State makes its mark in micro-finance

State makes its mark in micro-finance

Speakers at a conclave on ‘Micro-financing’, he felt the need for putting in place a regulatory architecture for the sector, but at the same time ensuring the industry was not “strangulated” by regulations.

According to statistics made available at the conclave, organised by Assocham, the micro-finance client base in the State has grown by 64 per cent, reaching 32 lakh (compared to the national average of 42 per cent).

Modi said there was a need to streamline and generate synergies between regional rural banks and micro-financing institutions (MFIs) to ensure financial inclusion of rural areas.
Rural Development and Panchayat Raj Minister Jagadish Shettar appealed to MFIs to diversify their customer base by making inroads, especially into the North Karnataka districts.

The move, he said, will place the movement of micro-financing in a better position to achieve greater inclusion by serving larger segment of the population.

A more socially inclusive approach will help micro-financing institutions diversify their risks, cushion negative impacts from future crisis, and ameliorate unhealthy competition in a single area.

Micro-finance loans serve as a last-mile bridge to low-income population excluded from the traditional financial services system, and seeks to fill the gap.

Vijaya Bank Chairman and Managing Director Upendra Kamath said access to sound financial credit would help the poor in becoming self-reliant and MFIs could play a major role in this endeavour.

He said the Reserve Bank of India (RBI) intervention by constituting Malegaon Committee was a mature and pragmatic step to regulate the sector and tackle issues like cost of raising funds, interest rates, repayment options among others.

Industry vs agriculture

Karnataka ranks number two top investment destination in the country after Gujarat, but on the flip side agricultural growth has decelerated over the last decade, according to an assessment done by Assocham.

The State is marching ahead in manufacturing and services with 1,528 projects worth Rs 9.1 lakh crore underway, states the Assocham assessment which was released in Bangalore on Thursday.

As much as 44 per cent of the projects in the State are in the manufacturing sector followed by 22.4 per cent in services, 15 per cent in power and about 14 per cent in real estate.

Gujarat tops the list as the most preferred investment destination with 1,455 projects worth Rs 13.35 lakh crore underway.

The study was jointly released by Assocham President Dilip Modi, Assocham co-chairman Southern Regional Chapter J Crasta.

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