Multi-partner banks and insurance companies partnering with FINO, too, will participate in the endeavour. Says CSC Infrastructure chairman Ashok Kumar, “Rural India’s estimated credit requirement is Rs 50,000 crore. If we stick to the current structure, then fulfilling this will take a long time and might also result in the exclusion of some customers. Hence, there is an urgent need to introduce technology in the microfinance sector in order to expand the scale of operations. This is what eGov Services is attempting to do in collaboration with FINO.”

The partnership has been warmly welcomed by various participants and stakeholders in the microfinance sector, as a developed and pervasive microfinance sector would go a long way in making our economic development an all-inclusive process. Experts say that microfinance sector developments like the FINO-eGov Services partnership will go a long way in bringing the poor and underprivileged into the ambit of the development process. Says FINO chief executive officer Manish Khera: “The microfinance sector reaches out to a larger number of people than banks do. It is definitely leading to the growth of both its customers and the economy.”

“For instance,” he added, “when a group of people initially start with small loans from the microfinance sector and later graduate to a stage where they require larger loans from banks, it definitely signifies growth. The sector is fast growing and FINO has the necessary technology to add value to it as it moves from manual to automated services during its growth .”

A section of experts, however, still has questions about the potential of microfinance. RPG Foundation president D H Pai Panandiker points out that it has still not entered the Indian economic process in a big way. Unlike Bangladesh, where Nobel Laureate Muhammad Yunus has ushered landmark changes, it is yet to touch the lives of people in rural India.

“The banking sector, through rural banks, has made a greater indent in rural areas,” feels Panandiker. “Thus, it is macro rather than microfinance that has affected the lives of low-income households. In fact, most activities require substantial funds for which even the poor have to approach banks. Therefore, the inroads that can be made by microfinance are limited.”

However, a large number of economists say that India’s socio-economic fabric makes conventional sources of finance inaccessible to the poor, as a result of which the microfinance sector assumes great importance. They point out that financial institutions shy away from giving credit to the poor because of the huge disconnect between their requirements and the economic features of the low-income groups.