Microfinance attracts renewed attention after RBI's interest rate cap move

Within months of the RBI lifting the interest rate cap on such loans, the industry is seeing a steady rise in borrowing, especially among women in some of India's poorest districts

Subhomoy Bhattacharjee New Delhi
Typical microfinance borrowers are families with monthly income of Rs 25,000 or less. (BS Photo)

Typical microfinance borrowers are families with monthly income of Rs 25,000 or less. (BS Photo)

Mamta Devi, a resident of Ranti village in Madhubani, makes a living selling her paintings of the famous art synonymous with the name of the district. This morning she is sitting in a group of 10 women taking out a microfinance loan of Rs 25,000 to finance her work.
This is her second loan from the company, having paid off her first one. Mamta Devi, like the hundreds of thousands of women in north Bihar who take these loans, does not understand how interest rates work but knows that, somehow, it matters for the payout. “The first question they ask the grahak mitras (village-level outreach agents) is how much they will have to pay back each month,” said Sameer Kundu, area manager of Adi Chitragupta Finance Limited (ACFL), the only microfinance company headquartered in Bihar, speaking to this writer at his office in Madhubani town.

And there are plenty of competitors, added Shubham Vineet, senior vice-president of ACF

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First Published: Jan 23 2023 | 6:21 PM IST

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