Microfinance Institutions Role

Microfinance is at an inflection point. In just 15 minutes, Vijay Mahajan and I lay out a bold new path forward: - A shift from rigid EMI-based loans to cash-flow-linked, flexible finance and micro-equity. - A new class of financial products designed to truly serve micro-enterprises - and scale sustainably. Watch this video if you are in microfinance, MSME lending, fintech, financial institution, policy, government, or impact investment. This isn’t just a conversation - it’s a strategic blueprint for the sector’s next chapter. Key insights from the video: - ₹6 trillion disbursed to 6.5 crore borrowers—but the surge in NPAs is now a loud signal that one rigid loan product can no longer meet the evolving needs of the sector - Fixed EMI loans are choking the growing micro-businesses - Entrepreneurs need patient capital—especially in startup, growth, and shock recovery phases - A new product: repayment as a fixed % of cash flows—automatically pausing in lean months - Digital rails (UPI, GST, etc.) now make cash flow tracking feasible - A 3-year pilot yielded a consistent 12% net IRR—proof this can scale - A call to action: RBI, MFIs, NBFCs & Banks must pilot this model The 15-page policy paper that expands this vision is linked in the first comment. If you care about reimagining microfinance and unlocking MSME growth, start here. Watch now. Let’s rebuild better. #flexiblefinance #microequity #patientcapital #MSME #microfinance #financialinclusion #vijaymahajan #policyinnovation #impactinvesting #digitouch #gamechanger #innovation

The big unlock for MFIs using AI. Recently the RBI lowered the qualifying asset threshold for NBFC-MFIs from 75% to 60%- nearly doubling the room to diversify, from 25% to 40% of the book. A clear green light to graduate existing borrowers into MSME loans, micro-housing and retail products. And just as importantly, vernacular voice AI has crossed a real threshold in the last few months- Sarvam's, BharatGen's, AI4Bharat's new models that hold natural, low-latency conversations in Hindi, Tamil, Bengali and dozens of dialects. So three curves are meeting at once: a ready customer already inside the book, a regulator that has cleared the path, and AI that can finally hold the conversation. The upsell was always a conversation problem- in her language, about her eligibility, at a cost that doesn't erase the margin. Field officers don't scale. Hindi-first IVR doesn't convert. Voice AI does both. This is where Fundamento is built to win: we understand the problem deeply and deploy models that deliver value at scale. That is what it takes to make AI work for India. Turning a regulatory relaxation into the next leg of growth for microfinance- reaching the missing middle already inside the book, in their own language, at scale. One conversation at a time.

In many countries, mobile wallets like M-PESA Africa have revolutionized everyday transactions. But they’re not just about payments anymore—these wallets now offer micro-loans and insurance, all within the same app! This is a game-changer for small business owners and individuals previously excluded from traditional financial systems. 💡 How is embedded finance actually helping people access financial services in new and innovative ways? Here are a few examples: 🔷 Micro-loans on the go: Imagine you're a market vendor in Kenya, needing a small loan to buy more stock. Instead of visiting a bank, you can access a microloan right through your M-Pesa mobile wallet! This is a game-changer for small businesses in developing countries. 🤯 🔷 Insurance built into your ride: You're booking a ride on Grab in Southeast Asia, and you're offered accident insurance right within the app. Simple, convenient, and affordable – exactly what embedded finance is all about. 🙌 🔷 Paying later, without the credit card: You're shopping online, and you see an option to "Buy Now, Pay Later" at checkout, even if you don't have a credit card. Companies like Klarna are making this possible, opening up credit to those who might not have had it before. 🛍️ Investing for everyone: Investment apps like Acorns let you round up your purchases and invest the spare change, making investing accessible even with small amounts of money. This helps people build wealth, even if they don't have a lot of financial knowledge. 📈 But what about the future? 🤔 Well, things are looking pretty exciting! Imagine a world where you could avail insurance around diagnostics/doctors appointment or credit could be provided while booking the venue for a wedding etc. Finance is an integral part of our daily activities and honestly, there is immense potential in embedding financial products seamlessly into frequently used portals 💡 😊 But, of course, there are challenges too: 🔴 Data privacy: With more financial data being shared, protecting sensitive information is crucial. We need strong security measures and ethical data practices. 🔐 🔴 Fairness and transparency: Embedded finance needs to be fair and transparent for everyone, ensuring that vulnerable people are protected from predatory lending and hidden fees. 🤝 🔴 Regulation: Governments and regulators need to keep up with this rapidly evolving space to ensure consumer protection and responsible innovation. ⚖️ Despite these challenges, the future of embedded finance is bright! It has the potential to revolutionize how we access and manage our finances, especially for those who have been traditionally underserved. Let's work together to build a more inclusive and accessible financial system for everyone! 💪

