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

Wednesday, August 22, 2012

BANGALORE: A new wave of start-up companies is building technology enabled services aimed at bridging the communication gap between borrowers and lenders in the embattled microfinance industry.

These fledgling ventures are creating services across cloud and mobile platforms which include credit rating of micro borrowers, online data storage and community radios services that could provide new fillip to an embattled industry.

The microfinance sector has struggled since the Andhra Pradesh government promulgated an ordinance barring MFIs from recovering loans disbursed in the country’s largest microlending market in October 2010.

“The problem with microfinance was that the cost of acquiring new clients was being loaded onto existing clients,” said Puneet Gupta, chief executive of IFMR Capital, which owns Kshetriya Gramin Financial Services. The launch of new innovative technology led services for data collation, analysis and setting up of critical back-end systems could help reverse this trend say industry executives.