MFIs Onboarded 13 Mn New Customers In FY24: Inclusive Finance India Report

The microfinance sector (comprising all players, both profit and non-profit) onboarded 137 million active loan accounts, an increase of more than 10 per cent over the previous year, according to a recent report.

The Inclusive Finance Report also added that during the financial year 2022-23 (FY23), micro-finance institutions(MFIs) acquired 13 million new customers, well above the previous year's level of about 12 million.

The report makes a case for redoubling efforts with respect to measures of financial inclusion other than a basic bank account. Women, small borrowers, Medium and Small Enterprises(MSEs) and other marginalised sections have a lot of catching-up to do when it comes to the availability of credit.

“We are not far from a situation where all the adults in the country will be covered with at least one basic bank account. Both the public and private sector banks have done a great job in furthering financial inclusion efforts and have done a lot of outreach for the popularisation of financial inclusion schemes. However, the private sector banks need to give a final push which will subsequently help the government to achieve its ambitious goals,” said Vivek Joshi, Secretary, Department of Financial Services, Ministry of Finance, Government of India.

Payment solutions such as Google Pay, PhonePe, etc. riding on the Unified Payment Interface(UPI) and Aadhaar-enabled Payment Services(AePS) infrastructure have created a positive consumer experience and are driving the adoption of digital finance. September 2023 saw over 11 billion transactions taking place using UPI in a single month, the report highlights while citing the data from the Reserve Bank of India (RBI).

“UPI is an amazing success story. Hello UPI and UPI 123 are initiatives that have helped inclusive finance take off,” said Alkesh Wadhwani, Director, Poverty Alleviation, Bill and Melinda Gates Foundation.

According to National Bank for Agriculture and Rural Development (Nabard) statistics, the Deendayal Antyodaya Yojna-National Rural Livelihoods Mission (DAY-NRLM) programme covers more than 160 Million households, with 13.4 million Self Help Groups(SHGs) having accumulated savings of Rs 588.93 million in their bank accounts as of 31 March 2023.

This registered a 13 per cent increase in the number of SHGs and a 25 per cent increase in the savings amount over the previous year. Of the total SHGs, 11.29 million were all women SHGs with savings of Rs 524.55 billion, accounting for 84 per cent and 89 per cent of total SHGs and savings, respectively.

“Typical SHG loan comprises worth Rs 30,000 on average. Despite having creditworthiness it is difficult to provide them loan,” Wadhwani added.

This registered a 13 per cent increase in the number of SHGs and a 25 per cent increase in the savings amount over the previous year. Of the total SHGs, 11.29 million were all women SHGs with savings of Rs 524.55 billion, accounting for 84 per cent and 89 per cent of total SHGs and savings, respectively.

“India always has inclusivity at its core. Digital Public Infrastructure has been driven by PMJDY, UPI, e-payment etc.,” said Ravi Aurora, Senior Vice President, Global Public Policy and Government Affairs, Mastercard.

Penetration of RuPay cards is not universal yet with less than 70 per cent of all PMJDY account holders being issued one as of August 2023 which means that approximately 160 million PMJDY account holders are still excluded from the accident insurance cover that comes along with the bank accounts, the report mentions.

Riding on the Aadhaar database for digitally identifying and verifying bona fide customers to comply with the ‘Know Your Customer’ (KYC) requirements, PMJDY enabled account ownership in India to leapfrog from 35.23 per cent in 2011 to 77.53 per cent in the year 2021, the report mentions.

The aggregate savings in these 500 million accounts stands at over Rs 2 trillion, saved by small savers. The universal reach of PMJDY enabled the elimination of the gender gap in account ownership for the first time ever, the report mentions.

“India has shown the world how financial inclusion and digital innovation can go hand-in-hand,” Aurora added.

Small Industries Development Bank of India (Sidbi) refinancing activities have significantly boosted MSEs’ credit access, with its portfolio expanding by 79 per cent to Rs 2,981.73 billion in March 2023. This growth encompasses a diverse group of 49 banking institutions. Similarly, Non-banking Financial Companies(NBFCs) financing saw an 86 per cent increase, with disbursements growing by 81 per cent compared to the previous year.

The bank’s support for microfinance organisations (MFOs) includes a variety of financial instruments, with a 57 per cent increase in the net portfolio to Rs 49 billion for FY23. Additionally, Sidbi introduced three new financial products under its special liquidity facility or SLF-3 scheme to aid small MFOs and digital finance entities.

“Data-driven credit appraisal has helped our credit facility. Quantum credit per day is something on which we always focus,” said S Ramann, Chairman and Managing Director, Sidbi.

As of 9 October 2023, according to the MSME (Udyam) registration portal, the total number of registrations stood at an impressive 19.84 million, reflecting the vast number of enterprises in this sector.

“We have successfully registered 1 crore entities in the Udyam portal in the last 15 months. Udyam registration is important for fulfilling priority sector lending norms. Account aggregator providing centralised details to the banks. Banks provide data to give credit scores. Then, banks providing loans linked with microinsurance is overall something which creates a virtuous cycle of financial inclusion,” said Ramann.

Overall, the 20th Global Inclusive Finance Summit showcased India's substantial progress in financial inclusion, with over 500 million accounts opened by August 2023, while emphasising the need for continued efforts, especially for marginalised groups and highlighting the role of digital innovations in driving financial accessibility.



Access Development Services hosted the 20th edition of the Global Inclusive Finance Summit to unveil its annual report titled ‘Inclusive Finance India Report 2023’. A discourse on financial inclusion was held in New Delhi on the 12th and 13th of December 2023.