Transformation of Microfinance Institutions to Small Finance Banks: Differentiating Men from the Boys!

MicroSave India Focus Note #122

MFIs transforming into Small Finance Banks (SFBs) will face capital restructuring challenges. SFBs will have to depend on their customers’ deposits, shareholders’ equity along with refinance facilities from bulk lenders. In this Note, MicroSave India discusses how SFBs can build a first-class retail institution, focused on low-income clients. It is safe to conclude that transformation of MFIs to SFBs is challenging - particularly since MFIs have only extended credit to date.

In order to transform from credit-only to deposit-mobilizing institutions, they will have to work on many areas, including:

  • Brand repositioning;
  • Investment in human capital;
  • Complimenting savings with payments.

About this Publication

By Anand, A., Singh, A., Singh, L., Kumar, N. , Malik, N.