DIGITAL TECHNOLOGIES AND NEXT-GENERATION MICROFINANCE: AN OVERVIEW

Abstract

Over the past ten years, the microfinance industry has experienced significant expansion and change in areas like consumer behavior, technology, and legislation. With the goal of fostering social and economic development in the nation, the microfinance industry has played a crucial role in advancing the financial inclusion agenda by facilitating the provision of microcredit to small and medium-sized businesses (SMBs) and financial services to underbanked and unbanked low-income groups. Loan disbursals in the Indian microfinance sector increased by 80% in Q1 FY 2022–23 over the same period the previous year. As of November 2022, 37% of the nation's non-banking financial companies–microfinance institutions (NBFC–MFI) portfolio was located in eastern and northeastern India. Current industry advancements include the COVID-19 pandemic, demonetisation, and technology initiatives.

As a result, the coordinated efforts of all parties involved in the microfinance ecosystem ought to go beyond simply bolstering the industry's development and sustainability pillars and instead take additional steps to assist the sector in making notable progress in the area of financial inclusion. This research aims to provide you with an overview of the current MFI landscape in India. It also identifies potential that can be harnessed through technology and difficulties that exist across the value chain. The paper also examines and highlights the strategic roadmap that the microfinance sector should follow in order to develop new goods and services, fill skills gaps, implement an environmental, social, and governance (ESG) framework, and improve customer service by utilizing digital tools and technology.

Key words: JAM, SIDBI, MFI, NGOs, BC, RBI, SGH, NABARD, AI, Micro Fin,