India has been progressing economically over the last few years and microfinance companies have played a huge role in alleviating poverty, especially among women, the rural youth, and the poor, uplifting them and bringing them formal channels of credit. Microfinance has become a hugely successful concept in India, with hundreds of microfinance companies changing the landscape of the financial lending industry for the low-income population.
Microfinance was first introduced to India in 1978 with the country’s first microcredit institution. MFIs were set up to provide people with small affordable loans for short-term financing needs. Microfinance is meant for people in the lower-income bracket to help achieve self-sufficiency.
Microloans help the unbanked and marginalized people in semi-urban areas and rural areas where banks and formal banking services are out of reach. Microfinance helps rural communities, women, and people who are involved in agricultural and small business activities.
BSS Microfinance Limited began its microfinance operations in 1999 as a Trust. The Trust activities were taken over by the Company in April 2008. Currently, the Company is a 100% subsidiary of Kotak Mahindra Bank Limited and is carrying on its activities as a Business Correspondent. It focuses on providing microloans to economically weak women for income- generating activities to help them come out of poverty. These microfinance services are then passed on to their families.
BSS Microfinance is presently present in four states - Karnataka, Maharashtra, Madhya Pradesh, and Tamil Nadu. BSS Microfinance primarily lends only to women through the Group Lending Program and aims to help women bring in higher profits, achieve a better quality of life, and better financial management.
Fusion Micro Finance Limited was founded in 2010 and provides loans to micro-businesses and entrepreneurs, who are unable to access loans due to a lack of collateral. The company is a pioneer in microcredit and provides financial services like short-term working capital loans, loans against property, gold loans, and various insurance products. It has grown to become a leading microfinance institution in India by lending over INR 1.3 billion. After empowering women to become financially independent, the company plans to launch Shubh-Karya, a housing finance scheme, where they will provide loans to individuals and institutions to buy or construct a house.
Annapurna Finance Private Limited, founded in 2009 in Odisha, has a loan portfolio of INR 70 crore (USD 12 million). It focuses on the poor, offering them a wide range of financial products and services including loans, deposits, and insurance, to help them establish sustainable livelihoods.
It specially aims to empower women in remote villages who have no access to retail banking or have been unable to procure a loan due to lack of collateral. The company provides these women with collateral-free loans enabling them to earn more and lead self-reliant lives.
Annapurna Microfinance serves approximately 50,000 customers across the country.
CreditAccess Grameen was visualized by Mrs. Vinatha M. Reddy and founded in May 1999 in South Bangalore as a T. Muniswamappa Trust project. Over time, the microfinance activities of the trust were taken over by CreditAccess Grameen company.
CreditAccess Grameen focuses on women’s upliftment and caters to the need for timely and affordable credit for India’s poor and low-income households. It offers income generation loans, home improvement, emergency, and family welfare loans. It also offers non-financial assistance like workshops. CreditAccess Grameen has over 900 branches in more than 230 districts with over 29 lakh borrowers.
Arohan began microfinance operations in 2006 in Kolkata but was eventually bought by IntelleCash Microfinance Network Company Pvt Ltd with 56% stakes in September 2012.Among the products that Arohan provides to financially disadvantaged customers are - credit products like income-generating loans and other loans for household purposes, and insurance products including healthcare and life insurance covers through Indian insurance companies that Arohan has tie-ups with.
Arohan also offers term loans to microfinance institutions. Arohan Financial Services Limited is the largest NBFC MFI in eastern India and is a subsidiary of The Aavishkaar Group. It has been certified as one of the Best Workplaces in Microfinance India 2020.
Asmitha Microfin Ltd. founded in 2002 is considered one of the best microfinance companies in India. Headquartered in Hyderabad, it aims to provide small loans to the poor village women to start a small business and become self-reliant. With its presence in 13 states of India, the sole aim of Asmitha Microfin Ltd is to help women living below the poverty line who don’t have the access to traditional banks and uplift their lives.
Muthoot Microfin Limited is part of the Muthoot Pappachan Group. It focuses exclusively on providing micro-loans to rural women entrepreneurs in lower-income households. The company’s portfolio includes income-generating assets like loans for dairy, life improvement loans like education, mobile, solar loans, and Health and hygiene loans for water and sanitation purposes.
Spandana Sphoorty Financial Ltd. headquartered in Hyderabad is one of the most reputed microfinance companies in India. It was founded in 1998 and provides a range of loans such as Income Generation Loan, Small Ticket Personal Loan, Micro-Enterprise Loan, Group loans, and Gold loans.
Spandana Sphoorty Financial Ltd. caters exclusively to financially backward women and enables them to live a respectable and sustainable life.
Cashpor Micro Credit is a microfinance institution working towards uplifting the economically backward sections of society. It is a subsidiary of CASHPOR Financial & Technical Services (CFTS) and is based out of Varanasi. It identifies women below the poverty line in rural eastern Uttar Pradesh, Bihar, and Chhattisgarh, and provides them with micro-credit services to generate income.
Cashpor also provides loans for non-income generation activities and acquiring assets that improve public health and social statuses like loans for women empowerment or the construction of toilets.
MFIs today are making a great impact, providing services to millions of Indians and enabling them to get loans at affordable interest rates. Thus, microcredit institutions are lucrative in India though they are heavily dependent on funding. Banks are currently among the largest providers of microfinance with MFI-turned-banks continuing to be the primary source. With financial inclusion increasing, the future looks bright for MFIs with years of opportunity ahead of them.