as follows:

1. Reduction of Poverty:

The primary goal of microfinance is to reduce poverty. If you are wondering how Microfinance can help you alleviate poverty here is the answer. Microfinance provides financial aid that helps people balance their finances. 

To measure this success, there has to be a systematic way to evaluate the change in income. One way to do so is to set a benchmark to assess the overall well-being of the borrowers from there on. With constant evaluation and support poverty alleviation is possible.  

2. Provides Employment and Encourage Entrepreneurship:

Microfinance is very instrumental in bringing out budding entrepreneurs in society. All the necessary capital required will be provided by microfinance to start your new, small business or organization. Underprivileged people will not be propelled to give up their dream as money could be a constraint. 

Success is not only concerning the money but the job requirement it has created, and how it has contributed to the economy. The impact of microfinance can be tracked with the record of employment created and the number of budding entrepreneurs in the country.

3. Empowering Women:

Microfinance has not only been providing financial stability but has a positive impact on women’s empowerment. When women are independent, their decision-making ability increases and can acquire control over finances effortlessly. 

Measuring success with a change in women’s social status is what contributes to society positively. And microfinance has been helping build women’s status and stature high.

4. Improved Health and Education:

When you are financially stable, you will have access to improved health and education. Being financially stable is a key to better access to healthcare and education. With appropriate financial stability, people can focus more on health and education without compromising their life.

We can measure social impact here by tracking changes in health outcomes of the borrowers and education enrolment and literacy level after seeking help from microfinance.

5. Strength to Sustain Shocks:

Who would not want to be resilient to financial shocks? Microfinance can enhance borrowers’ resilience to economic shocks and disasters. It helps the debtors to get back on their feet without falling back to the poverty line.

Microfinance not only provides financial support but also gives the self-confidence to stand against economic stability. Financially underprivileged people will gain the confidence to deal with their daily hustle without giving up on their life. 

6. Client Satisfaction and Well-being:

Microfinance does not stop after lending money, but it keeps monitoring the well-being of its borrowers to avoid any undesirable outcome. 

Monitoring the well-being of the clients is crucial to understanding the client’s well-being. A regular survey has to be conducted in this direction to evaluate the effectiveness of the service.

7. Long-Term Sustainability:

Long-term sustainability indicates whether the borrowers can lead a happy and meaningful life even after the repayment. The main objective of microfinance is achieved only when the borrowers can achieve their economic goals.

Microfinance keeps track of their client’s financial aid so that the repayment should not burden the borrower’s lifestyle. The main agenda is to make life better and not worse. Therefore, they verify every aspect of borrowers’ records to help them lead a normal life even after the repayment of the loan.

8. Social Return on Investment (SROI):

All the above-discussed points can be evaluated with a practical methodology called social return on investment. It collectively considers both financial and social outcomes to measure the effectiveness.

Solely relying on the financial evaluation would not reveal the effectiveness of the financial service, as they do not show the social outcome after consuming the financial service.  However, a mix of qualitative and quantitative evaluation can show how the financial service has impacted the lives of the borrowers.

 Conclusion:

In the period where most finance sectors focus on ROI, Microfinance enhances helping underprivileged ventures. Therefore, the impact of microfinance is not only measured in terms of money but the social awareness and improvement formed in society. With the above-mentioned facts and checks, it becomes clear that microfinance has surely built a positive impact on society’s well-being.

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5th July, 2023

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Chaitanya India Fin Credit Pvt. Ltd. on 5th July, 2023 added another feather to its cap! The organization received the Gold Level client protection certification, from M-CRIL inclusive microeconomics. Standing true to its core values and striving for excellence, Chaitanya India Fin Credit Pvt. Ltd lays its foundation on its core values which among others include –discipline, respect, fairness and transparency.  M-CRIL’s recognition as a national institution with international standing promoted by Cerise+SPTF makes this certification even more significant for the company. Cerise+SPTF is a joint venture of two leading global organizations dedicated to social and environmental performance management—a way of doing business that puts people and the planet at the center of every decision.

This achievement is a testament to Chaitanya India Fin Credit Pvt. Ltd.’s commitment to client protection and ethical practices in the microfinance industry.

To Read More: https://www.linkedin.com/posts/m-cril_clientprotection-financialinclusion-responsiblefinance-activity-7084091577056337921-zJFI?utm_source=share&utm_medium=member_desktop

https://cerise-sptf.org/who-is-on-the-pathway/

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July 01, 2023

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Introduction

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When it comes to financial needs and services, it is important to know about Microfinance. Microfinance Companies play a key role in providing basic financial services to underserved and unbanked populations. These microfinance institutions empower people who are below the poverty line and improve their livelihood. 

 Non-Banking Financial Companies are among these institutions that commit themselves to ensuring responsible lending practices. Responsible lending practices are nothing but practices to ensure affordability, and transparency in terms & conditions and provide all sorts of support to a borrower if they experience any difficulties during repayment.

In this blog, we discuss how NBFC-MFI is maintaining a balance between financial incorporation and responsible lending.

Understanding NBFC-MFIs and Microfinance

NBFC-MFIs are financial institutions that support poor and vulnerable sections of society. They offer small loans, savings, and other financial products that could be of help to the people. Microfinance on the other hand benefits people who do not have access to traditional banking services. These services help small vendors who wish to expand their business using microloans or savings products to promote financial resilience.

 The Positive Impact of NBFC MFI on Responsible Lending

 NBFC-MFIs (Non-Banking Financial Company-Microfinance Institutions) play a crucial role in promoting responsible lending practices. 

Here are some of the benefits of NBFC-MFIs in responsible lending:

Easy Access to Financial Services

NBFC-MFIs enable easy access to finances by providing microfinance services to individuals and communities who have limited or no access to formal banking channels. The main goal of NBFC-MFIs is to offer small loans, savings facilities, and other financial products, to empower marginalized populations to participate in the formal financial system, fostering economic growth and poverty alleviation.

