MFIs shouldn't sacrifice social mandate at altar of growth: RBI dy governor

M Rajeshwar Rao urges them not to forget sector's original mandate of financial inclusion, as over-indebtedness by borrowers, coercive recovery would roll back gains achieved over the years

Reserve Bank of India (RBI) deputy governor, M Rajeshwar Rao, said it is necessary that the microfinance sector (MFI) does not forget its original mandate of financial inclusion in order to grow, as over-indebtedness by the borrowers and coercive recovery tactics would roll back all the gains achieved over the years.

“Negative consequences of over-indebtedness, harsh recovery practices and adverse outcomes arising from harassment of customers will adversely impact the MFI ecosystem,” Rao said in his keynote address at Sa-Dhan National Conference on ‘revitalising financial inclusion’. Sa-Dhan is a self-regulatory organisation of micro lenders.

“While chasing higher asset growth and returns, lenders