Microfinance - NewNerve

Beyond Payments: How Fintech Firms Use Microfinance Licenses to Expand Their Offerings

26Jun

By Ankit2 Comments

BFSI, Fintech, Global BFSI, International Reports, Microfinance

Beyond Payments: How Fintech Firms Use Microfinance Licenses to Expand Their Offerings

The microfinance sector has traditionally been the domain of specialized lenders focused on serving the underbanked. However, in recent years, a new trend has emerged - fintech companies are increasingly acquiring microfinance banking licenses to expand their capabilities. According to Eric Ntumba, the acting CEO of Baobab Microfinance Bank, this strategic move by fintechs is driven by their desire to go beyond just being payment platforms. "Most fintechs present themselves primarily as payment platforms. However, once they obtain a microfinance banking licence, they can also lend. Thus, they become relevant competition as they are equipped to perform the same regulatory activities we do," Ntumba explained. The advantages for fintechs are clear. By obtaining a microfinance ...

The Business Correspondent Model: Expanding Financial Access in India

6May

By AnkitNo Comments

BFSI, Blog, Fintech, Lending, Microfinance, Payments

The Business Correspondent Model: Expanding Financial Access in India

The Business Correspondent (BC) model is a crucial component of India's financial inclusion strategy, aiming to extend financial services to unbanked and underserved populations in rural and remote areas. Let's delve deeper into how this model works: 1. What is a BC? A BC acts as an intermediary between a bank and its customers, providing basic financial services at the last mile. These individuals or entities are typically local entrepreneurs or community members who understand the local context and have the trust of the community. 2. Services Offered by BCs: BCs typically offer a range of services, including: Account opening Cash deposits and withdrawals Money transfers Micro-loans Micro-insurance Bill payments ...

6May

By Ankit1 Comment

BFSI, Blog, Fintech, Microfinance

Financial Inclusion Initiatives with Fintech Collaboration in India

The Indian government and regulators have actively collaborated with Fintech companies to promote financial inclusion, reaching underserved populations and providing access to essential financial services. Let's explore some specific initiatives: 1. PMJDY (Pradhan Mantri Jan Dhan Yojana): This government-led initiative aimed to provide universal access to banking services by opening bank accounts for the unbanked population. Fintech companies played a crucial role in enabling account opening through mobile wallets and online platforms, reaching remote areas and simplifying the process. 2. Aadhaar Enabled Payment System (AEPS): AEPS allows individuals to use their Aadhaar biometric authentication to access their bank accounts and make financial transactions. Fintech companies...

BCs (Business Correspondents) and Fintech Collaborations, 2024

4May

By Ankit3 Comments

BFSI, Blog, Microfinance

BCs (Business Correspondents) and Fintech Collaborations, 2024

Benefits of Fintech-BC (Business Correspondents) Collaborations for Underserved Communities The collaboration between fintech companies and BCs (Business Correspondents) has significantly benefited underserved communities in India by expanding access to financial services, promoting financial inclusion, and empowering individuals and communities. Let's explore the key benefits of these partnerships: 1. Increased Financial Access: Fintech-BC collaborations have extended the reach of financial services to remote and underserved areas, bridging the geographical gap and bringing financial products closer to the unbanked population. This has enabled individuals to open bank accounts, access micro-loans, micro-insurance, and other essential financial services, empowering ...

4May

By AnkitNo Comments

BFSI, Blog, Fintech, Microfinance

Fintech-BC Collaboration: Driving Innovation in Financial Inclusion

Fintech companies are actively collaborating with BCs to offer innovative financial products and services, expanding access and catering to the diverse needs of unbanked and underserved populations. Let's explore some key areas of collaboration to drive innovation in Financial Inclusion: 1. Digital Onboarding and KYC: Fintech companies are providing digital platforms and mobile apps to streamline customer onboarding and KYC (Know Your Customer) processes for BCs. This reduces paperwork, accelerates account opening, and improves the overall customer experience. 2. Micro-loans and Credit Scoring: Fintech companies are leveraging alternative data sources and machine learning algorithms to develop innovative credit scoring models for BC customers. ...

