Challenges of Introducing Micro and Small Enterprise Lending in India

by Anup Singh and K Somanadha Babu
Feb 25, 2009
1 min

This IFN discusses some of the key challenges faced by MFIs implementing individual lending(IL) model

Individual Lending (IL) in the context of Indian microfinance is still at a nascent stage thereby providing scope for expansion. This IFN discusses some of the key challenges faced by MFIs implementing IL model. These challenges pertain to coping with cash-flow based lending servicing diverse businesses and problem in recognising assets as collateral due multiple ownerships in India. Operation and human resource issues also pose a significant amount of challenge while implementing IL model microfinance. Financial management in terms of integrating IL to existing group based models, demand substantial cash and many MFIs do not plan their liquidity to respond to this increased demand. The challenge of establishing effective MIS to cater to the varying requirements of clients is another aspect discussed in the IFN.