Focuses on Underprivileged

The main agenda of NBFC-MFIs is to focus on people who have low earnings, belong to rural backgrounds, and are women. Using the Responsible lending process, these factors are addressed and most vulnerable groups will be able to receive accessible financial services based on their need. 

Client-Centric Approach: 

NBFC-MFIs place utmost importance on prioritizing the needs of their clients in their lending operations. They dedicate substantial resources to comprehend the financial needs, capabilities, and aspirations of borrowers. Through comprehensive due diligence, evaluating repayment capabilities, and tailoring loan terms to align with borrowers’ income-generating activities, NBFC-MFIs ensure responsible lending that effectively fulfills the borrowers’ financial objectives.

Credit Risk Mitigation

No finances take a risk with their funding. NBFC-MFIs make comprehensive credit assessments before lending. They consider various factors to invest in it. Income stability, cash flow, collateral availability, and credit history play a key role to determine loan eligibility and repayment capacity. 

Enhance Financial Education and Knowledge

NBFC-MFIs not only provide credits but also actively participate in financial literacy programs. Their initiatives aim at enhancing the financial knowledge and skills of borrowers. Through these efforts, NBFC-MFIs empower borrowers by educating them about effective financial management, savings strategies, and responsible borrowing practices. By equipping borrowers with this valuable financial knowledge, NBFC-MFIs enable them to make informed decisions, steer clear of excessive debt, and enhance their overall financial well-being.

Transparent and Fair Practices:

Responsible lending by NBFC-MFIs is characterized by transparent and fair practices. They make sure the borrowers have enough information regarding the loan terms and conditions, interest rates, fees, and penalties. Through this practice, borrowers will make a fair judgment of loan options and make informed choices, promoting a fair lending environment.

Emphasize Social Imprint

NBFC-MFIs always emphasize social impact and financial sustainability. They make sure to concentrate their efforts on sectors like agriculture, small businesses, and rural development as well. These sectors play a vital role in generating employment and reducing poverty. Through responsible financing to these sectors, NBFC-MFIs actively contribute to fostering inclusive economic growth, enhancing livelihoods, and promoting overall social development.

Data-Related Impact on Responsible Lending

The effective use of data by NBFC-MFIs has significantly impacted responsible lending practices in microfinance. Through data-driven lending, the lender considers all the data related to the borrower’s profile and associated risks.

Decrease in Default Rates: 

Data-driven risk assessment has led to more informed lending decisions, resulting in reduced default rates for NBFC-MFIs. That is, it reduced the loan rates that NBFC-MFIs had marked not paid by the borrowers’ missed payments for a longer period.

Improves Financial Inclusion:

With the help of digital technologies and with the help of data, NBFC-MFIs have expanded their outreach to remote areas. It has outreached its financial services to most underserved populations in society. 

 Improved Borrower Fortification

Having access to borrowers’ digital financial footprints assists NBFC-MFIs in identifying susceptible borrowers and providing appropriate assistance and support. NBFC-MFIs also help people by providing financial education, preventing them from falling into a debt trap.

Avoidance of Over-Indebtedness:

NBFC-MFIs can prevent multiple borrowing through the use of biometric identification. Also ensures borrowers’ debts remain manageable and reduces the risk of over-indebtedness.

Conclusion

 NBFC-MFIs have always made sure to promote responsible lending practices in microfinance. It not only enables financial inclusion but also plays a key role in safeguarding the interests of susceptible borrowers. Also, by data-driven approaches, NBFC-MFIs can also overcome the challenges that are faced by microfinance and reach more underserved populations. The data-driven approach not only helps in credit risk assessment, multiple borrowing, and lack of financial literacy but also empowers borrower’s protection. Therefore, it can clearly be seen that NBFC-MFI ensures responsible lending practices in microfinance.

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May 26, 2023

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Introduction

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Microfinance, a financial service that provides small loans and other financial services to low-income individuals and communities, has gained significant attention in recent years. Originating from the idea that access to credit can empower individuals and alleviate poverty, microfinance institutions have emerged as powerful catalysts for economic development.

This article explores the impact of microfinance, highlighting how small loans can make a big difference in the lives of the underserved population.

Economic Empowerment:

Microfinance plays a crucial role in empowering individuals to break free from the cycle of poverty. By providing small loans, microfinance institutions enable entrepreneurs and small business owners to start or expand their businesses. These loans can be used to purchase inventory, equipment, or raw materials, thus increasing production and income-generating opportunities. As a result, borrowers can improve their financial stability, support their families, and contribute to local economic growth.

a) Job Creation: A study conducted by the International Finance Corporation (IFC) revealed that microfinance loans have contributed to the creation of approximately 4.3 million jobs globally.

b) Income Generation: The Consultative Group to Assist the Poor (CGAP) reports that microfinance borrowers experience an average income increase of 20% within the first year of receiving a loan.

Poverty Alleviation:

One of the primary goals of microfinance is poverty alleviation. By granting access to credit, microfinance institutions enable individuals to invest in income-generating activities and improve their standard of living. Small loans allow borrowers to invest in education, healthcare, housing, and other basic needs. This, in turn, reduces their vulnerability to economic shocks and enhances their ability to withstand financial hardships. Moreover, as borrowers succeed in their entrepreneurial endeavors, they often create job opportunities for others in their communities, fostering economic growth and poverty reduction.

1. According to the Microfinance Barometer, microfinance institutions reached an estimated 140 million clients worldwide by the end of 2020, indicating the scale of its impact. The World Bank reported that microfinance programs successfully lifted approximately 100 million people out of poverty between 2005 and 2019.

Women Empowerment:

Microfinance has shown tremendous potential in empowering women and promoting gender equality. Women, who traditionally face more significant barriers in accessing financial services, can greatly benefit from microloans. As women become successful entrepreneurs, they gain financial independence, decision-making power, and a stronger voice within their households and communities. This empowerment contributes to breaking gender stereotypes, reducing gender disparities, and fostering inclusive development.

