The concept of Microfinance in India was introduced in the late 1980s. It has evolved by drawing upon the existing institutional architecture of social and cooperative Banking as also on newer model and approaches. As a result the concept of microfinance is more complex to comprehend in Indian context and the sphere of public policy around it cluttered and inconclusive.

Notwithstanding these challenges, the sector was shaken by the crisis that took place in Andhra Pradesh some time in 2009. While the MFI channel were recovering from the aftermath of the of the Andhra crisis, with debt and equity starting to tickle in more efforts were required to restore its bruised and battered image. Given the stringent regulatory guidelines by the Reserve Bank of India, MFIs have no option but to comply, even if grudgingly.  In view of the controversies raised post Andhra Crisis and in the absence of the Microfinance Act there has been lot of uncertainty among lots of Banks whether to lend or not to MFIs.

In the above backdrop with a view to revitalize the industry, SIDBI in the State of Uttar Pradesh took an initiative on 03rd December,2010 by bringing all the sector players on one platform so as to understand their concern. A consensus was formed to build its own regulatory body i.e an Industry association so as to exhibit transparency in complying with the stringent guidelines of Reserve Bank Of India. This firmness was of great importance to convince the Bankers to open the channel of financing.

It is noteworthy that Commercial Banks have compulsion to fulfill their priority sector lending obligation. Except as a consequence of the Andhra crisis the recoveries from loans to MFIs have been 100 per cent, making them most secure risk adjusted priority sector lending avenue. The need is felt for an independent body to supplement this avenue.

The suo motto effort of SIDBI got overwhelmed support from MFIs working in the State and accordingly on 13th June, 2011 at Allahabad the organization structure for the proposed Association was finalized.  Finally on 10th June, 2013 in the aftermath of the challenges ahead, and with the common cause as enumerated above, Uttar Pradesh Microfinance Association (UPMA) was formed on 17th December,2013 with its Head Quarter at Lucknow. It is registered as Society under Act No 21 of 1860 with seven members as its founder members. Presently UPMA has ten members on its board.

The main objective of UPMA is to maintain co-ordination, among Govt; RBI and the industry players, besides working as a bridge between them.  Though there are already two such bodies working in this field at the national level. However the concept of State association is completely different from national organizations. The care is taken that there is no conflict of interest among National level bodies and State level Associations. The object of state level Association is to function as umbrella, towards safeguarding the interest of the MFIs besides, cautioning them against any unforeseen disaster at the State level. National level organizations have policy intervention goals at National level.

As per UPMA Bye-laws all MFIs more particularly those registered as NBFC_MFI with RBI are eligible to be member of the Society. Institutions being member of other National bodies and or having presence in other states besides U.P. are also eligible to be the member of this Association. UPMA to large extent is member funded. Its governing body comprises of the leadership of the member organization.