Let’s not conflate microfinance with self-help-group financing
- Recognizing the difference between the two will allow clarity in the official approach taken to both
The microfinance industry has witnessed moves by the Reserve Bank of India (RBI) to revise the regulatory framework (March 2022) for it and also caution it against an exclusive focus on business growth (November 2022). What remains in question, though, is whether RBI’s revised regulatory framework addresses the moral charge it seeks to impose on the industry. Thus, it wasn’t surprising for us to see the CEO of Sa-Dhan write an op-ed in April 2023 that spoke of some hurdles faced by microfinance institutions (MFI) in their search for growth. There appears to be a divergence in the way RBI and Sa-Dhan view MFI growth. While RBI sees the prioritization of growth as misaligned with the promise of microfinance—which ought to act as an economic development aid, help eliminate poverty and empower women—Sa-Dhan sees such expansion as an essential condition for those very aims to be realized.