1. A study by the United Nations Capital Development Fund (UNCDF) found that women comprise approximately 80% of microfinance clients globally.
2. According to the Global Microscope on Financial Inclusion, gender-focused microfinance programs have contributed to closing the gender gap in financial inclusion, allowing women to become more active economic participants.

Social Impact:

Beyond the economic benefits, microfinance has a profound social impact on the communities it serves. By promoting financial inclusion, microfinance institutions extend banking services to populations that have traditionally been excluded from the formal financial sector. This, in turn, enhances financial literacy and promotes savings habits among borrowers. Moreover, microfinance programs often incorporate educational and capacity-building components, providing borrowers with valuable knowledge and skills in financial management, entrepreneurship, and other relevant areas. These programs create a ripple effect, as empowered individuals become agents of change within their communities, sharing their knowledge and inspiring others to pursue their dreams.

a) Education: According to a study conducted by the Consultative Group to Assist the Poor (CGAP), children from households with microfinance loans were 10% more likely to attend school regularly compared to those without access to microfinance.

b) Healthcare: The World Bank reports that microfinance has contributed to improved healthcare access, leading to a 13% increase in health-related expenditures among borrowers.

Repayment Rates and Sustainability:

Contrary to common misconceptions, microfinance has demonstrated remarkable repayment rates, often outperforming traditional lending institutions. The close-knit nature of microfinance programs, with borrowers forming solidarity groups or joining lending circles, creates social pressure and peer support, incentivizing timely loan repayments. Additionally, microfinance institutions employ careful screening and risk assessment techniques to ensure borrowers’ creditworthiness and minimize default rates. The sustainability of microfinance lies in the continuous recycling of loan funds, as repaid amounts are disbursed to new borrowers, fostering a self-replenishing cycle of economic empowerment.

a) According to the Microfinance Information Exchange (MIX), the average global repayment rate for microfinance loans in 2020 was approximately 96.3%.

b) A study published in the American Economic Journal found that borrowers who had access to microfinance were more likely to repay their loans compared to those without access, challenging the notion of higher default rates among low-income borrowers.

Let’s see how How Small Loans Can Make a Big Difference

The impact of small loans through microfinance programs cannot be underestimated. These seemingly modest financial resources have the power to make a big difference in the lives of individuals and communities. Small loans provide economic empowerment, allowing borrowers to start or expand businesses, increase income, and improve their financial stability. This, in turn, contributes to poverty alleviation and economic growth, creating a ripple effect within communities.

Microfinance also has a broader social impact, promoting financial inclusion and enhancing financial literacy among marginalized populations. By extending banking services to those excluded from the formal financial sector, microfinance programs cultivate savings habits, improve money management skills, and provide opportunities for personal and professional development.

Furthermore, the sustainability of microfinance lies in its repayment rates and the continuous recycling of loan funds. Through careful risk assessment and the formation of solidarity groups, microfinance institutions ensure high repayment rates, fostering a self-replenishing cycle of empowerment.

In essence, small loans through microfinance programs unlock the potential of individuals, offering a pathway out of poverty, creating opportunities for growth, and fostering social and economic progress. By addressing the specific needs of the underserved population, microfinance demonstrates that even small financial resources can have a profound and lasting impact on individuals, families, and communities, paving the way for a more inclusive and prosperous future.

Conclusion:

Microfinance has emerged as a powerful tool for poverty alleviation, economic empowerment, and social change. By providing small loans and financial services to the underserved population, microfinance institutions unlock the potential of individuals, particularly women, to create businesses, generate income, and improve their quality of life. Through its multifaceted impact, microfinance promotes financial inclusion, increases financial literacy, and fosters economic and social development. As microfinance continues to evolve and innovate, its potential for making a big difference in the lives of the marginalized and underserved remains significant, offering hope for a more inclusive and equitable future.

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April 25, 2023

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Introduction

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Poverty remains a significant economic issue in many developing countries, including India. Here agriculture is the main source of income for rural areas. However, despite employing 42.6% of the workforce in 2019, access to official financial institutions has been limited for these communities, leading to poor performance. To address this issue, Microfinance Institutions (MFIs) have emerged as a viable solution to raise household income and lower poverty levels among the poorest individuals. Despite some challenges, MFIs continue to focus on providing financial inclusion to the most vulnerable populations in India’s rural areas. While microfinance has proven effective in addressing poverty levels among vulnerable populations in India’s rural areas, ongoing efforts are needed to ensure its long-term sustainability and success. In this blog post, we will delve into the advantages and obstacles of microfinance in rural regions. 

What are Microfinance Institutions?

In the realm of financial inclusion in developing countries, microfinance has emerged as a potent tool, especially in rural areas where traditional banking services are scarce. Microfinance institutions (MFIs) provide small loans, savings, and insurance services to low-income individuals that assist them in starting small businesses and enhancing their standard of living. So, microfinance holds immense promise as a means of financial inclusion for rural communities. 

Benefits of Microfinance in Rural Areas

Microfinance has numerous benefits in rural areas that contribute to economic and social development:

• Economic Empowerment

One of the most significant advantages is economic empowerment, which allows low-income individuals to become entrepreneurs and manage their finances effectively. Microfinance institutions (MFIs) provide small loans that enable people to start or expand small businesses, generating income and employment opportunities in their communities. 

• Financial Inclusion

Another advantage of microfinance is financial inclusion, which provides financial services to those who are typically excluded from formal banking systems. By offering loans, savings, and insurance services, MFIs enable individuals to build assets and manage financial risks. This contributes significantly to poverty reduction efforts. 

• Women Empowerment

Microfinance has also been a powerful tool for women’s empowerment. In many societies, women are often excluded from economic activities and denied access to formal financial services. However, MFIs target women as their primary clients by providing them with the resources and support needed for starting small businesses and becoming financially independent. 

• Social Development

Moreover, microfinance promotes social development by increasing access to basic services such as education, health care, and clean water. With increased income from microloans provided by MFIs, individuals can afford these necessities while improving their standard of living. 

• Self-Sustainability

Finally, the self-sustainability model of MFIs ensures that microfinance remains a sustainable solution for financial inclusion in rural areas. These institutions generate enough revenue to cover operational costs while remaining financially viable in the long run. 

