Short blog series (part-5) MFIN

Manyanshi Joshi
Oct 5
6 min read

MFIN

Full Name: Microfinance Industry Network (formerly Microfinance Institutions Network). FIDC+3Wikipedia+3mfinindia.org+3
Established: October 2009 under the Andhra Pradesh Societies Registration Act, 2001. PwC+1
Purpose: To promote responsible and inclusive microfinance in India — including client protection, good governance, advocacy, self-regulation of MFIs, and working with regulators and stakeholders. Business Standard+3PwC+3mfinindia.org+3

Key Functions & Roles

Self-Regulatory Organisation (SRO)MFIN is recognized by the Reserve Bank of India as an SRO for the microfinance sector. Its members include Non-Banking Financial Company Microfinance Institutions (NBFC‑MFIs), banks, small finance banks, etc. APN News+3PwC+3mfinindia.org+3
Advocacy & PolicyIt advocates for policy/ regulatory changes beneficial to the sector. Works with RBI and other regulators. PwC+1
Standards & GuidelinesSets standards for responsible lending, underwriting guidelines, interest rate practices, client protection measures. Business Standard+2PwC+2
Data & ResearchPublishes quarterly reports (“Micrometer”) tracking the state of India’s microfinance industry: loan portfolios, number of clients, delinquency, regional spread etc. APN News+1
Capacity Building & TrainingRuns programs like “ASCEND” for training field officers, branch managers etc. in areas like ethics, regulatory compliance, client protection etc. ETGovernment.com
Grievance Redressal & Consumer HelpProvides helplines, forums for customer complaints pertaining to member institutions. mfinindia.org +1

Recent Changes / Key Developments

From January 2025, MFIN has tightened norms: e.g. reducing the number of micro-lenders per client from four to three; capping total indebtedness (microfinance + unsecured retail) per borrower; stricter rules for delinquencies. Business Standard
Introduction of “Guardrails 2.0”, revising underwriting and oversight norms. LinkedIn+1
Leadership changes: As of July 2025, Vineet Chattree has been elected Chairperson, and Dibyajyoti Pattanaik as Vice‑Chairperson. India Blooms
Expansion of membership: Initially only NBFC‑MFIs; now includes all “regulated entities” having microfinance portfolios (banks, SFBs, NBFCs etc.) under its “Unified MFIN” framework. FIDC+2mfinindia.org+2

Reach & Scale

Covers a pan‑India presence: has State Chapters and District Forums across many states and UTs, to address local issues. mfinindia.org +1
In recent reporting (Q1 FY 25‑26), had about 7.5 crore unique clients as of June 30, 2025, and portfolio size of ~ ₹3,53,233 crore. APN News

The motive of the Microfinance Industry Network (MFIN) can be summarized through its core mission and objectives. It exists primarily to promote responsible lending, financial inclusion, and sectoral stability within India's microfinance ecosystem.

Here’s a breakdown of its core motives:

🎯 1. Promote Financial Inclusion

Why: Large sections of India’s population, especially in rural and low-income urban areas, are excluded from formal financial services.
Motive: Ensure that underserved and unbanked populations get access to credit in a fair, transparent, and sustainable manner.

⚖️ 2. Act as a Self-Regulatory Organization (SRO)

Why: The microfinance sector has faced criticism for over-lending, coercive recovery, and client exploitation.
Motive: Maintain discipline, transparency, and ethical behavior among member institutions by enforcing self-regulation in line with RBI guidelines.

🛡️ 3. Ensure Client Protection

Why: Borrowers in microfinance are often financially vulnerable.
Motive: Promote responsible lending practices, avoid client over-indebtedness, and ensure that clients are treated fairly and respectfully.

📊 4. Standardize Practices Across the Industry

Why: Diverse players (NBFC-MFIs, banks, small finance banks) operate in the sector.
Motive: Create common standards in underwriting, pricing, disclosures, and grievance redressal, to bring consistency and reduce risk.

📣 5. Advocate for the Microfinance Sector

Why: The sector needs a collective voice to influence policy and regulation.
Motive: Represent the industry to regulators like RBI, policymakers, and international bodies, and advocate for a conducive operating environment.

🧑‍🏫 6. Capacity Building & Awareness

Why: Field officers and borrowers often lack adequate training and understanding.
Motive: Build the capabilities of microfinance professionals and raise awareness among borrowers about their rights and responsibilities.

📈 7. Data Collection & Research

Why: Lack of reliable data leads to poor decision-making and risk assessment.
Motive: Provide sector-wide data, insights, and research to support evidence-based policymaking and industry performance tracking.

