The Microfinance Industry Market in India : Pros and Cons

India is a developing country. Banking services are still not available to many people. So, microfinance companies, also known as microcredit companies, are growing in India. Microfinance institutions are financial institutions that make loans to the unemployed and poor. These services are popular among the women who are part of self-help groups. Before studying the microfinance market in India, let's have a look at how this concept started and how it has evolved.

History of the Micro Finance Industry

Back in 1970, when banking services were beyond the reach of the lower economic classes, one economist from Bangladesh named Muhummed Yunus was experimenting with a system where he provided small loans to his nearby villages that were unavailable through the banking system. Consider the value of your time and money. This system was later dubbed the Grameen Bank. In 2006, he got the Nobel Prize for this as well.

In India, the concept of microfinance was introduced in 1974 by the Self-Employed Women's Association (SEWA), which was established in Gujarat. It was also getting famous among the NHGs, i.e., neighbourhood groups. It started empowering women in rural areas and also gave support to the unemployed poor in villages. It had tremendous results for controlling poverty and promoting employment in many underserved areas.

The current market of the microfinance industry in India

India has one of the largest markets for the microfinance industry in the world. From Kerala to Assam, from Tamil Nadu to Uttarakhand, this industry is growing by leaps and bounds. According to a recent study, the microfinance industry is currently spread across 595 districts in India. As per the report, the combined microcredit portfolio of 225 lenders is Rs 2,62,599 crores as of March 31, 2022. It is shown to have grown by 5% from the previous year.

In Kerala, where the literacy rate is so high, the unemployment rate among women is also high. The formation of self-help groups in this state is also increasing day by day. As these groups are increasing, the market for the microfinance industry in Kerala shows remarkable growth. To provide a quality service to these customers, the microfinance company requires dependable software that meets all of the company's basic requirements and generates accurate reports. For quality microfinance software in Kerala, you can also check this link : https://www.webstartechnology.in/microfinance-software.html.

Not only in Kerala, another South Indian state like Tamil Nadu, has a huge market for microfinance companies. There are numerous companies that offer microfinance solutions software in Tamil Nadu, but I can assist you in selecting the best one. First, check whether the company provides you with a software solution with an accurate report or not, so that you will not face any problems at the time of the audit. Next, the software must be user-friendly. If you go through Webstar Technology's software, you can understand how user-friendly it is.

Currently, Uttarakhand is a state where many microfinance companies are having problems searching for microfinance company software in Uttarakhand. A lot of complaints are arising about post-delivery support for software. Also, many needed reports are missing in their software.

Taking the microfinance market in Assam as an example, many case studies show that many microfinance companies fail because they can't maintain the operation properly and fail to prove themselves in the audit. A good piece of software plays a great role in this case. If someone searches for the best microfinance software in Assam, only a few names will be shown that are reliable, and among those names, you can see Webstar Technology is showing up on the first page.

Advantages and disadvantages

Today, the microfinance industry is one of those that is rapidly expanding. Because India is still a developing country, a large portion of the population is unemployed. Every day, new self-help groups spring up. So, from south to north, east to west, there is a huge market for this kind of industry. Those people who are beyond the reach of the banking system can get loans easily through this microcredit system. But there are also some drawbacks. In India, many people are still illiterate. So due to this reason, many people don't rely on microfinance companies. From the standpoint of the microfinance industry, many companies have ceased operations due to audit failure. Some businesses opt for complex software with few features. It will create more complications in the operation. It also causes the company to switch software vendors several times, incurring significant costs. Choosing a software developer for the company is therefore critical.