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Business Standard
16 hours ago
- Business
- Business Standard
Microfinance industry refashions itself amid opportunities and challenges
Central bank has taken a sympathetic view of institutions by easing some lending norms premium Raghu Mohan Listen to This Article 'The microfinance sector continues to suffer from a vicious cycle of over-indebtedness, high interest rates and harsh recovery practices,' said M Rajeshwar Rao, deputy governor at the Reserve Bank of India (RBI), last week. These are tough words from the otherwise soft-spoken Rao, the senior-most in that position at the central bank. He also pointed out the prevalence of Shylock-like tendencies: 'Lenders should look beyond the conventional 'high-yielding business' tag…and approach it with an empathic and developmental perspective, recognising the socioeconomic role that microfinance plays in empowering vulnerable communities.'
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Business Standard
16-05-2025
- Business
- Business Standard
MSMEs struggle with access to formal credit due to limited formalisation
Other factors such as information asymmetry, lack of comprehensive financial records, weak credit histories, and insufficient collateral contribute to this issue Raghu Mohan New Delhi Listen to This Article Access to timely and adequate formal credit remains a persistent challenge for micro, small, and medium enterprises (MSMEs). Factors such as information asymmetry, limited formalisation, lack of comprehensive financial records, weak credit histories, and insufficient collateral contribute to this issue. According to SIDBI's report 'Understanding the Indian MSME Sector: Progress, and Challenges', in primary interactions with MSMEs, 17 per cent of the respondents did not avail any form of credit, while 8 per cent availed it from informal sources. Given the higher level of difficulty in accessing credit for micro enterprises, 12 per cent of those surveyed borrowed from informal