So, microfinance promotes self-sustainability among communities through an inclusive approach to finance management.

Challenges of Microfinance in Rural Areas

Microfinance is a crucial tool for providing financial services to low-income individuals in rural areas. While MFIs have shown a median return on equity of 8.1% in 2016, their financial viability remains a concern due to high operational expenditures resulting from costly credit risk management systems and small loan portfolios. Yet, overindebtedness among borrowers is a common problem faced by microfinance institutions. This is because borrowers frequently seek funds from various sources due to their constant need for money. Several challenges: 

• Lack of Infrastructure

One major challenge is the lack of basic infrastructure in many rural areas, such as roads, electricity, and internet connectivity. This poses a significant obstacle for microfinance institutions (MFIs) looking to reach remote areas and provide much-needed financial services. 

• Limited Financial Literacy

Another challenge is the limited financial literacy of many low-income individuals in rural areas. Without a solid understanding of loan terms and effective financial management skills, it can be difficult for borrowers to make informed decisions about borrowing money. MFIs must provide financial education to their clients to ensure they understand the risks and benefits of taking out loans. 

• High Operational Costs

In addition, operating in rural areas can be expensive due to high transportation costs and the lack of infrastructure. This presents a significant operational cost challenge for MFIs who must keep their costs low while still providing affordable services. 

• Limited Collateral

Furthermore, collateral requirements pose another obstacle for low-income individuals in rural areas who often lack assets that can be used as collateral. To mitigate this risk, MFIs must develop innovative solutions to assess creditworthiness without relying on traditional collateral-based lending. 

• Limited Regulatory Framework

Finally, regulatory oversight for microfinance institutions is still evolving in many countries which poses regulatory challenges for MFIs operating in these regions. Lack of oversight can also lead to unethical practices by some microfinance institutions that may harm borrowers’ interests. 

Overall, addressing these challenges will require innovative solutions from both MFIs and policymakers. And, we also need to make Microfinance programs succeed in helping those who need it most.

Conclusion

While microfinance has been successful in various aspects, it also confronts several challenges. Overcoming these above-mentioned challenges requires innovative solutions that involve collaboration between stakeholders so that microfinance can continue being a viable solution for promoting financial inclusion in rural areas without any setbacks or obstacles impeding its progress.

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March 20, 2023

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Introduction

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NBFC – Non-Banking Financial Companies include a loan company, an investment company, an asset finance company, and residuary non-banking companies.

In the past decade, NBFCs have made tremendous growth in the Indian financial sector. These may be in ways of disbursing loans, accepting deposits, leasing and even selling via hire purchase.

How can we forget the role of NBFC in promoting inclusive growth, mobilization of assets, financing for the long term, offering innovative products, and much more? That makes everyone think about how to have a flourishing career in the NBFC sector.

And choosing a career in the NBFC sector can’t be thought of as a wrong decision. Here are some reasons to support your decision and also the required knowledge and skill set to flourish in it.

Benefits of having a career in the NBFCs

Careers in NBFC MFI in India offer a good amount of benefits. Below are some of those.

• Good money and growth – Just explore the opportunities that come up on your way
• Balanced lifestyle – Stressful days are not meant for always!
• Job security – Maximum financial stability
• Diversity – Many roles with diversified specialization
• Scope for growth – A growing sector will always look for new talent and skills

Top career options in NBFC in Bangalore

Corporate finance

As the name suggests, this segment of NBFC deals with corporate clients. It includes activities and transactions related to raising capital to create, develop and acquire a business. 

Some of the important functions of this job profile include:

• Balancing risk and profitability
• Analyzing and forecasting economic trends
• Reviewing company reports and suggesting improvement measures
• Maximize the value of stock
• Managing funds and selecting investment portfolios
• Performing tasks related to financial risk management

A candidate for this domain is expected to have a knack for numbers and can apply this smartness while managing money, maximizing return on Investment, and introducing smart solutions for budgeting.

Investment Banking

Investment Bankers are professionals whose primary function is to help corporate, governments, and other entities in raising capital at the optimum cost.

In addition to this, investment bankers play a key role in structuring the acquisition, merger, and sale of assets that can garner the highest possible amount from the market.

Other job profiles of investment bankers can be grouped into equity participants, which range from trading and stock broking to asset management to asset research.

Investment Banking is very popular because of its hefty pay that can’t be matched by other fields. But as more power comes with greater responsibility, a person who loves to crunch big numbers, has good communication skills, and has the ability to work for long-long hours can be the best for this field.

Portfolio Management

Let’s make things simple. A portfolio is a collection of comprehensive financial investments done by an investor.

And your work in this field is to manage the overall investment mix of your client, institute, or an individual.

The ultimate goal of a portfolio manager is to earn the highest possible returns at minimal risks. Also it’s your job to make suggestions for investments, some of them are:

• Change in organizational policies for investment
• Decision on asset allocation
• How to choose investment avenues in the current scenario
• Take care of prevailing law and compliance
• Which market and instrument is the best
• Risk Management

The prime objective of this field’s professionals is to maximize return at optimal risk. They require mathematical prowess and logical reasoning abilities to play with numbers and present market scenarios.

He/she should have the ability to foresee market risks and recognize poor investment decisions before their occurrence.

Some of the positions available in this field can be:

1. Financial risk manager
2. Enterprise risk manager
3. Supply chain risk manager
4. Operational risk manager

Financial Planning

Everyone has a financial goal to achieve in a definite period. For example, economic freedom, paying off the entire debt, buying a home, building a corpse for retirement/marriage/education, capital for business, etc. 

So, the role of financial planners is to chalk out a strategy to achieve those financial goals.

Here are some specific areas in this field that one can explore to have a bright career and that will surely sound exciting to you!

• Wealth management
• Knowledge Processing Organisations
• Asset Management Companies
• Finance Journalism 
• Self-employment

Compliance and Internal Control

This field of finance is related to ensuring that the company or institution is carrying out its business as per applicable laws, ethical practices, and standards.

