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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.'