Dec. 9: The Prime Minister’s Economic Advisory Council chairman, Dr C. Rangarajan, has asked microfinance institutions (MFIs) to overhaul their “flawed” business model for sustainability. Stating that most MFIs are either registered or unregistered NBFCs, he said that they are following a flawed business model by lending to consumption-related spends.
“Unless they change their lending model, they will not be able to sustain their business for long”, Dr Rangarajan said here while giving away best banks award instituted by Business Today magazine.
MFIs should lend more for productive purposes and not just for consumption- related expenses, Dr Rangarajan said.