New Delhi, Nov. 14 -- A sharp decline in loan accounts and outstanding microfinance lending over the past year reflects growing stress and inefficiencies in the microfinance sector, M. Nagaraju, Secretary, Department of Financial Services (DFS), said on Thursday.

He cautioned that operational shortcomings in microfinance institutions (MFIs) were contributing to unreasonably high interest rates, undermining efforts at financial inclusion.

Speaking at a conference organised by Sa-Dhan, an association of impact finance institutions, Nagaraju said that while people in distress often borrow at high rates, many are unable to repay such loans.

He described certain interest rates in the sector as 'uncomfortable', attributing them to institutio...