Here you can explore a role with the firm that is providing this function as a service or in the law and compliance department of an organization.

A person with a law and accounting degree can opt for a role in this field and make the firm compliance-ready with its logical reasoning, mathematical acumen, and business interest.

What are the skills required to make a flourishing career in NBFC MFI in India?

We get to know about the opportunities available in the NBFC sector in the first part of the blog, but the skills and knowledge needed to perform these better is yet more important than just knowing it. Let’s deep dive into that.

Education

This line of the finance sector demands the right degree for a particular role. For example, if you want to perform the role of a company secretary in the compliance department. 

Then you have to pass the company secretary course by The Institute of Company Secretaries of India.

Every role in NBFC demands a different set of education may be due to its legal nature of compliance.

Interpersonal skills

There is a popular myth that says, NBFC in Bangalore’s employees – are people of numbers. It’s not like that always.

Employees need to deal with clients, communicate clearly, and build strong relationships. And to do these, one should have good communication and interaction skills to garner better results.

Analytical skills

If you have tons of data but you can’t generate insights from it. Then, it’s of no use to gather the data and go through it.

An NBFC guy should enjoy drawing conclusions from the dataset by performing and applying various statistical and mathematical techniques.

Attention to details

A tiny mistake has the power to spoil the big picture and especially when it is related to money, its impact, you know – right?

So, a keen eye on financial matters while creating, developing, and representing them to the stakeholders in an easily understandable format different for each audience with 100% accuracy is the mastery here.

Business Intelligence

Keeping pace with the changing business environment is an essential quality NBFCs look for in a person.

Because NBFCs like Chaitnya, lend loans to low-income families and individuals. That’s why, the NBFC representatives expected to know about the present and future data regarding sales, inventory, and other fields.

And chalk out the financial services path for their customers accordingly.

Determination

A determination to succeed, even if it means working for long stretches of time and making sacrifices in order to achieve a given set of goals, especially the sales ones.

As mentioned earlier, NBFC is a flexible and placidly competitive environment where you’ve to overcome many obstacles on a daily basis on your journey from low-level personnel to the higher ones.

The monetary and non-monetary benefits are also unimaginable as compared to invested hard work and intelligence.

Stress Management

Usually, any role in finance is considered to be as stressful, given its monetary nature, high-performance pressure, and long working hours.

A high tolerance level and methodical approach to coping with stressful situations turned out to be a mandatory quality that an NBFC guy should possess.

While meeting monthly sales goals, closing a high-value deal, or performing regulatory duties. It may happen that due to the unavailability of sufficient time, things may turn adverse and can damper an individual’s confidence.

At the end

As we can say, the life of a guy working in NBFC MFI in India is more exciting than a regular 9 to 5 job. Although, monetary benefits set it higher than its alternatives. As a result, aspirants have to sacrifice a lot before reaching the pinnacle.

We at Chaitanya India are excited to see you thriving in the NBFCs! Have an incredible career ahead! 

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March 16, 2023

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Introduction

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The microfinance industry started in the 1990s in India by taking inspiration from the Grameen model of Prof. Mohammad Yunus in Bangladesh.

Over the years, MFI (Micro Finance Institutions) have helped India boost financial inclusion, self-sufficiency, stability, women’s entrepreneurship, financial literacy, and digitization.

To put things in perspective, microfinance is a type of financial service that offers loans,  credit, insurance, and saving accounts to small-scale, low-income businesses and entrepreneurs.

It’s evident that the best microfinance is beneficial for those who didn’t get benefits from the traditional loan lending system. On the other hand, microloans typically bear higher interest rates as compared to traditional bank loans.

Why is Microfinance Important for India?

Microfinance lets entrepreneurs or individuals who do not have a sound financial background access capital.

Approximately, half of India’s individuals do not have a basic savings account. Though, things have changed after the introduction of Jan Dhan Accounts.

And everyone needs financial assistance to accomplish their goals for asset accumulation and risk management.

At this juncture, microcredit comes and assists these low-income groups in making sound business investments.

Features of Microfinance

We’d like to highlight some of the important aspects of microfinance institutions in India below.

• Generally, microfinance lends only small tickets of loans
• Borrowers are individuals with weak or no financial background
• Tenure of a loan is limited as per the agreement between a borrower and the institution
• The repayment frequency is higher as compared to traditional loans
• The most important point is microfinance companies don’t stress on collateral to grant loans

How is the best Microfinance Company working?

Indian microfinance lends loans through two channels:

• The Self Help Group-Bank Linkage Programme (SBLP)

This model was established by the National Bank for Agricultural and Rural Development (NABARD) in 1992.

This channel consists of groups (10-15 members) mostly financially unstable females. They deposit their savings to the group on a regular basis. And in return, these savings are used as capital to lend money.

This is the proven model that gained popularity in helping women entrepreneurs.

Once these groups reach the stability point, they can operate with negligible support from NABARD, or any other entity established for this purpose.

• Microfinance Institutions

The primary objective of these organizations is to lend money to the underprivileged part of the population with a motive to generate earnings. But with a small twist.

We learned about Self Help Groups above, by taking this as a base MFIs lend money to Joint Liability Groups. Wherein the members of the group take the liability for each other and repay the loan as per the terms.

JLG is found to be very efficient in providing loans by microfinance companies.

Key metrics of India’s Microfinance Industry 

As per MicroFinance Institutions Network’s report, some of the key metrics of the Microfinance industry are mentioned below.

• Women from low-income households comprise 99% of total micro-credit disbursement.
• 98% of loans are distributed through JLGs.
• Nearly 194 members are part of the microcredit network which includes Banks, Small Finance Banks, NBFC-MFIs, and NBFCs(Non-Banking Financial companies).
• The industry is providing services across 632 districts of India. As an outcome, 76% of the total loan portfolio is dominated by rural and the rest by the urban population.
• Unlike banks, this industry has only 1% as Non – Performing Assets (NPAs) out of the total loan disbursements.

