The banking sector plays a crucial role in the economic development of a country. However, unfortunately, in a country like India, there are many who do not have access to formal banking. There are many reasons for this such as lack of infrastructure, cost of credit, lack of awareness about banking or financial discipline. This is where Microfinance steps in.
Microfinance or Microcredit is a kind of financing service which is offered to people from remote villages, low-income groups, unemployed youth, and underprivileged sections of the society or any person who doesn’t have access to conventional banking operations.
Thanks to the Government’s intervention and initiatives towards providing financial inclusion, there is immense growth in the microfinance industry. This is a step to improve the financial conditions for those below the poverty line. Latest reports suggest that there are more than 2.65 crore borrowers in the microfinance industry. There is a vast amount of population, close to 191 million is outside the ambit of the banking sector.
Owing to the tremendous business growth, the microfinance industry is all set to witness a lot of hiring in the coming days. It is expected that the hiring opportunities will increase 20-25% in the next one year.
Some of the profiles that will be in high demand in the microfinance industry are:
Risk management and assessment:
Just like the conventional banking sector, the microfinance industry has a certain exposure to risk. Therefore, there is a lot of requirement for risk management professionals who understand the finer nuances of the microfinance industry. The main responsibilities of the risk manager are to establish the risk limits, setting up risk benchmark and standards, designing the risk management and compliance process and evaluating it continually. The Risk Management professionals in the microfinance industry will also be responsible for doing the risk profiling of the borrowers according to the demography, geography and keeping a tab on increase/decrease in risks.
A microfinance company can leverage Data Science smartly to identify new growth corridors and enhance its operational efficiency. Along with the predefined algorithm, and machine learning, the Data Scientists bring invaluable analytical skills to the table. Data Science can help the company to decipher unique insights about the portfolio performance, collection patterns, risk profile and various scenarios. Automated loan underwriting process coupled with real-time data transfer, digital KYC and digital loan application are all the result of streamlined operation through Data Science. It not only helps to reduce cost but also gives a competitive advantage.
Business Development professionals:
Microfinance can deliver its entire potential only if it reaches every corner of the country and is accessible to all. Therefore, there is an immense requirement of cross-selling and marketing efforts. Hence, the marketing department of the microfinance companies need to be on constant lookout for other financing offerings like solar financing, water & sanitation loans, low-cost housing projects, SME loans etc. and associate themselves with these opportunities. Professionals who have experience in rural marketing techniques and know-how of strategic business alliances are apt for these roles. The Business Development professionals must also be comfortable with travelling to tier III cities and remote villages, as well as interacting with the natives.
To streamline operations and expedite the process of the loan application to final disbursal, technology plays a big role. The online application process, e-documentation process, electronic fund transfer, loan underwriting and disbursal are the crucial steps in loan processing with can be made easier and faster with the help of technology. In a country like India with a diverse population, especially in the remote areas, there is a great need for microfinance companies to amp their technology quotient. This creates a huge opportunity for tech developers in the country. App developers, software engineers, process flow designers, database managers etc. are some of the key responsibilities that the IT graduates can fulfil in the microfinance sector in India.
Accounting and Finance
No business can survive without a proper accounting and finance framework. However, the importance increases when the core business operation is lending. Those involved with the accounting and finance professions will monitor the operational costs, financial projections, bad debts, and check the financial viability of the business plans so as to develop a profitable business model. This will not only lead to identifying newer funding propositions but also attract potential investors. CFAs, Financial Accountants, Management Accountants and Financial Analysts are in high demand to fulfil the responsibilities of the Finance vertical in the microfinance companies.
Microfinance sector in India is an unexplored yet fast-growing financial segment in India. It is still in nascent stages but once it gets the right resources, it will grow at a faster rate.