Rebuilding Micro-Enterprises Are Small Finance Banks up to the Challenge?

Micro and Small Enterprises (MSE) are extremely vulnerable to the disruptions created by the pandemic. While the COVID 19 pandemic is affecting societies and econ­omies across the globe at their core, the damage to MSEs is severe owning to their inherent higher fragility and vulnerability. India’s adoption of stringent lockdown measures to curb the health impact of pandemic, wreaked havoc for the micro enterprises which forms 99.5% of MSME sector.

Annual Report of Department of MSME -2018-19 mentions, there are 6.34 crore MSME in the country employing a little over 11 crore individuals indicating less than 2 people employed per MSME on an average. Majority of the MSEs are household firms and usually deploy low level of capital, lack technical and managerial skills, follow family organizational pattern for employment. Most of them are unregistered and fall outside the formal network for accessing any meaningful social or economic entitlements and benefits from government. They have poor access to market –  limited market availability and inability to go beyond localized markets and depend heavily on middlemen.

Before the pandemic as well, MSEs as a segment was braving the challenge of lack of access to formal financial services in general and lack of credit in particular. They rely heavily on informal networks to borrow for business needs. MSEs also exhibited weak technological adoption in business operation leading to high inefficiencies and under-utilization of capacity. With the pandemic and lockdown striking them hard, MSEs were struggling to stay afloat with dwindling cash reserves, zero revenues, recurrent expenses, depleting stock levels and almost non-existent credit support. The fragility of their financial and operational health was more pronounced and exposed, post COVID.

As a stroke of relief, the government has opened up markets and businesses (with caution) and announced a slew of fiscal measures targeted for the MSME sector. The stimulus package of INR 20 Lakh Crores to tackle the economic fallout of COVID-19 and to revive the Indian MSMEs was much timely.

Key component of stimulus package wrt MSMEs included INR 3 Lakh Crores Collateral-free Loans with 4-year tenure and a moratorium period of 12 months for Businesses (including MSMEs). The package was targeted for MSMEs with INR 100 Crore sales or INR 25 Crore outstanding loans to help them pay their operational liabilities, disburse salaries for employees, and buy raw materials to get their businesses back on course. The eligibility criteria for accessing benefits from the above scheme resulted in benefits percolating to only 4.5 million enterprises contributing to less than 7% of the total Indian MSMEs under the older definition. More recently, the Government’s decision of increasing the threshold for qualifying for MSME may deprive the small players of benefits due to crowding out. The disbursement of INR 20,000 Crores in form of Subordinate Debt to functional but non-performing or stressed MSMEs and provision of equity support of INR 2 Lakhs to MSMEs through Promoter Loan by banks clearly targeted the Medium-sized enterprises.

As part of the Government relief measures, support for “business purpose” to MSEs was manifested in two critical schemes  (a) INR 1500 crores for 2% interest subvention on MUDRA Shishu Loans (up to INR 50,000)  to benefit 3 crore individuals (b) INR 5000 crores – Loans for street vendors up to INR 10,000.

While banks and larger financial institutions will be distinctly inclined towards directing credit flow to better rated, safer and perceived low risk entities and enterprises, MSEs will gasp for affordable and timely formal credit.

The differentiated Small Finance Bank category has been created with the objective of promoting financial inclusion by supplying credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations. SFBs therefore will have an important role to play in the supporting the revival of micro and small enterprises. SFB’s presence across hinterlands and ability to underwrite the micro-enterprise segment are two inimitable core-capabilities and competencies which can help them provide the much sought after “credit support” to small enterprises, which typically get left out from the coverage of Microfinance Institutions as well as large banking and financial institutions.

In the meanwhile, the various challenges faced by SFBs like liquidity crunch, weakening capital market and deteriorating asset quality cannot be fully ignored. As they transformed themselves from largely mono-line asset-backed revenue businesses to a diversified asset and liability backed profitable businesses, the SFBs have managed the crisis ensuing demonetization and are now faced with a looming NPA crisis as an impact of the lockdown.  It has probably made them test their resilience by undergoing multiple stress points.