An overview of the scope and future of Microfinance

After a hugely successful decade, the Reserve Bank of India (The regulatory body of the Microfinance Industry) has introduced a new category of NBFCs (Non-Banking Financial Companies) called NBFC-MFIs. With rules & regulations to protect customers from any kind of fraudulent practices.

Presently, the Microfinance industry has 100 regulated Banks, SFBs, NBFCs, and NBFC-MFIs to serve low-income individuals in India.

RBI has set a clear regulatory framework for the future of microfinancing to have a sound underlying business model, better financial performance, and potentially large untapped demand from the world’s most populous country.

But till now, only 34% of districts of our nation hold 80% of India’s microcredit portfolio. So, there is a remaining 64% to tap by industry players.

Conclusion

The future of Microfinance is a bright and untapped opportunity. And the huge disparity between the rich and poor classes, says that poor people are yet to enter the organized financial channels. As Microfinance is a concept that is built to help out the poor, that’s why it’s essential to address all the loopholes by MFIs, RBI, and the government of India to let the Microfinance Industry grow immensely in the coming years.

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February 02, 2023

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Introduction

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When leading microfinance companies arrange community development programs, they emphasize more on financial literacy, financial education, and financial inclusion which together result in financial development. Making people aware of microfinance companies, financial tricks, tips, savings, investments, etc., will do a financial miracle as a contribution to society. As a CSR activity, non-banking financial institutions run various community development programs for food, health, and education of weaker sections of society. 

 In this article, we’ll understand how community development programs by microfinance companies are impacting society.

Impact of community development programs 

The implementation of government policies aimed toward marginalized communities can be facilitated through microfinance has the following impact:

Women’s empowerment

About 95% of some loan products by microfinance companies are for women, along with the disabled, the jobless, and even those who only beg to cover their basic requirements. Community development programs are executed by Socially responsible companies by raising some funds and employing their staff to educate women. This creates hope for women’s empowerment. 

Poverty alleviation

 To combat poverty, they provide customers with small loans with no collateral and simple credit. By running financial education campaigns under CSR programs, micro-finance companies break the cycle of poverty. It makes possible future investments.

Basic needs are fulfilled in rural households 

Community development programs include helping the poor and needy with food, health kits, and shelters. This aids in developing a saving culture and provides the poor and marginalized members of society a base support to restart their life with full potential.  

Employment creation

Micro-finance companies help business owners in underdeveloped nations and communities start up new employment opportunities for others.

How Community Development is a boon for the underprivileged?

Community development is the act of fostering the economic and social advancement of a community while relying on local initiatives. It is achievable when all forms of assistance—financial and non-financial or through microfinance companies link to social and community recognition of the poor and underprivileged, universal access to education, the elimination of child labor, etc.

The community has found Microfinance as an effective tool for development assistance. It spread to millions of underprivileged individuals and became a revolution. Through financial and social intermediation, it is a workable alternative that enabled the hitherto unreached to become economically and socially empowered.

Group-lending contracts with joint liability in micro-finance have a potential innovation or a noble solution for flaws in rural credit markets to reduce risks in the credit markets. The group motivates or requires taking on the tasks of payback selection, monitoring, and enforcement in a cost-effective way because of the joint liability of the group members. This results in lower transaction fees, a higher volume of transactions, and better access to credit for those who otherwise couldn’t afford it.

Advantages of community development programs by NBFCs

• More households can increase their existing opportunities thanks to CSR programs by microfinance companies, which allows for greater income accumulation. 
• It enables people to uplift their living standards. People get access to required basics like food, shelter, education, and health treatment which can quickly end poverty. 
• It benefits those who are frequently neglected in society. Women, those with disabilities, the unemployed, and even those who merely beg to cover their necessities receive almost 95% financial, and emotional support through community development programs arranged by NBFCs.
• Future investment opportunities are made possible through financial education programs. By effectively utilizing the amount of available money, a downtrodden section of society can break the cycle of poverty. The credit goes to these CSR activities.
• It has the potential to generate employment. Additionally, small programs arranged with a noble cause enable business owners in underdeveloped communities to establish new employment prospects for others. 
• Community development programs work for the overall financial, social, mental, and physical development of society.

At the end

In India during the past ten years, community development programs by microfinance companies have delivered tremendous growth. However, the majority of microfinance service providers have placed a strong emphasis on growing the reach of their programs, paying little attention to the breadth, excellence, and viability of their financial offerings. Still, CSR programs by microfinance companies lead to strong helping hands for the underprivileged. They donate their manpower and some amount of their financial resources for food, health, shelter, and education of the needy, and this is creating miracles for society. 

Chaitanya India being a responsible financial company in India, is a firm believer in this concept of community development programs by Non-Banking financial companies. For the previous several years, the company through its multi-facet community development programs has given a value addition to society.

How CSR programs by Chaitanya India helped people during the crisis?

In addition to providing financial services, Chaitanya strives to improve the lives of those who are underserved as a whole. Chaitanya aspires to make a significant contribution to India’s social, economic, and environmental development. To that end, the company takes part actively every year in community-building initiatives including disaster relief, healthcare, education, skill development, and other volunteer work. 

Flood Relief camps

CSR programs like flood relief camps, and Flood relief funds raised by Chaitanya India worked as a true helping hand for those who were in acute need of basic life-saving elements like food, medicines, and shelter. The team was proactively working in rural flood-affected areas of Mysore city by supplying articles of basic needs including food, medical kits, etc.

Covid relief kits

Chaitanya’s CSR initiatives helped people during COVID, the toughest period of all time. The team was voluntarily active throughout the period with vaccination drives, supplying COVID relief kits to nearby police stations. Chaitanya’s Karnataka team held vaccination clinics and distributed covid safety supplies. Each COVID safety package includes items like masks, liquid hand wash, hand sanitizer, and machine sanitizer.

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January 31, 2023

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Introduction

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India’s financial literacy landscape figures out a long history of the cooperative movement at the turn of the 20th century.  In recent years, a wide range of stakeholders, including government agencies, non-banking financial institutions (NBFCs), micro-finance institutions (MFIs), providers of financial education, and support organizations—have played significant roles in advancing financial literacy. 

