Fusion Microfinance Pvt

Odisha contains almost 35% of India’s natural resources. Its GDP has been expanding at an impressive rate of 12.36%. The mineral and metal based industry is one of the most prominent drivers of Odisha’s economy. This is evident from the fact that almost 47.5% of the mineral production by value in India was contributed by Odisha. Odisha also has a rich history of artisans and painters and is considered to be the land of handicrafts. There are almost 1.3 lakh handicraft artisans spread across the state. Needless to say, microfinance has the potential to transform the lives of the poor in Odisha. How do Microfinance companies help in the provision of finance? Microfinance companies provide loans without collateral to women, rural individuals, and small enterprises from 50,000 to 100,000. The loan provided is usually for a shorter period of time and allows them to escape the high-interest rates that might be charged by intermediaries or unorganized lenders in the area. The Microfinance companies set up the individuals either through Self-help groups that encourage savings by a group of people or through joint-liability groups wherein a loan is advanced to a group of people engaged in similar activities. What considerations must be kept in mind? Microfinance is popular in states where in regular penetration of credit has not been achieved successfully to date. Microfinance in Odisha is provided by a variety of companies and organizations to uplift the women and poor in the area. One of the first things to be kept in mind by any person or group looking for microfinance must be that the company should be registered with the Reserve Bank of India. Ideally, microfinance companies need to be registered with the RBI before conducting any transactions. However, many companies may be conducting operations devoid of that and may advance loans at high-interest rates or dupe the poor of their savings. A registered MFI would grant protection to the borrower in case of any dispute in the future. Apart from registration with RBI, most Microfinance companies are affiliated with a bank that funds such MFI. Borrowers may take a look at the bank affiliated with the microfinance company to enable them to get the best possible rates. While Microfinance in Odisha is generally between the rates of 20 to 30%, they are still at a lower rate than private lenders. A borrower or customer may also look at a credit facility being extended by the microfinance company as well as other services offered. Many MFI in the past have grown to become small savings banks or even full-fledged banks. An MFI providing a variety of services may enable the consumer or the borrower to inject themselves into the banking system and take advantage of the same. What areas are being funded by Microfinance companies? Microfinance companies generally do not limit themselves to a particular sector as their lending may be dependent on the primary sector of the region they operate in. Microfinance companies such as Annapurna, Fusion Microfinance provide loans and advance credit to women entrepreneurs enabling them to earn income and establish their business. Microfinance is a fiercely competitive field and a borrower may find various lenders willing to provide them loans. Although the market is facing some crunch post COVID, borrowers must take a look at the registration of a company, areas they operate in, and interest rates provided before undertaking a loan.