#FinTech Women of #Bharat report provides strategic recommendations and #innovation prompts for #financialservice providers to develop tailored solutions for diverse segments such as homemakers, #farmers, textile workers, and teachers. For Rural Women: • Homemakers (140 Million):     ◦ Microsavings tools for household budgeting and long/short-term goals.     ◦ Flexible credit for emergencies, aligned with local store credit cycles.     ◦ Homepreneur starter micro-loans for training, tools, and setup. • Farmers and Agricultural Workers (60+ Million):     ◦ Digital wage access + daily wage saver accounts.     ◦ Alternative credit scoring for farmers without land titles.     ◦ Income protection coverage.     ◦ Agribusiness starter loans for training, tools, and setup. • Livestock Rearers (14 Million):     ◦ Digital earnings access + cattle registration.     ◦ Collective enterprise starter packs: group capital for equipment, storage, and market access. • Shop Owners, Assistants and Retail Workers (3.8 Million):     ◦ Women-focused bulk purchase platforms for better supplier access and pricing.     ◦ Microcredit for stock replenishment without disrupting cash flow.     ◦ Earnings digitization and recognition for informal family helpers. • Textile Workers (3.6 Million):     ◦ Cash flow-linked working capital.     ◦ Earnings digitization and recognition for informal family helpers. • Handicraft Artisans (1.7 Million):     ◦ Market-linkage financing for bulk orders, fairs, and exhibitions.     ◦ Tools to manage cash flows, marketing, and scaling.     ◦ Earnings digitization and recognition for informal family helpers. • Mining and Construction Workers (4 Million):     ◦ Digital wage access + daily wage saver accounts.     ◦ Flexible income protection for job loss, accidents, and health risks. • Tutors and School Teachers (3 Million):     ◦ Employer-linked savings and retirement plans.     ◦ Income booster packages for private tutors, including credit and prepaid learning plans. For Urban Women: • Shop Owners, Assistants, and Retail Workers (4 Million):     ◦ Women-focused bulk purchase platforms for better supplier access and pricing.     ◦ Microcredit for stock replenishment without disrupting cash flow.     ◦ Earnings digitization and recognition for informal family helpers. • Cooks and Cleaners (5.4 Million):     ◦ Income-linked credit based on work history and employer references.     ◦ Income protection coverage. • School Teachers (3.4 Million) ◦ Employer-linked bridge loans for salary or healthcare gaps.     ◦ Specialized credit for upskilling and certification. • Textile Workers (3 Million):     ◦ Flexible income protection for job loss, accidents, health risks.     ◦ Employer-linked bridge loans for salary or healthcare gaps. • Clerks (2 Million):     ◦ Micro-investment tools for small, automated savings.     ◦ Career progression #credit for certifications or role transitions.

🌱 RBI nudges MFIs to broaden their product base — A positive shift for financial inclusion The Reserve Bank of India has recently encouraged Microfinance Institutions (MFIs) to diversify beyond traditional group-based lending models. This is a significant signal for the sector. For years, most MFIs have largely focused on working-capital loans through JLG structures. RBI now wants MFIs to expand into new asset classes such as inventory financing, capital-asset loans, and enterprise-focused products that support real business growth. Why this matters: 🔹 Greater resilience — A diversified loan book reduces concentration risk 🔹 Stronger micro-enterprises — Financing assets and inventory increases productivity 🔹 More flexibility — With qualifying-asset norms eased recently, MFIs can innovate responsibly 🔹 Wider impact — Product depth leads to deeper financial inclusion This shift encourages MFIs to evolve from being just credit providers to becoming holistic enablers of micro-enterprise growth. A welcome and timely move by RBI. 👏 Financial inclusion is not only about access — it is about access to the right products. https://lnkd.in/dsqp4bDW #RBI #Microfinance #MFIs #FinancialInclusion #NBFC #BankingAndFinance #FinServ #FinancialStability #MicroEnterprise #DigitalFinance #IndiaGrowth #InclusiveGrowth

