Microfin industry needs $100 bn to promote green livelihood: Jayant Sinha

The Chairman of the Parliamentary Committee on Finance Jayant Sinha on Monday said sustainability and clean energy will drive growth in the microfinance sector which would need USD 100 billion to serve customers.

For creating entrepreneurs, microfinance institutions should focus on creating a financing bouquet that will enable disbursal of loans to those who will be working on sustainable livelihood, Sinha, the BJP Member of Parliament from Hazaribagh, said at the microfinance conference by Sa-Dhan.

''Out of the 500 million workforce in India, 400 million are in the informal sector. This informal sector workforce is those who hugely benefit from the microfinance sector.

''The task in hand for the microfinance sector is to create green jobs for millions. And for this USD 100 billion will be required by the microfinance sector to promote green livelihood,'' Sinha said.

Sinha also said one of the key challenges today is to create quality jobs for the millions who join the workforce every year, however, the aspirations of landing a government job cannot be fulfilled and they are limited.

There are only 3.5 crore or 35 million government jobs available today, he said.

Anil Kumar Sharma, Executive Director of the Reserve Bank of India (RBI) said that grievance redressal of microfinance institutions and more particularly of customers is very important along with customer protection.

Any form of financial inclusion, financial literacy is paramount, Sharma said. The RBI is implementing a 5C -content, communication, capacity, community and collaboration- approach to spread financial literacy across the country, he said.

Further, he said empowering the population through financial inclusivity is the key and the microfinance sector has been doing a commendable job at this.

Sa-Dhan, which represents the microfinance industry in the country, also unveiled the Bharat Microfinance Report (BMR) FY2021-2022 presenting a sectoral view of the sector in the country.

The microfinance industry clocked a loan portfolio outstanding of over Rs 2.63 lakh crore as on March 31, 2022, as per the report, collating data from NBFC-MFIs, banks, SFBs, NBFCs and non-profit MFIs.

The Return on Asset (RoA) and Return on Equity (RoE) remained positive at 1.11 per cent and 4.26 per cent respectively for the industry in FY22, while financial cost lowered at 10.65 per cent, said the report.

However, the portfolio at risk (PAR) 30+ has increased to 8.35 per cent in 2021-22 from 7.12 per cent in 2020-21, the report said, reasoning it was largely because of the aftereffects of the pandemic.

''The microfinance industry has come out successfully from the lull it had faced on account of the pandemic in the previous two years. Above that, the Reserve Bank of India's framework for the industry has ushered in a new era,'' Jiji Mammen, Executive Director & CEO, Sa-Dhan said.

He said the new guidelines have been implemented and the industry expects to have steady growth.

''From a growth perspective, we saw a growth of 5 per cent in the last fiscal and a greater push in the current fiscal year. If we continue with the positive growth, the industry might touch Rs 3.25 lakh crore in the current fiscal, if not more,'' Mammen said.

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