Axis Bank forays into urban microfinance sector

India’s third largest private sector bank Axis Bank has forayed into urban microfinance programme by providing TAB based solution to low-income women groups in urban cities. Under this, the bank has launched its Axis Sahyog programme form Pune’s Hadapsar branch. 

Currently, urban microfinance contributes to 65 percent of the overall microfinance sector. 

At a national level, the bank intends to commence its urban microfinance offerings in 85 branches across Bengaluru, Chennai, Kolkata and Mumbai. 

Rajiv Anand, xecutive director and head retail banking, Axis Bank said, “The launch of urban microfinance initiative reinforces our commitment of serving the under banked population with innovative banking products and services. We are confident that our technology-enabled offering will help build seamless last mile connectivity and transform the lives of the under banked.”

 

Axis Bank is currently providing small loans to around 8 lakh households with a total throughput of Rs 1,500 crore and has a presence in states such as Bihar, Uttar Pradesh, Madhya Pradesh, Orissa, Karnataka, Jharkhand, West Bengal and Tamil Nadu. 

Under this, the loans will be disbursed to self-employed women, part of Joint Liability Groups (JLGs) small businesses like tailoring, catering and running grocery  shops with an average loan size of Rs 15,000.

According to Microfinance Institutions Network (MFIN) data, a self-regulatory organization for the industry,  the loan portfolio of microfinance institutions (MFIs) stood at Rs 53,233 crore as of 31 March 2016, up from Rs 28,940 crore a year ago. 

In April 2015, RBI eased rules for MFIs, raising total indebtedness limit of a borrower to Rs 1 lakh, double the previous limit of Rs 50,000. The new rules state that MFIs can disburse loans to a borrower in urban or semi-urban regions, the annual income limit has been raised to Rs 1.6 lakh from Rs 1.2 lakh.