It is important to review some learnings in hindsight on what insular systems SFBs should have built-in for better crisis proofing. Going forward, the SFBs have to protect themselves along with responding to the needs of the last mile ‘inclusion’ clients.  In this context it would be critical to know the “essentials” for the SFBs to bounce back to business and devise innovative ways to rebuild the micro-enterprise sector by unlocking the access to credit. The scope for innovation could possibly vary from deployment of efficient financial instruments and structures to raise funds, smart use of blended finance mechanism to attract impact-focused capital, lean and relevant product structuring for MSEs and investing in partnerships and collaborations for credit underwriting across the value chain.

Join the Inclusive Finance India’s webinar on “Rebuilding Micro-Enterprises: Are SFBs up to the challenge?” to hear perspectives and experiences on these questions and more.  

Register Now!

IFI Webinar (004)





It is now over four years since the RBI issued licenses to 10 financial institutions to set up Small Finance Banks (SFBs) with the objective to provide financial services to sections of the economy not being served by other banks, such as small business units, small and marginal farmers, micro and small industries and unorganised sector entities. Of the 10, 8 were Microfinance Institutions, most of which have either completed or are close to completing three years of operations as SFBs. For most SFBs however, the portfolio continues to be dominated by microfinance loans and the share of retail liabilities is low. By September this year, all SFBs had been granted scheduled status by the RBI. Meanwhile, the RBI also released the draft guidelines for on tap licensing of SFBs, raising the expectations of MFIs and NBFCs for the next level of transformation into banking institutions.

The session provided an opportunity to review the extent to which this new set of differentiated banks have succeeded in achieving the objective of financial inclusion so far, and discussed operational, structural and regulatory challenges faced by them as they transformed themselves from largely mono- line asset backed revenue businesses to a diversified asset and liability backed profitable businesses. The session discussed various aspects of providing an enabling and supportive framework to SFBs for them to realize the potential of transforming into the bankers to the last mile, and also highlighted lessons learnt for financial institutions aspiring to be SFBs in future.

TEJI0553Key Takeaways

  • The transition journey to SFBs from MFIs was marked with challenges with the highest priority being to build trust among customers, market players and investors that MFIs can indeed be “banks” who have the intent to be in the financial system for long run as true “Banks”.
  • Of the various challenges faced, compliance challenge was the most critical as senior management time was primarily devoted to dealing with compliance adherence. Others include developing a truly granular liability franchise and diversifying asset line by venturing into new but related business verticals. On the regulatory front, meeting the requirements of dilution of shareholding and public listing remain an on-going concern.
  • SFBs have tackled the challenges of building liability by mobilizing wholesale deposits to begin with, while the intent and long term vision continues to be have retail liability base. Similarly, diversifying to new asset classes required setting up a strong team, integrating the team into the culture and investing in the right technology.
  • At a steady state, the liability business built up will be largely retail driven and deposit sizes will be small, however, the volume of transaction will be very high. To manage high volumes on liability side on a base that is built up on smaller deposit size, keeping costs under control while delivering the services is critical. Cost efficiency can be achieved through investment in innovative technology. Strengthening SFB’s readiness to manage volumes and diversity of services will need prudent investment in technology.
  • SFBs have emerged as an investible asset class for mainstream capital market investors.
  • Investor community has set higher benchmarks for SFBs on metrics to track return on investment compared to the private sector banks. Key strengths that have made SFB a lucrative proposition to invest in is largely driven by high standards of governance, strong grasp and understanding of customer and continued focus on vision of creating impact at scale.
  • Quality of service and ability to provide door step service is critical for SFBs to claim and retain market share.
  • Compliance adherence is at times, significantly more for SFBs than regular mainstream banks. Increased compliance and regulatory requirements for SFBs helps build trust. Since regulator’s prime responsibility is to protect the interest of depositors, SFBs attracted greater vigil and supervision given that they are new to the system.
  • Moreover, it is considered prudent to undergo the rigor of adhering to increased scrutiny and compliance. It builds a culture of trust with the regulator, investors and customers.
  • To build a resilient SFB ecosystem, it is important to build trust and building trust will need the effort to build a culture around transparency and highest standards of governance. Compliance helps in achieving those standards till they become part of organizational culture.



