Microfinance Sector and the Supportive Role of Regulator in its Transformation: A Case Study from India

Jesu Raju Thomas () and Jyothi Kumar ()
Additional contact information
Jesu Raju Thomas: CHRIST (Deemed to be University)
Jyothi Kumar: CHRIST (Deemed to be University)

A chapter in Financial Inclusion in Emerging Markets, 2021, pp 219-235 from Springer

Abstract: Abstract Microfinance is a proven business model to deliver financial services to unbanked. In the beginning years of microfinance, Non-Governmental Organizations (NGOs) were engaged in microfinance initiative and used to raise capital through grants for their microfinance program, similar to other grant-based development initiatives. To become self-sustainable financial institutions, NGOs started to transform their microfinance initiatives to a for-profit legal entity. Microfinance experienced commercialization in the process of transformation which neglected the basics of microfinance, especially in protecting the interest of clients. Supportive role of regulator transformed the Indian microfinance sectors and formed sustainable financial institutions. The successful story of Reserve Bank of India’s (RBI) intervention in shaping Indian microfinance sector counters the argument of free market principle in fixing the interest rate and healthy regulation for microfinance institutions. Supportive role of Reserve Bank of India created win-win situation for both microfinance borrowers, microfinance institutions and other stakeholders for the long-term sustainability.

Keywords: Microfinance; Commercialization; Institutions transformation; Supportive regulations; Microfinance sector growth (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-2652-4_11

Ordering information: This item can be ordered from
http://www.springer.com/9789811626524

DOI: 10.1007/978-981-16-2652-4_11

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().