This IFN discusses some of the current trends and challenges faced by Indian microfinance institutions. The exponential growth coupled with efficient operating costs has attracted attention of venture capital funds and nationalised institutions to invest in Indian MFIs. However, this is also leading to a number of challenges, like limited access to finance, weak governance and lack of second line of leadership, inadequate integration of IT and E-banking solutions, competition and lack of social protection.
The IFN focuses on the single biggest challenge – capacity building, imperative to address the above mentioned challenges. It stresses on the need to invest in human capital and systems through capacity development encompassing both training and technical assistance. There is need for involving established service providers rather than relying on ad hoc in-house training competencies. Customised solutions to nascent/growing and expanding/mature MFIs are the need of the hour. Rural academic institutions need to focus on theory and real life case studies integration.
Discussing the demand side, the IFN highlights on less attention paid to training for senior management who are most often not considered for training. It is time that capacity building starts getting treated as an investment rather than expense. The IFN concludes by emphasising the need to focus on good governance, client focus and networking with other development institutions.