Small and micro merchants have the potential play a major role in accelerating financial inclusion and driving economic growth. Such small businesses are not traditionally reached by banking and formal payment services. Many of these micro merchants transact primarily in cash, which prevents both the businesses themselves and their customers from joining the world’s formal economy.

New technologies that automate services (financial and non-financial) provides an unprecedented opportunity to bring the unserved or underserved micro, small merchants and their customers into the fold of formal finance. Technology enables creation of digital footprint of merchant & customer transactions which leads to improved visibility of financial lives of the missing middle, atleast on the expenditure and revenue side. It opens up the access to the universe of financial services that can be available to the masses beyond micro-credit. The digital transformation of transactions, businesses and subsequently financial services will lead to better, faster, cheaper, and safer financial products; a transformation that would provide the small businesses / merchants and families with the tools they need to run, buy and sell better. This will help them have better control over their financial lives, manage and deal with emergencies, seize opportunities, and realize their potential.

There are tangible benefits to private sector organizations from pursuing greater usage of digital technologies, especially digital payments, in their supply chains. First, digital payments allow for the realization of operational efficiencies by streamlining processes and reducing reliance on cash-based value chains. Second, digital payments enable opportunities for market expansion that leverage new data on consumer segments to better target products and services. Third, a more inclusive business model enhances a brand’s value in today’s age where consumers increasingly place a premium on sustainable practices. In this context, the session discussed on the true potential of digitization in delivering the financial inclusion dream, challenges faced in driving digitization drive across banks, BC players, payment banks and other ecosystem service providers. The session also discussed on the challenges around adoption of data driven approach to credit underwriting. It also discussed in detail about the importance of  partnership in achieving scale, challenges faced w.r.t. to providing high quality customer experience across partners. It also discussed about the importance of putting clients at the centre of institution’s practices – including seeking customer feedback, designing merchant-centric products, with advent of new technologies and increased digital interfaces.

Key Takeaways

  • Digitization is a journey; the impact of digitation in terms of increasing the coverage of financial inclusion is felt in micro-merchant segment which are either acting as BC to bigger players or are standalone micro-retail unit.
  • The true benefits of digitization of operations by micro-merchants in terms of pricing and better product offering is yet to be observed.
  • Most dialogues unintentionally limit the scope of digitization to credit and payments.

However, it is critical to see digitization as being subsumed in daily life. This will need

concerted efforts through capability building, behavior change and outreach.

  • Partnerships hold key to the immense possibility of bringing efficiency and scale, especially in a market like India which is incredibly diverse.
  • Time taken to execute partnerships in terms of real output is critical. Conscious effort has to be made to ensure “getting down to do business” quickly as markets, opportunities and customer needs evolve and change much rapidly in a digital world.
  • Building and maintaining a culture around customer centricity while translating partnerships into reality needs clear framework on roles and responsibilities, resolution and escalation frameworks, processes for right control over customer touch points, universal/standardized fair practice codes and relentless focus on customer feedback and grievances.
  • Right incentives for market enablers and service providers to continue to offer the services to the excluded segment are an important factor. Policy support in terms of appropriate design of rewards and incentives is critical to achieve scale in partnership with market players.


Clients segments that were being served by MFIs are now being covered by other (non MFI) non-banking finance companies and commercial banks as well. All the three categories of financial institutional are disbursing microfinance (JLG) loans in addition to some institutions offering retail and enterprise loans possibly to the same clientele (non JLG).  CRIF presented industry insights from the study of India’s microfinance customer base and the graduation of borrowers to individual loans over time and highlighted the emerging trends and patterns of lending.  The session deliberated on the scope and challenges for MFIs and other financial institutions to offer more differentiated and suitable products to microfinance borrowers that have the potential to graduate from the JLG methodology to retail loans. Panelists discussed the current landscape, opportunities, scope and challenges for MFIs to offer more differentiated and meaningful products to graduated JLG borrowers, challenges faced by them to scale the unsecured small ticket individual product offering within the qualifying asset limit ambit.

