Formation 2012 Vice President C. S. Ghosh | President Samit Ghosh | |
Location Gurgaon, Haryana, India Website | ||
Microfinance Institutions Network (MFIN) is an association for the microfinance sector in India. Its member organizations constitute the leading microfinance institutions in the country.
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Business model
MFIN was created to promote the key objectives of microfinance, which is to help economically under served communities achieve greater financial independence and build sustainable livelihoods. MFIN seeks to work closely with regulators and other key stakeholders to achieve larger financial inclusions goals through microfinance.
MFIN is a primary representative body and the Self-Regulatory Organization (SRO) for Non Banking Finance Companies (NBFC) Microfinance Institutions (MFIs) regulated by the Reserve Bank of India (RBI). MFIN currently has a membership of 42 NBFC MFIs, which on an aggregate basis constitute over 89% of the microfinance business in India.
The core areas of work for MFIN are Self Regulation, Policy Advocacy and Development.
MFIN's internal whistle-blowing mechanism tries not to charge beyond RBI suggested rates from its Member Micro Finance Institutions. This is to ensure there is no more possibilities of charging high rate of interest rates. RBI has set a cap on the lending rate of MFIs at 26 per cent per annum and a margin cap of 12 per cent over their cost of funds, whichever is lower.
Currently MFIN member organizations consist of 42 of the leading NBFC/MFIs whose combined business constitutes over 90% of the Indian microfinance sector excluding SHGs.
Database of borrowers
Validation of lending money beyond the clients (borrower) capability to pay back was a challenge to RBI before. MFIN tries to validate this aspect by finding the existing borrowings of the client through dedicated microfinance credit bureaus, only two MFIs can lend to one borrower and both together cannot provide loans beyond Rs.100,000.
MFIN has facilitated setting up a database of the borrowers which confirms the necessary validation required. The database consists of over 30M micro borrowers and about 60 million loan accounts. When a person applies for the loan, MFI checks for the loan history and verifies the RBIs benchmark with the credit reports. The credit reports are 80-90% accurate.
Many MFIs undertake significant social activities across health, education and skill development on a non-profit basis.