In this article, we’ll discuss the impact of financial literacy programs by NBFC and micro-finance institutions.

Background of financial literacy programs in India

The Indian government and non-government institutions have been active in making considerable efforts to promote financial literacy for years. Among several socially responsible organizations, microfinance companies have done a great job by supporting the financial literacy mission of India.

With help from the Indian government, micro-finance institutions (MFIs), and nongovernmental organizations (NGOs) have made very positive contributions in a way to increasing financial literacy. It makes loans and other financial services available to low-income customers. 

How does financial literacy differ from financial education? 

Financial literacy is the organization for economic co-operation & Development (OECD), as a mix of financial awareness, knowledge, skills, attitude, and behavior that makes wise financial decisions and, ultimately, attain individual financial well-being.  

Finance education is the process by which financial consumers and investors increase their awareness of financial products, concepts, and risks via knowledge, training, and unbiased counseling. The motive of financial education is to

• Build skills and confidence 
• Become more aware of financial risks and opportunities 
• Make informed decisions
• Know where to turn for help 
• Take other effective measures to improve their financial well-being

Why is there a need for financial literacy?

Financial literacy plays a very important role in promoting Financial inclusion, development, and financial stability in every section of society. Several research studies describe the need for financial literacy for a poor household in financial management at different stages of its life cycle. According to this argument, the effectiveness of financial literacy programs depends on how they are tailored to the life stages of the target population.

All potential stakeholders – policymakers, researchers, and academics, microfinance institutions- from all corners of the world recognize the necessity of financial literacy and its significance for financial inclusion. Several NBFCs and MFIs run programs, many of which are distinctive in their methodologies and delivery methods. Chaitanya India is one of them.

Role of technology employed by NBFC in financial literacy

Financial literacy, by itself, had no impact on financial inclusion, but when combined with internet use, it could lead to better financial access.  Financial literacy enhances one’s propensity to use digital financial tools and services to increase financial accessibility. As per the research data it has been found that rural people are highly eager to engage in financial communication as it is widely accessible throughout the nation. 

Non-banking finance institutions are able to connect with rural residents through digital technology to educate financial literacy. When customers are unable to access required finances, mobile apps provide a very significant option to connect with MFIs. With such efforts, rural residents not only get access to financial education but also avail of easy loan facilities. 

How do financial literacy programs by NBFCs drive a country’s growth?

When a socially responsible organization driven by a group of intellectuals executes a campaign for the welfare of people, obviously it impacts-no matter to what extent. Here’s how these efforts lead to positive results: 

#Brings financial peace

Digital surroundings have changed how we handle our money. All activities like spending, saving and borrowing now differ from traditional means. Also, today’s younger generation is under more financial stress than ever due to concerns like high student debt, a housing bubble in many locations, and a lack of true financial awareness. They’re in a dilemma about how or when to spend or save money. Such programs are helping students to overcome issues, and bring financial peace to their life.

#Build trust among people

Even if not every financial literacy initiative by NBFCs directly benefits the customer, they assist in developing client loyalty and trust. Even participating in early education initiatives helps financial institutions to prove their responsibility toward educating local customers. Over time, these efforts help people gradually win over more devoted customers.

#Help lower credit and debt spending 

Customers with poor financial literacy overspend, purchase on credit, and incur excessive fees and fines. All of this, over time, leads to lower levels of wealth. People with higher degrees of financial education develop the ability to make intelligent financial decisions, save money, pay bills on time, invest, and ‌ grow one’s wealth. In recent years, India has made great strides toward integrating its populace with the world’s formal financial system. 

In the end,

Chaitanya India one of the leading microfinance companies in India works with a mission to make financial services simple, accessible, and affordable. The company driven by financially intellectual entrepreneurs understands the value of financial education. Chaitanya ran a program on financial literacy and awareness in villages with the aim to teach financial intelligence in disadvantaged sections of society.  The company is the NBFC-MFI arm of the Microfinance group in Bangalore.

Along with this, Chaitanya India also conducts consumer education programs. The company has posted consumer education material with examples describing the principles of date of overdue, SMA, and NPA categorization and upgradation, with specific reference to a day-end procedure, in order to raise awareness among the borrowers.

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[fusion_builder_container type=”flex” hundred_percent=”no” hundred_percent_height=”no” hundred_percent_height_scroll=”no” align_content=”stretch” flex_align_items=”flex-start” flex_justify_content=”flex-start” hundred_percent_height_center_content=”yes” equal_height_columns=”no” container_tag=”div” hide_on_mobile=”no” status=”published” padding_top=”20px” padding_bottom=”0″ border_sizes_top=”0px” border_sizes_right=”0px” border_sizes_bottom=”0px” border_sizes_left=”0px” border_style=”solid” box_shadow=”no” box_shadow_blur=”0″ box_shadow_spread=”0″ gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_position=”left top” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_blend_mode=”none” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” absolute=”off” absolute_devices=”small,medium,large” sticky=”off” sticky_devices=”small-visibility,medium-visibility,large-visibility” sticky_transition_offset=”0″ scroll_offset=”0″ animation_direction=”left” animation_speed=”0.3″ filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″][fusion_builder_row][fusion_builder_column type=”1_1″ type=”1_1″ layout=”1_5″ last=”true” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” border_position=”all” animation_speed=”0.1″ border_sizes_top=”0px” border_sizes_bottom=”0px” border_sizes_left=”0px” border_sizes_right=”0px” first=”true” spacing_right=”2%” background_blend_mode=”overlay” min_height=”” link=””][fusion_separator style_type=”none” /][/fusion_builder_column][fusion_builder_column type=”3_4″ type=”3_4″ layout=”3_5″ last=”false” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” border_position=”all” animation_speed=”0.1″ border_sizes_top=”0px” border_sizes_bottom=”0px” border_sizes_left=”0px” border_sizes_right=”0px” first=”true” spacing_right=”2%” spacing_left=”2%” background_blend_mode=”overlay” min_height=”” link=””][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ title_link=”off” link_target=”_self” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” content_align=”left” size=”3″ line_height=”1″ text_shadow=”no” text_shadow_blur=”0″ margin_top=”0px” gradient_font=”no” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ style_type=”default” animation_direction=”left” animation_speed=”0.3″]January 10, 2023[/fusion_title][fusion_separator style_type=”single solid” top_margin=”0″ bottom_margin=”30px” sep_color=”var(–awb-color4)” border_size=”3px” width=”200px” alignment=”left” /][fusion_title title_type=”text” rotation_effect=”bounceIn” display_time=”1200″ highlight_effect=”circle” loop_animation=”off” highlight_width=”9″ highlight_top_margin=”0″ title_link=”off” link_target=”_self” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” content_align=”left” size=”3″ font_size=”18px” line_height=”1″ text_shadow=”no” text_shadow_blur=”0″ margin_top=”0px” gradient_font=”no” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ style_type=”default” animation_direction=”left” animation_speed=”0.3″]

