MFIs’ growth below RBI’s expectations

Tags: News
The microfinance sector is yet to regain normalcy and grow to the central bank’s expectations, according to a senior Reserve Bank of India (RBI) official.

With the performing loan portfolio turning negligible because of stringent laws in Andhra Pradesh and Telangana, the sector was yet to restore investors’ confidence, said R Gandhi, deputy governor of RBI, here on Monday.

“To restore normalcy is not easy. Even now there are some problems. In fact, the growth has not been up to our expectations. Restoring faith among investors is not an easy job. Because of the continued growth in other states, MFIs, however, have come out of disturbances. But for customers until all issues were resolved, the SHG bank linkage programme would continue to serve alone,” he said.

Gandhi said this while speaking on the ‘role of financial sector in the growth of the southern region’ at a Ficci meet.

“They (Telangana and Andhra governments) had come to us with a detailed plan on rescheduling loans. We had preliminary discussions on this,” he said on the sidelines. On the gold loans, he said gold investment was being looked as a safe investment option. But right efforts by related sectors could make people with moderate or good risk appetite to shift focus from non-finance products to financial products.

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