Microfinance Institutions Urged to Slash Interest Rates for Financial Inclusion

Financial Services Secretary M Nagaraju has called on microfinance institutions (MFIs) to reduce their interest rates, citing inefficiencies as a cause of high rates. The focus is on increasing financial inclusion, especially for rural areas and self-help groups, with innovative methods like the Grameen Credit Score.

In a bid to enhance financial inclusion, Financial Services Secretary M Nagaraju has urged microfinance institutions (MFIs) to maintain reasonable interest rates, addressing inefficiencies that lead to high borrowing costs.

Speaking at an event by Sa-Dhan, an RBI-appointed SRO for MFIs, Nagaraju highlighted the sector's critical role in promoting women empowerment and narrowing the financial inclusion gap. He stressed the need for MFIs to innovate to include around 30-35 crore youth in the financial mainstream.

On the issue of sectoral stress, Nabard Chairman Shaji K V revealed digital advancements like the Grameen Credit Score. This initiative aims to provide specific credit assessments for rural borrowers, potentially transforming access to finance for self-help groups, farmers, and marginalized communities.

(With inputs from agencies.)