EMERGENCE OF MICRO FINANCE INSTITUTIONS AND ROLE FOR CLUSTER DEVELOPMENT

Volume : VII, Issue : VI, June - 2018

Dr. V. Balamurugan

The microfinance sector in India, largely unfettered by tedious regulation and interference is young and dynamic. The biggest

obstacle until recently was little access to commercial markets and the forbidding cost of capital funds. As private banks,

spearheaded by ICICI in 2003, entered the microfinance market, this barrier has partly disappeared and microfinance is growing

at a eak–neck pace on all fronts viz. loan outstanding, client outreach, product and service diversification or geographic spread.

Concerns have now shifted to growth management issues such as skilled human resources, flexible product design, reducing

transaction costs, ensuring adequate management information systems, standard credit information, better use of advances in

technology, accessing alternative financing, expanding into underserved areas, and dealing with regulatory hurdles and political

risks. There is an urgent need for structured long term financing to the sector to fully address these important issues and smoothly

transition into a well functioning mature industry.