NBFC Leaders Advocate Responsible Lending and Equitable Co-Lending with Banks

29Apr

By AnkitNo Comments

Banking, BFSI, Digital Lending, Lending, Microfinance, NBFC

NBFC Leaders Advocate Responsible Lending and Equitable Co-Lending with Banks

Non-banking finance companies (NBFCs) are at the forefront of financial inclusion, bridging gaps in credit access for underserved segments. In recent discussions at the ETBFSI NBFC Connect’24 Summit in Chennai, industry leaders underscored the importance of responsible lending practices and equitable partnerships in co-lending arrangements with banks. Responsible Lending Practices Ashish Mehrotra, MD & CEO of Northern Arc Capital, emphasized the significance of reaching the last mile through partnerships. He stated, “As long as we are able to reach the last mile in partnership/co-lending, we bring more value to the ecosystem.” This approach ensures that credit reaches even the most remote borrowers. NBFCs adopt a calibrated and responsible underwriting process. T...

Co-lending Model: A Collaborative Approach to Financial Inclusion in India, 2024

25Apr

By Ankit1 Comment

Blog, Banking, Digital Lending, Lending, Microfinance, NBFC

Co-lending Model: A Collaborative Approach to Financial Inclusion in India, 2024

The co-lending model has emerged as a significant innovation in the Indian financial landscape, aiming to bridge the credit gap and promote financial inclusion. This model involves collaboration between banks and non-banking financial companies (NBFCs), leveraging their respective strengths to offer wider access to credit for underserved segments. Stakeholders and their involvement: Banks: Contribute their robust risk management expertise, regulatory compliance, and access to low-cost funds. They typically originate the loan and conduct due diligence on borrowers. NBFCs: Bring their domain expertise in specific sectors, strong customer relationships, and agility in loan processing. They often handle customer acquisition, credit assessment, and loan servicing. Borrowers: Benefit...

Evergreening in the Lending Ecosystem in India: Understanding the Practice and its Implications

24Apr

By Ankit1 Comment

Lending, BFSI, Digital Lending, Microfinance, NBFC, Regtech

Evergreening in the Lending Ecosystem in India: Understanding the Practice and its Implications

In the lending ecosystem of India, there are various practices and strategies employed by financial institutions to manage their loan portfolios. One such practice that has garnered attention is "evergreening." Evergreening refers to a process wherein lenders extend new credit or provide additional funds to borrowers who are struggling to repay existing loans, primarily to maintain the appearance of a performing loan. In this article, we will explore the concept of evergreening in the Indian lending ecosystem, its implications, and the regulatory measures in place to address this practice. Understanding Evergreening It involves granting additional credit or restructuring existing loans to borrowers who are facing financial distress, often without addressing the underlying issues causin...

Fueling Inclusive Finance: Microfinance Portfolio Skyrockets by 31% to Rs 4 Lakh Crore

15Apr

By AnkitNo Comments

Lending, Digital Lending, Microfinance

Fueling Inclusive Finance: Microfinance Portfolio Skyrockets by 31% to Rs 4 Lakh Crore

India's microfinance sector has experienced a remarkable surge, with the outstanding portfolio reaching a staggering Rs 4 lakh crore. This represents a significant increase of 31% year-on-year, according to the CRIF MicroLend report. The robust growth in the sector highlights the increasing importance of microfinance in providing financial inclusion and support to underserved segments of the population. Impressive Growth Statistics: The CRIF MicroLend report reveals several key growth indicators within the microfinance sector. The number of active loans witnessed a substantial rise of 23.2% year-on-year, reaching a total of 155 million loans. This demonstrates the increasing demand for microfinance products and services among individuals and microenterprises across the country. Loan d...

Small Finance Bank License: RBI denied licenses 2 more entities

13Apr

By Ankit1 Comment

Banking, BFSI, Lending, Microfinance, Payments

Small Finance Bank License: RBI denied licenses 2 more entities

In a recent development, the Reserve Bank of India (RBI) has turned down two more applications for (SFB) Small Finance Bank licenses, as reported by Moneycontrol. This decision marks a continuation of the stringent scrutiny exercised by the central bank in granting licenses for SFBs. Background of Bank Licenses The central bank had received a total of 12 applications for both small finance bank licenses and universal bank licenses. These applications were submitted by various entities aiming to set up financial institutions that cater to specific segments of the population. The RBI's decision comes amidst the backdrop of a rigorous evaluation process that assesses various aspects including financial stability, governance structures, and business models. With the Indian banking s...