🌐 8. Strengthen Regional and Local Ecosystems

Why: Microfinance is deeply local, yet part of a national financial system.
Motive: Build state and district-level forums to address local challenges and improve coordination among local stakeholders.

In simple terms, MFIN’s motive is to make microfinance work better for both borrowers and lenders — by making it ethical, safe, transparent, and scalable.

🔹 MFIN’s Role in Schemes

MFIN itself does not directly launch government schemes — it is a self-regulatory and advocacy body for the microfinance industry in India. However, it supports the implementation and monitoring of various government and institutional schemes that promote financial inclusion and access to microcredit.

Below are key schemes related to the microfinance ecosystem that MFIN is connected to or supports indirectly:

✅ 1. Pradhan Mantri MUDRA Yojana (PMMY)

Launched by: Government of India in 2015
Purpose: Provide microfinance to non-corporate, small/micro enterprises
Loan Types:
- Shishu (up to ₹50,000)
- Kishor (₹50,001 to ₹5 lakh)
- Tarun (₹5 lakh to ₹10 lakh)
MFIN’s Role: MFIN members (NBFC-MFIs) are often lenders under the MUDRA scheme and follow guidelines aligned with it. MFIN also tracks performance of these loans in its reports.

✅ 2. Credit Guarantee Fund for Micro Units (CGFMU)

Under: PMMY
Purpose: Offers a guarantee on loans to mitigate risks for MFIs/lenders.
MFIN’s Role: Advocates for better implementation of the fund, helps MFIs benefit from this protection scheme.

✅ 3. Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM)

Focus: Empower SHGs (Self-Help Groups), mostly women, through financial and skill support
MFIN’s Role: Works to align its members’ outreach with NRLM objectives, ensuring ethical lending practices to SHGs and joint liability groups (JLGs).

✅ 4. Women-Centric Microfinance Programs

Many MFIs under MFIN focus on women borrowers.
MFIN supports schemes focused on women-led enterprises and gender-inclusive finance such as:
- Mahila Samman Savings Certificate
- NABARD's Women SHG support schemes

✅ 5. Jan Dhan – Aadhaar – Mobile (JAM) Trinity

Purpose: Enable financial inclusion using digital platforms
MFIN’s Link: Supports MFIs in leveraging JAM infrastructure for faster disbursals, KYC compliance, and digital lending.

✅ 6. Emergency Credit Line Guarantee Scheme (ECLGS)

Launched: During COVID-19
Purpose: To help NBFCs (including MFIs) lend to micro and small borrowers by giving them access to emergency funds.
MFIN’s Role: Acted as a key liaison with the government to ensure MFIs were included in this scheme.

🧩 MFIN’s Own Initiatives (not schemes, but supportive)

Though MFIN doesn’t create “schemes” in the traditional sense, it runs initiatives and frameworks such as:

🔹 ASCEND Program

Certification program to train microfinance staff (field officers, branch managers) on ethics, regulations, and client protection.

🔹 Guardrails Guidelines

Not a scheme, but a regulatory framework for responsible lending — helps MFIs assess borrower over-indebtedness, cap household repayments, etc.

📌 Summary Table

Scheme	Purpose	MFIN’s Role
PM MUDRA Yojana (PMMY)	Loans to small borrowers	MFIs act as lenders
CGFMU	Credit guarantee for MUDRA loans	Supports implementation
DAY-NRLM	Empower SHGs and rural women	Aligns MFI lending practices
JAM Trinity	Financial inclusion via digital identity	Supports MFIs in digital lending
ECLGS	Emergency loans during crises	Advocated for MFI inclusion
ASCEND Program	Training MFI staff	MFIN’s own initiative
Guardrails Lending Norms	Responsible lending framework	MFIN’s regulatory guideline

✅ Conclusion on Microfinance Industry Network (MFIN)

The Microfinance Industry Network (MFIN) plays a crucial and multi-dimensional role in shaping India's microfinance landscape. As a self-regulatory organization (SRO) recognized by the Reserve Bank of India (RBI), MFIN serves as the backbone of ethical, responsible, and inclusive micro-lending in India.

Its efforts focus on:

Promoting financial inclusion among low-income and underserved populations
Standardizing industry practices to protect borrowers from over-indebtedness and unfair practices
Supporting policy advocacy, data transparency, and training for field-level staff
Balancing growth and client welfare through frameworks like Guardrails and initiatives like ASCEND

By uniting microfinance institutions under a shared code of conduct and working closely with regulators, MFIN has helped professionalize and stabilize the microfinance sector, making it a powerful tool for poverty alleviation and women’s empowerment.

In short:

MFIN is not just an industry body — it's a guardian of responsible finance for the poor, ensuring that access to credit uplifts rather than exploits.

Thanks for reading!!!