NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, August 13, 2014

Mumbai: Microfinance companies have committed to opening at least 30 million bank accounts within a year through tie-ups with banks as part of the government’s ambitious financial inclusion plan likely to be announced on Independence Day.

The commitment was made at a meeting on Monday between the representatives of 25 large microfinance companies and banks and government representatives, including financial services secretary G.S. Sandhu.

According to Sadaf Sayeed, chief operating officer at Muthoot Mahila Mitra, a microfinance company of Muthoot Fincorp Ltd, who was present at the meeting, the target to open 30 million accounts is an initial estimate.

“Around 80% of our borrowers do not have a bank account, but all have a credit bureau record; so, opening of accounts is not a problem. The government intends to use these accounts for direct cash transfers and link them to Aadhaar for eKYC (electronic know-your-customer rules). Microfinance companies will also integrate data with core banking solutions of banks,” Sayeed said.