Introduction

[/fusion_title][fusion_text rule_style=”default” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” fusion_font_family_text_font=”Poppins” fusion_font_variant_text_font=”400″ text_transform=”none” animation_direction=”left” animation_speed=”0.3″]

Financial inclusion is a must to ensure access to the complete range of financial services like deposits, lending, payments, insurance, etc. to historically marginalized groups at a reasonable price. Small enterprises, women, and other low-income groups can be considered examples of these groups. To give strength to these sections of society, Microfinance Companies in India play a very crucial role. In this article, we’ll discuss the role of the microfinance industry in financial inclusion.

Miro-finance is a boon for underprivileged

Due to a variety of factors, this underserved population only has a limited amount of access to standard banking channels.   The primary causes include a lack of collateral or credit history, inconsistent income patterns, remote locations, and a lack of financial awareness.

Financial inclusion refers to the availability to both individuals and businesses of useful and cost-effective financial goods and services, including payments, transactions, savings, credit, and insurance, that are provided in a sustainable and ethical manner.

Thanks to the concept of Microfinance. It is a type of financial service that offers little-to-no-interest loans and other financial products to low-income and underprivileged households. Savings accounts, checking accounts, financial transfers, micro-insurance, and microcredit are just a few of the services offered by micro-finance.

Why is it required?

The microfinance industry protects those who are not able to get lending benefits from the established financial system. The rural poor have no choice but to borrow money from local moneylenders at high-interest rates because conventional banking institutions refuse to lend. It happens due to the lack of collateral or proof of recognized employment which is needed at the time they seek loans. MFIs help give these people access to financial facilities.

Inclusive Growth of weaker sections

By making credit accessible to those in the last mile, micro-finance is essential in fostering inclusive growth and serves as a safety net for those at the base of the economic pyramid.  The poorest people are given access to money through microfinance loans, which enables many of them to launch new enterprises, expand current ones, insure against shocks from illness and inclement weather, and manage their consumption.

Expanding the impact of Micro-finance 

28 states and 9 union territories are included in the reach of microfinance programs. Eastern and northeastern parts of the nation account for 37% of the regional distribution, followed by the south (27%), and the west (15%). Micro-finance thus plays a continuing role in influencing people’s lives and means of subsistence. Even though there are micro-finance institutions practically everywhere in the nation, 82% of the loan portfolio is concentrated in just ten states.

Effective Customer Protection

The RBI microfinance laws offer a strong framework for customer safety. The RBI-recognised self-regulatory body supports this structure (SRO). The SRO aids MFIs in carrying out the rules, makes efforts to build capacity, enhances governance through routine oversight and assistance, and offers a forum for dealing with issues on a sectoral level.

Programmes for digitalisation

Initiatives for digitalization have been coordinated with the quick uptake of smartphones and the growing comfort of borrowers with online payment methods. Today, almost all loans are funded online and sent straight to the borrower’s bank account; also, more and more repayments are being made digitally. In March 2022, the Reserve Bank published a thorough and updated regulatory framework for micro-loans:

Core Principles

The principle of client protection was a major consideration when these rules were drafted. The framework has five key ideas built into it to help with this. To ensure that all regulated organizations involved in microfinance follow the goal of client protection within a well-calibrated and harmonized setup, regulatory arbitrage has been addressed by the establishment of a lender-agnostic and activity-based regulation.

Protection prevents micro-loan borrowers from becoming over-indebted as a result of loans being granted that are larger than their ability to repay, which could subsequently result in forceful collection tactics. Enhancing transparency measures to allow the competitive forces to lower interest rates.

Steps to Take

The “stated purpose of the loan,” which is frequently requested from borrowers throughout the loan application process, should be confirmed after the loan’s term by MFIs. Concerns should centre on how easy it is for people to acquire micro-loans in both urban and rural areas, the associated rules, and the availability of basic training for the underprivileged in both places.

Role of Chaitanya India in financial inclusion

In the past few years, Chaitanya India with its ethical deeds has emerged as one of the best microfinance companies in India. Through financial inclusion, the company offers the availability of useful and cost-effective financial goods and services to low and middle-income businesses and individuals. The goal of the company is to simplify the process of lending including payments, transactions, savings, credit, and insurance.

The company’s mission is to help entrepreneurs in underdeveloped areas of the countries pursue their ideas by offering financing services. All loans in India that are under Rs. 1 lakh are classified as micro-loans. All services are provided in a sustainable and ethical manner.

Making financial inclusion services easy to use, accessible, and affordable is the goal of Chaitanya India Fin Credit, an NBFC-MFI division of Navi Micro-finance Group. Bengaluru serves as the company’s corporate headquarters. One of Bangalore’s microfinance organizations with the quickest growth is Chaitanya India.

Conclusion: 

During the past ten years, the microfinance industry has experienced a tremendous expansion in India. While paying little regard to the breadth, excellence, and viability of financial services, most microfinance service providers have continued to concentrate on growing the reach of their programs.

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