- 1974: India’s first MFI, SEWA Bank, registered as a cooperative bank.
- 1976: Muhammad Yunus founded Grameen Bank in Bangladesh, pioneering modern microfinance.
Regulation: RBI oversees MFIs in India.
Malegam Committee (2010):
- Â Recommended a framework for regulating NBFC-MFIs.
Services: Provides small loans, savings accounts, fund transfers, and micro-insurance to underserved populations.
Sector Summary
- Â Significance: Key for financial inclusion, poverty reduction, rural development, and women’s empowerment.
- Â Challenges: High transaction costs, lack of collateral, higher interest rates, costly credit, and low financial literacy.
-  Government Initiatives: SHG-Bank Linkage Program and Pradhan Mantri Mudra Yojana (PMMY) for loans up to ₹10 lakh (raised to ₹20 lakh in 2024 Budget).
- PMMY Loan Categories: Shishu, Kishore, and Tarun for small/micro enterprises.