Key findings from CRIF study
• There is no difference in repayment rates, roll forward and roll backward rates for customer cohorts who had taken group-backed loans only and a combination of group-backed loans and individual loans.
• Asset quality at portfolio level for the cohort which had both individual loan and group
backed loans did not reveal any relationship between repayment behavior of customer
towards individual liability and group liability. CRIF highlighted, before any conclusions to be drawn on possible co-relation or independence of customer behavior towards repayment, the vintage and seasoning of individual loan portfolio has to be considered.
• There in recent increase in volume of disbursements towards smaller ticket individual loans indicating service provider’s preference towards disbursing personal loans or consumer durable loans.
• Clients of group-backed product serviced by only banks (bank-only micro-finance group
customer) were offered standard bank products like PSL agri loans, Home Loans and later business loans as cross-sell offering from banks.
• Customers who were serviced only by NBFC-MFIs under group-loans usually received
two-wheeler loans, gold loans followed by business loans by NBFCs and NBFC-MFIs
• The cross-sell product profile has also a very clear rural-urban pivot to it and is largely state driven. For. Eg. Cross-sell of non-JLG product is largely urban dominated by housing and home improvement loans in Maharashtra. While in states like Odisha, Bihar, WB, cross-sell is observed in rural segment mirroring the JLG portfolio. Cross-sell in Rajasthan was fairly interesting with preponderance of business loans in semi-urban and urban area and mostly dominated by local financiers and not necessarily PAN –India service providers.


Women contribute only 18% to the national GDP in India; and their workforce participation hovers around 27%. Among these, poor women are mostly self-employed; they are subsistence farmers and micro entrepreneurs, and while their work is critical for family well-being, they earn significantly less than men. Access to finance is an important impediment that keeps women out of the mainstream economy.

It is therefore imperative that for meaningful financial inclusion of women, focused and deliberate policy attention is given. In India, women have been the focus of the two significant microfinance channels – the MFI and the SHG Bank linkage model. The SHG bank linkage model is one of the largest microfinance programmes in the world that has linked unbanked women to formal financial institutions. Beyond this, there is no formal policy attention to financial services for women.

In terms of ownership of bank accounts, the gender gap in India had substantially dropped from 20% in 2014 to 6% in 2017 as per the Findex reports, largely due to the progress made under the Jan Dhan Yojana. By September 2019, 196.2 million PMJDY of the total of 368.9 million were of women. This however does not translate in visible any way to women beginning to benefit from financial inclusion. However outside of the SHG programme, there do not seem to be any other programmes and policies which promote and push flow of loans and access to other financial services specifically for women. One of the key policies to push loans to underserved segments is the Priority Sector Lending targets for banks. The government had set up the Bharatiya Mahila Bank for specific focus on women, which did not take off and was subsequently merged with the State Bank of India. The PM Mudra Yojana promotes loans to micro and small enterprises, without any specific targets or focus on women.

The session discussed whether there is adequate, deliberate focus on reaching women with financial services within the current policies and schemes aimed at promoting financial inclusion. It provided recommendations for policy consideration to enable meaningful inclusion of women, particularly from poor and low income segments, in the mainstream financial sector. The session touched upon MoRD’s experiences, challenges and core strategies pivoted across NRLM and other financial inclusion policy framework in leading the economic development campaign and advancing financial inclusion for women. The session also discussed on Ministry of MSME’s effort in bringing focus on access to finance for women enterpreneurs. The session had detailed discussion on product suitability, need for women specific financial institutions and partnerships for facilitating better coverage for women.