I spent 2024 studying four disruptive African fintechs—Turaco, Pesapal, Kopo Kopo Inc and Chumz.io—and found common patterns in their success. These companies aren’t winning by copying Silicon Valley. They are winning by truly understanding Africa’s unique needs and solving real problems for millions of unbanked and underserved people. Here are the three patterns I found: 1. They deeply understand their customers Rather than forcing Western ideas into the market, they design solutions that fit local realities. Turaco saw that traditional insurance was too expensive for most people. So they created an affordable alternative offering coverage for as little as USD 2 a month, with claims paid in just two business days. That’s a game-changer in a market where insurance payouts takes weeks. 2. They believe in partnerships These fintechs know they can’t do it alone. Collaboration is part of their DNA. Pesapal partnered with Oracle Hospitality to simplify bookings and payments for hotels and restaurants. Chumz.io teamed up with Nabo Capital to allow users to earn interest on their savings. They make financial services more accessible by working with trusted, established names. 3. They solve real African problems These companies are building for the local markets. Kopo Kopo Inc has helped over 20,000 small businesses in Kenya processs digital payments. They recognize that small businesses are the backbone of African economies, yet they are often overlooked by traditional banks. Even their entry points reflect local realities. Chumz.io allows people to start saving with as little as KES 5. Their focus is helping people take their first step toward financial security by starting and keeping a saving habit. Fintech success in Africa comes down to understanding the market and building products that solve real, everyday problems. When you focus on serving people’s actual needs, growth happens naturally. These companies are changing how millions interact with money. And that is the kind of innovation that moves entire economies forward. PS - Follow me Ben David for more finance industry insights.

In many parts of Africa, millions of micro-businesses and individuals remain financially excluded—not because they lack ambition, but because traditional financial systems aren’t built for them. One of the fintechs I am banking on to be part of the solution to that problem is Regxta. Led by Rukayat Kolawole-Bello, I became fully aware of the ambitions of the business when I heard Rukayat pitch at an event in Lagos, Nigeria. And it was a compelling narrative. Regxta is a digital platform tackling the problem of financial exclusion head-on by providing instant underwriting and loan disbursement to the unbanked. With a simple agent-driven model, Regxta enables small business owners to open accounts, access microloans, and build financial records. All within 24 hours or less. Those outlined steps are often taken for granted but remain out of reach for many. During a recent deep dive into the company—speaking with the founders, visiting their operations, and testing their product—it became clear to me that Regxta is more than just a fintech startup. It is a bridge to economic empowerment for people who are otherwise overlooked by traditional banks. In my view, these are a few things that make Regxta unique: 𝐀𝐈-𝐃𝐫𝐢𝐯𝐞𝐧 𝐂𝐫𝐞𝐝𝐢𝐭 𝐀𝐬𝐬𝐞𝐬𝐬𝐦𝐞𝐧𝐭𝐬: By leveraging alternative data sources—including mobile money transactions, repayment behaviour, and local trust networks—Regxta has achieved an impressively low default rate far lower than many traditional microfinance institutions. 𝐀𝐠𝐞𝐧𝐭-𝐋𝐞𝐝 𝐃𝐢𝐬𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧: Regxta’s network of agents ensures that even in the most remote areas, people can access financial services with minimal friction. 𝐒𝐜𝐚𝐥𝐚𝐛𝐥𝐞 𝐈𝐦𝐩𝐚𝐜𝐭: In just the past 18 months, Regxta has provided over $3.5 million in microloans to 50,000+ small businesses, many of which previously had no access to formal credit. 𝐅𝐚𝐬𝐭 𝐋𝐨𝐚𝐧 𝐃𝐢𝐬𝐛𝐮𝐫𝐬𝐞𝐦𝐞𝐧𝐭: Unlike traditional microfinance institutions that take days or weeks, Regxta disburses approved loans in under 5 minutes. With a strong founding team, a scalable approach, and a mission deeply rooted in financial inclusion, Regxta is not just filling a gap—it is reshaping the financial landscape for Africa’s last-mile customers. That’s why I’m banking on Regxta—𝘯𝘰𝘵 𝘫𝘶𝘴𝘵 𝘢𝘴 𝘢 𝘧𝘪𝘯𝘵𝘦𝘤𝘩, but as the future of banking for those who have been left out for too long.