Bangalore: The Association of Karnataka Microfinance Institutions (AKMi) is gearing up to host “The Microfinance Karnataka Summit – 2023” in Bangalore on the 12th of September. This summit aims to shed light on the remarkable growth of the microfinance industry in the state of Karnataka. The event will feature the release of an extensive impact study conducted across 7 districts, which has been transformed into the book titled “Microfinance in Karnataka – Sector Report 2023.” The book will be unveiled by the Hon’ble Home Minister of Karnataka, Dr. G. Parameshwara, who will also address industry leaders and experts in attendance.
Unveiling the Socio-Economic Impact
The summit will kick off with the release of the Impact Study report, which will be followed by panel discussions featuring industry experts. The discussions will delve into topics such as the growth, innovation, and future prospects of microfinance in Karnataka. This comprehensive survey covered 7 districts in Karnataka, gathering insights from 2300 microfinance customers per district. The primary objective was to assess the socio-economic impact of more than two decades of microfinance operations in Karnataka while gaining a deeper understanding of customer needs.
Impressive Growth in Karnataka
According to Venkatesh N, Chairman of AKMI, “The Microfinance industry in Karnataka has witnessed an estimated growth of over 10% during the year 2022-23, encompassing both Joint Liability Group (JLG) and Self-Help Group (SHG) loans, resulting in a portfolio size of approximately 46,000 crores. This positions Karnataka as one of the largest states in terms of microfinance portfolio size.” AKMI’s pivotal role in safeguarding customer interests, fostering strong stakeholder relationships, and addressing local-level issues across the state is instrumental in this growth.
Microfinance’s Crucial Role in India
The microfinance sector has played a pivotal role in providing credit support to vulnerable sections of the population in Karnataka. Nationally, India’s microfinance sector has recorded a remarkable overall portfolio growth of 21% during 2022-23, as reported by industry body Sa-Dhan. Market data reflects a notable increase in the number of microfinance loan accounts, reaching 136.3 million in FY23, compared to 123.9 million in FY22, showcasing a year-on-year growth of 10%. A joint study conducted by Price water house Coopers (PwC) and the Association of Microfinance Institutions of India highlighted the sector’s transformation and expansion from February 2017 to June 2022.
Positive Impact of Regulatory Changes
The year 2022-23 marked the implementation of the Reserve Bank of India’s new uniform regulations, applicable to all microfinance players. The industry’s swift recovery indicates that these new regulations have had a positive impact. Key support from the RBI, the Central Government, and the State government has been instrumental in restoring normalcy to the sector following disruptions caused by the COVID-19 pandemic. Healthy loan repayment collection rates and robust portfolio growth have been noteworthy achievements.
A Bright Future for Microfinance
The microfinance sector has the potential to serve 10 to 15 percent of the population residing in India’s rural areas, with aspirations to expand to reach up to 30 percent of the rural population in the future. Microfinance is poised to play a pivotal role in India’s rural economic growth, not only by providing loans but also by integrating the most vulnerable individuals into the mainstream of the Indian economy, which is anticipated to reach new heights in the coming years.
Fostering Financial Inclusion
Highlighting the significance of financial inclusion, Mr. Venkatesh N stated, “Financial inclusion is the path to achieving inclusive growth in our country.” Microfinance Institutions have been at the forefront of delivering a range of financial services to low-income households, both in urban and rural India. With outreach to more than 2.67 Crore households and a loan portfolio exceeding 46,000 Crores, the microfinance industry’s contribution to the Indian economy is undeniably substantial.
The “Microfinance Karnataka Summit – 2023” promises to be a significant event, offering insights, discussions, and a vision for the future of microfinance in Karnataka and India as a whole. The release of the impact study and the presence of Dr. G. Parameshwara, the Hon’ble Home Minister of Karnataka, add an extra layer of significance to this event, reinforcing the critical role of microfinance in the socio-economic development of the region.