TEJI0306Key Takeaways

  • While the financial services access points with respect to basic credit is largely available to women as customer segment, quality of financial services and diversity of products offered needs to be improved.
  • There is a glaring need for infusing gender bias (tilted towards women) by way of appropriate incentives and subsidies in policies, which are otherwise designed gender neutral. Such positive bias opens up opportunities both at supply and demand side to increase women participation in financial inclusion spectrum.
  • Women do not shy away from using technology platform; the retention and sustained usage rate of technology is significantly better than for men as customer segment. Hence JAM trinity holds immense potential in reducing the gender gap in financial inclusion.
  • While lower ticket micro-loan segment is largely dominated by women borrowers on group-backed models, there is need for higher order loan sizes for individual women and women owned enterprises.
  • One-size-fits-all approach might not work while providing services targeted for individual enterprises unlike micro-credit.
  • The shift of focus on ecosystem development and not just product development is critical. Similarly shift of focus of policy makers from manufacturing sector to trading and services sector has brought spotlight on women as target beneficiary.
  • Market intervention, technology skilling and regulatory framework needs to be conducive for making women as an entrepreneurial and economically active segment. Economically vibrant women and women businesses presents itself as financially viable value proposition for financial institutions to pursue after.
  • There is need to aggregate smaller women enterprises by way of producer companies for efficient delivery of services and usage of financial and other resources.
  • For making finance work for women, there is an accentuated need for strong relationship between financial institutions and communities. This relationship has to be routed through community resource persons or similar cadre of Feet-on-Street who can help break the opaqueness of operating environment of small, micro and dwarf enterprises. It will bring comfort to many mainstream commercial financial institutions as more information is made available about the enterprises.
  • Concerted effort to break the information asymmetry around availability of various schemes, products and bouquet of benefits is also critical to create empowered and informed demand from women.


A customer-centric approach to product design and delivery can offer value for financial institutions, customers, and the ecosystem at large. Apart from a strong business case for an ‘outside-in’ approach, customer-centric solutions can empower clients by responding to their needs and empowering them with the tools to control their financial lives and mitigate risk and uncertainty.  In a series of Ted-style talks, experts from the Krea University ecosystem discussed the key principles, from various perspectives, essential for designing a customer-centric financial services architecture in India and how to create a truly responsive and inclusive financial services sector that offers long-term
value to all stakeholders. The talks were focused around Enabling last-mile access through Technology, Integrating Humanities and Social Science Concepts in Creating a Customer Centric Financial Ecosystem, Women and Customer Centricity, and Leveraging Insights from the Ground.

Interface of Women with Indian Financial, SystemTalk by Soumya Kapoor, IWWAGE (Initiative for What Works to Advance Women and Girls in the Economy) at Krea University

• Gender disparity in number of inactive accounts under Jan Dhan Yojana is stark. Inactivity stems from various reasons spanning from insufficient cash at disposal, limited working knowledge of operating bank account to interacting openly with a BC correspondent.

• BC assisted and guided schedules is critical for usage of bank accounts and other financial services by women.

• While there are empirical studies clearly articulating and highlighting strong rationale for financial products and services for women, not much is explored or discussed for supply of women-workforce in financial services for servicing women clients.

• Practitioners have mentioned challenges related to mobility, lack of disciplined time commitment from women field officers and safety as primary concerns.

• Also women workers look for stability of income flow and largely field officer’s fixed and incentive are linked with targets. Such incentive structures at times act as a barrier for women workforce to participate in financial services sector.

• Apart from the tangible challenges outlined above, many practitioners mentioned that they need field officers who can “run around” and becomes a “sales rock star” indicating strong gender bias even before actual hiring.

• Designing a customer –centric, gender responsive and inclusive financial services architecture will need to address the issue of missing women workforce in financial services space.

Creating a Citizen-Centric Financial Ecosystem, Talk by Dr. Bisnu Mohapatra, Dean of School of Interwoven Arts and Sciences (SIAS) at Krea University

• The role of Rights-based approach, esp. for marginalized communities, for universal financial inclusion is not explored much, and provision of financial services is largely market-driven. Market-led solutions to solve for efficient resource allocation and return maximization, and financial services design and delivery is largely left for the market to engage, provide and serve customers/client guided by the principle of shareholder’s value maximization.

