India Microfinance Market is Being Fueled by Loans Provided by NBFCs
The increasing demand for microfinance services among
low-income group, government policies and diversification of services provided
by the microfinance companies are driving the growth of microfinance market in
India.
According
to TechSci Research report, “India Microfinance Market- By Region, Competition Forecast and Opportunities, 2019-2029F,” the
India
microfinance market is witnessing high demand owing to the rising awareness regarding
microfinance among consumers and the services provided by companies through
online mode.
The idea of
"microfinance," a type of financial service that offers small loans
and other financial services to poor and low-income households in a consistent
and legitimate manner, was born out of the need to support low-income families
in developing nations like India as well as uplift and provide them with a
better standard through financial support in a more efficient way. It is an
economic instrument created to encourage financial inclusion, which enables
low-income and impoverished households to escape poverty, raise their income
levels, and generally improve their standard of living. It can make it easier
to implement national policies aimed at raising living standards, empowering
women, reducing poverty, and supporting vulnerable populations.
Nearly 50% of people in
India do not have a straightforward savings account. However, in order to realize
their objectives of wealth accumulation and risk mitigation, they require
financial services, and due to microfinance, people with restricted access to
capital can do so. If microfinance organizations hadn't been lending to this
segment of society, these groups would have turned to borrowing money from
friends or family. They are more likely to select payday loans or quick cash
advances, both of which have incredibly high interest rates. Microfinance helps
these organizations make wise investments in their businesses, supporting the
government's objective of financial inclusion in the country.
As India's economy has
grown, so has the demand for credit. Many people are looking to start small
businesses or expand existing ones, but traditional banks are often unwilling
to lend to them. MFIs offer a more accessible alternative, providing loans that
are tailored to the needs of small business owners and entrepreneurs.
Advances in technology
have made it easier for MFIs to reach customers and manage their operations.
Mobile banking and other digital platforms have enabled MFIs to provide
services to remote areas and reduce transaction costs. This has helped to
increase the efficiency of the sector and make it more attractive to investors.
In India, the microfinance industry has access to a variety of financing
sources, such as grants, debt, and equity. This has made it possible for MFIs
to grow their businesses and attract additional customers.
With a variety of
stakeholders, including banks, governmental bodies, and other organizations,
MFIs in India have developed significant partnerships. These collaborations
have aided in extending the sector's influence and advancing financial
inclusion.
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an in-depth TOC on "India Microfinance Market”
Key market players in
the India microfinance market include:
- Ujjivan Financial
Services Limited
- Asmitha Microfin Ltd.
- Utkarsh Small Finance
Bank Limited
- CreditAccess Grameen
Limited
- Share Microfin Limited
- Spandana Sphoorty
Financial Ltd.
- Bhartiya Samruddhi
Finance Limited (BSFL)
- Bharat Financial
Inclusion Limited
- BSS Microfinance Limited
- Muthoot Microfin Limited
The India microfinance market is
segmented based on provider type, purpose,
tenure, region and competitive landscape. Based on provider type the
market is divided into banks, NBFCs, Fintech. Based on purpose, the market is
fragmented into agriculture, manufacturing/production, trade & services,
household and others, including consumer durable, vehicle, etc. Further, based
on tenure the market is segmented into less than 1 year, 1-2 years, and more
than 2 years.
Based on provider the
banks are in more demand as the people in rural areas are mostly in the need of
unsecured loans and have trust on small finance banks in their areas which is
significantly resulting in high demand for the banks as a trustable and easy
solution for loans for different uses.
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“Due to a number of factors, including
lack of access to formal financial services, rising credit demand, government
support, technological advancements, strong performance, social impact, growing
competition, regulatory environment, access to
capital, and strong networks of partnerships, the microfinance sector in India
has seen significant growth in recent years. These factors will probably
continue to have a substantial impact on the sector's growth as it continues to
develop,” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based
global management consulting firm.
“India Microfinance Market By Provider
Type (Banks, NBFCs, Fintech), By Purpose (Agriculture,
Manufacturing/Production, Trade & Services, Household, Others (Consumer
Durable, Vehicle, etc.), By Tenure (Less than 1 Year, 1-2 Years, More than 2 Years),
By Region, Competition Forecast & Opportunities, 2019-2029F,” has evaluated the future
growth potential of India microfinance market and provides statistics &
information on market size, structure, and future market growth. the report
intends to provide cutting-edge market intelligence and help decision makers
take sound investment decisions. besides, the report also identifies and analyzes
the emerging trends along with essential drivers, challenges, and opportunities
in the microfinance market in India.
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