Waking up to the need of the hour, the microfinance industry has formed an umbrella organisation, called Microfinance Institutions Network (MFIN). So far it has 35 players in including SKS Microfinance, L&T Finance, Bandhan Financial Services, Bhartiya Samruddhi Finance, Equitas Micro Finance, Fullerton India, Janalakshmi Financial Services.

Also MFIN has formed a special purpose vehicle, called Alpha Micro Finance Consultants, that has invested Rs 2 crore in credit information company, High Mark. MFIN will work with Cibil and High Mark to check for multiple borrowing and the credit record of the customer. These credit information companies will get access to the entire borrowing history of these 20 million customers under the net of these RBI-regulated NBFC microfinance entities.

The network would also enable to lower costs of operations and lead to a significant drop in interest rates at which the un-banked segments of the society get loans. At present, MFIs provide loans to their clients at bout 24-26%. Many new interventions like use of mobile telephony for repayment of loans, servers, MIS would help reduce the manpower costs, which is a huge component in the MFI operations. This reduction in costs would ultimately be passed on as benefit to the clients.