• In contrast to the existing state of supply for financial services, many citizen studies have highlighted that India as a country expects state to provide for basic goods and services. Interestingly, studies have highlighted the provision of basic financial services is perceived as the responsibility of the state to provide. While the delivery mechanism of such services could be in partnership with private players, the state cannot absolve themselves from providing such services.

• The primary concern with making a client-centric argument is customers and clients are individualized and narrowed down to very thin categories. Customers and clients are defined as segment consuming certain products and having certain preferences at certain price points. The market has to solve for these preferences. The client-centric approach does not acknowledge rights and neither makes a strong enough argument for accountability.

• Hence it will be critical to incorporate the dimension of citizens instead of just clients in the discourse, including tenets of a rights-based approach in designing more considerate and sensible financial inclusion architecture.

• The idea of clients and citizenship should be connected to the social structure of society. The idea of citizenship applied properly to financial services, can do a lot of good to the client-centric imagination

– It will allow paying attention to multiple facets a client has, for e.g. access to finance/ market is connected to many things like education, upbringing, social capital, etc. This would help identify,  understand, and acknowledge the complexities to be addressed while designing a resilient system.                                    – It will facilitate including technology perspective basis the understanding that technologies introduced are connected to unequal social forces in society. Technology is not a neutral entity, it rides on capital and private interest.
– It will allow room for designing accountability mechanisms.

Enabling Last Mile Access through Technology, Talk by Dr. Gaurav Raina, Head of Research Council at Krea University

Adoption and sustained usage of technology at last mile is complex.

• Technology adoption is largely  use case driven even for a fairly educated and tech-savvy population segment. Any technology adoption targeted for last mile will have to be articulated strongly for clear use-cases.

• Designing systems and architecture which will enable transfer of money will have to be designed for trust, comfort along with interoperability, fastness and security.

• The last mile issues like language are still not addressed in a fairly stable mobile payments segment yet. Multilingual applications, user-interfaces and customer support is critical for breeding trust and comfort from user’s standpoint.

• UPI and IMPS are recent but are increasingly contributing to digital payments. There has been a 10x increase in per capita digital payments in the last 5 years and a 10x increase is expected in the upcoming 3 years. There are around 100 million unique UPI users in the country.

• The national unified USSD platform did not require to download an app. This is the only payment channel where both value and volume has dropped. It is difficult to isolate reasons why it hasn’t taken off. From the people owning mobile phones, 50% people are using smartphone and the other feature phones. Only 1/5th of them are using UPI with rapidly increasing numbers. The number of USSD users on feature phones is dropping.

• However, USSD has seen a smashing success in South Africa. One of the reasons for that is – multilingualism – seeing/hearing things in their own language provides a sense of comfort leading to confidence which acts as a proxy for trust in the system, an important component missing in India’s USSD offering.

• For digital financial services to contribute towards universal financial inclusion, there is need to pay attention to triangulation of practical use cases, human behaviour pivoted against cultural, gender, age, socio-economic lens and map it carefully to underlying technology.

To view the talk, please click here.


The conversation started with the regulator’s perspective on what’s next after the institutional infrastructure for pursuing the agenda of Financial Inclusion is in place, with bank branches opened, BC infrastructure, MFI operations, and Government policies like PMJDY. According to C. Rangarajan, the context of Financial Inclusion has been ever-changing and is ascribing different meanings at different times. While a lot has been done, the sector has still not reached the end with institutional innovation, there exist more possibilities. The focus of the government and regulators should be on making existing institutions and structures more effective.

During the fireside chat, Dr. C. Rangarajan also emphasized the continued relevance of a multi-agency approach nurtured over the past decades by the Government of India and the RBI and urged inclusive financing institutions to stay true to the spirit of their inception. Financial Inclusion cannot be seen as a single agency delivery model. The multi-agency approach encompasses the SHG movement, Urban cooperatives and Regional Rural Banks. The SHG movement was a substantial innovation, moving the focus of credit from men to women. After 1996 circular, the banks considered SHGs as part of their mainstream credit operations. SHGs changed the paradigm of banking. The importance of SHGs and MFIs must be ascribed to the people it is catering to and the average size and the purpose of loans.


