The Urge - The marginal communities in both rural and urban areas have never had it so good. It is boom time for microfinance. This sector has grown to be a bankable investment opportunity for the poor. Many big national level and state level NGOs have floated their own microfinance institutions and thereby compete with the banks in luring the poor by providing finance. Seeing the market, many national and international banks have also moved in a big way with venture capital concept. They have established portfolios that lends low-cost banking technology to microfinance firms and co-operative banks that inturn cater to low-income groups to take up productive ventures.

Funds - No wonder, DPG also felt the need to own portfolio of this nature. Hence over the past six years DPG has built up a fund, at the hands of SHGs, to the tune of Rs.94lakhs. This fund is now being revolved among DPG and NGO partners sponsored Apex Bodies / Self-Help Groups. There is a strict code that the end user should not pay more than 15% as interest on reducing balance, in rare case, 18% reducing balance. Nevertheless, most of the fund is made available at 12% reducing balance! To further augment the funds, the friends of DPG have registered a Micro Finance Institution (MFI) in the name of Micro Finance Development Initiates of India (MFDII). So far through this institution, Rs. 39,85,500/- was given to various SHG members on 12 – 13% reducing balance basis with application and processing fees being charged. Besides this, DPG partners have also mobilized about Rs.16,38,32,995/- from nationalized banks for the SHGs.

Caution - The sector is growing and many have jumped in to this with varied motives! In the process, there is a tendency to not only hijack the groups / members, but also provide finance at much higher rates, maintaining that the cost of borrowing funds and serving the funds are very high. The high rate will do good to agents than to the end users! Therefore this sector needs either a self-imposed regulation or Government regulation. Many NGOs / MFIs May not welcome this idea! The money lender is dead and long live the money lender(s) !