“We need constructive participation and collaboration,” said Alok Prasad, CEO of Microfinance Institutions Network (MFIN), aptly summing sum up the panel discussion on Microfinance and Empowerment: The Last Mile Challenges and Solutions at the conference on Bihar: Banking on Inclusion, organised by Governance Now, along with department of planning and development of government of Bihar and Asian Development Research Institute (ADRI).

Prasad was reflecting the concerns expressed by the panelists, which ranged from a crisis of funding and high cost of operation that plague microfinance institutions to the need for social strengthening, taking education and healthcare to the underprivileged sections of society for the idea of inclusive growth to be sustainable and meaningful. There was unanimity that a single intervention like microfinancing was not enough for inclusive growth.

PK Saha of SIDBI Foundation for Micro Credit, a microfinance company, said microfinance institutions were facing a “double crisis” – liquidity crisis and cost of compliance. On the one hand high cost of operation and lack of money flow had caused liquidity crisis for microfinance firms, RBI’s new guidelines, like verifying credit worthiness of customers, had added to the cost. These were the challenges that the microfinance companies were facing and needed to be addressed to ensure that this element of inclusion was sustainable.

CS Ghosh, chairman of Bandhan Venture Management, said inclusive growth in education and health was required to make development sustainable. He outlined two major challenges facing microfinance institutions in Bihar as shortage of power supply because of which computerisation of data was not possible and RBI’s restriction on multiple loans to one individual.

The others who participated in the discussion included Vineet Rai, managing director of Abhiskaar Management, Rashmi Sinha, director of Saija Foundation, Harshavardhan, UNDP’s Bihar representative and BK Mishra, chairman of Vananchal Gramin Bank.