The need of the hour is to shift the lending practices into a more robust system. Promoting retail loans is a promising option where there is a need for local players to be a part of the lending side ecosystem within a much resilient framework for lending practices. The customer base still harks back to traditional lending practices even if there are other financial instruments present. The point of contact and the lending infrastructure needs to be more user friendly and remotely accessible.

To watch the fireside chat, click here.

Affordable Housing Finance

Real estate sector in the country saw a boom after the commercial banks opened up to housing loans around the year 2000. From the year 2000 to 2010 the industry grew rapidly, the focus of builders was primarily on luxury and high-end houses. The target segment had been the upper middle class.


However, with the slowdown in the industry there is now an increasing realisation that affordable housing is the new segment offering immense potential. The next housing boom is likely to come from this segment of the market.
To shed light on the highly anticipated boom in housing finance sector inline with government’s vision, IFI Summit 2017 presents session: Affordable Housing Finance, ascertaining where the future lies by the industry experts and veterans.Housing Loan

Government’s mission of ‘Housing for All’ (Urban) by 2022 envisages to address shortage of 20 million houses in urban areas, creating huge opportunity and providing the policy impetus. It will be impossible to achieve this ambitious mission without access to finance.

The construction industry and the financial institutions will have to re-align and re-engineer the products to effectively cater to this segment.

This session discusses about this re-alignment for addressing the housing need. The session will highlight the market potential, the emergence of new housing finance companies focusing on affordable housing, increasing focus of existing finance companies on the low-income segment, product innovations and the key challenges that impede the growth. The session would also discuss how HFCs are leveraging

Small Finance Banks: New Hope for the Unbanked?

Guidelines of RBI for licensing of SFBs states that the objective of setting up of small finance banks will be to further financial inclusion.

IFI Summit 2017 has arranged a plenary session discussing the so-far impact, implications and future prospects on #FinancialInclusion (F / T) by Small Finance Banks in the Indian economy.


The objective mentioned above fitted well with the institutions that were granted license, as most of them were MFIs. It also created opportunities for them to be able to do things that were constraints as ‘NBFC-MFIs’ such as mobilizing savings. SFB was a legal form much-awaited and was cheered by the sector with great excitement and hope.

As most SFBs celebrate their first anniversary, it is an opportune time to assess whether these institutions are on course to fulfilling the above objective. It is important to understand if the change in legal form has resulted in any change in the mission, the delivery methodology or change in priorities.

Are SFBs still as committed to their core clientele that they started with or are the business compulsions veering them to other market segments?

This session explores the development in SFBs since their origin. The session will deliberate the direction that SFBs are heading; the challenges they are facing and the opportunities that they are leveraging.


Changing Contours of the Financial Sector Architecture: Small Tremors or Tectonic Shifts

Recent years have seen the kind of changes in the financial landscape at institutional level which appear to be unprecedented and fundamental in many ways

Given the importance of these changes, the Inclusive Finance India Summit 2017 has dedicated a plenary session lead by key banking sector front-runners towards Indian financial landscape going through a pivotal period and its implied future prospects for the country.

Reserve Bank of India (RBI) approved niche banks paving way for offering small-scale financial services in a more robust framework. We are witnessing an increasing confidence of the mainstream banks in the low-income segment, evident from the rising number of BC partnerships and banks’ acquisition of the Microfinance Institutions (MFIs). Tectonic image

Banking industry is also undergoing consolidation at a scale and pace not seen before. Government is all set to merge several Public-sector banks. SBI’s recent merger with its associate banks has already created a banking behemoth of the size India has not seen before, propelling it to top 50 banks globally. In this changing landscape, once ubiquitous Regional Rural Banks (RRBs) are struggling to find their relevance as they rapidly vanish. Their numbers are reaching a low of 56 and counting, only downwards.

Then of course there is much talked about digital financial services. When a large proportion of Indians had just learned to operate ATMs, mobile payments have begun to threaten their existence.


The session is going to discuss this changing landscape and assess if these are just ordinary and regular changes or if there is a fundamental shift happening and what it means for the future?