MFIs should bet on micro venture capital

Hyderabad: Vijay Mahajan, Chairman, Basix Group, advised the microfinance institutions to focus on micro venture and micro equity to encourage startups.

Pointing out that India is home to 24 crore youth who need employment, he said they should be provided with self-employment opportunities as it would not be easy to generate jobs for all of them. “But startups have a failure rate of over 70 per cent globally. Therefore, financial institutions may not support such ventures,” he observed.

Delivering Sitaram Memorial Lecture organised here by Bharat Financial Inclusion Ltd recently, he said MFIs should not shy away from funding startups. “But they should create new form of finance such as micro venture capital and micro equity to fund startups,” he stated.

He further said poor need savings and insurance much more than credit. “Micro insurance will help the poor to have insurance protection,” he said. Quoting a study carried out by the Indira Gandhi Institute of Development Research, he said the ordinance issued by erstwhile government in undivided Andhra Pradesh imposing restrictions on microfinance activities had affected poor people severely.