Esaf Microfinance, a State-based microfinance player, is betting on its role as a National Pension Scheme (NPS) service provider.

Esaf has been providing NPS services to clients, said K. Paul Thomas, managing director, told Business Line here.

“Last year alone, we disbursed Rs 5 crore to beneficiaries in the unorganised sector. We are aiming to hit Rs 20 crore this year,” he said on the sidelines of a regional convention on microfinance.

It was organised along with Assocham, microfinance industry body MFIN and Kerala Association of Microfinance Institutions (Kamfi).Microfinance institutions are also thinking of entering direct cash transfer scheme of the Central Government, Thomas said.

Also chairman of Kamfi, he said that the organisation has a client base of at least one million in the State.


An estimated 300 branches across the State have given out loans of Rs 4,000 crore in all and have Rs 700 crore as outstanding.

Entry into the NPS sector is part of the ‘Microfinance Plus’ services, which includes livelihood training, education, health services and market linkages to clients.

Ajai Kumar, additional secretary, finance, Kerala, said in his address that passing of the Microfinance Bill would really empower the poor.

“The Government sees microfinance as a tool for service delivery in those areas where its reach is limited,” Kumar said.


He offered all support to the activities of Kamfi in its activities in the State aimed at providing services to the rural poor.

R. Sudeep, deputy general manager, Reserve Bank, recalled that self-help groups floated initially in 1992 had ‘needed no regulation.’

They are better left ‘to grow on their own’ was the received wisdom at National Bank for Agriculture and Rural Development (Nabard).

But as these groups proliferated, they thought it was better that they formed a self-regulatory organisation.

Sa-Dhan and MFIN were borne out of this concern, but even these were found ill-equipped to deal with explosive growth in the sector.


The Microfinance Bill followed, which provides for bringing all players in the sector under Reserve Bank regulation. Microfinance players in the State continue to be ruled by the Kerala

Moneylenders’ Act, which is a paradox, said K. Padmakumar, company secretary, Esaf Microfinance. Microfinance players could not be equated with moneylenders, he contended.

The Act empowers the State to regulate lending rates of lenders and requires them to register branches with authorities. The Kerala Association of Microfinance Institutions has 17 members.

(This article was published on February 14, 2013)
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