Banks focus on microfinance ops

Betting big on the fast-growing microfinance sector, leading private and foreign banks are all set to scale up their MFI operations in the country.         

Apart from providing financial support to the fund- starved MFIs (microfinance institutions),  banks are also active in launching schemes to support the growth of tiny units by giving training in management skills.         

Foreign lender Royal Bank of Scotland (RBS) has said it has chalked out a plan to grow its microfinance portfolio, which is currently at Rs 300 crore, to Rs 450 crore by the end of this fiscal year.         

The UK-based lender currently provides direct financing to around 30 MFIs across the country and has partnered with another 41 MFI units to train them build up the administrative skills and strong business model, RBS Vice- President Moumita Sen Sarma said.         

"Despite the financial crisis, MFIs have been least affected as they have managed to maintain the quality of the business. RBS will continue to expand its MFI portfolio and expects to grow the size to Rs 450 crore by the fiscal-end," Sarma said.         

The lender did not expect any deterioration in the asset quality of MFI units in financial year 2009-10, she said.India's largest private-sector lender, ICICI Bank, also plans to significantly scale up its operations in the sector in the current fiscal.         

Over the last one year, ICICI Bank has nearly doubled its MFI portfolio to Rs 2,600 crore and expects the segment to grow by at least 20% in the current fiscal, ICICI Bank General Manager, Agri, Rural and Micro Banking, Kumar Ashish, said.         

"We could nearly double our MFI portfolio over the last year. We have been working closely with 30 top MFIs to finance their projects and look forward for more such tie-ups in the future," Ashish said.         

The bank was also providing training to various other MFIs through its sister organisation ICICI Foundation, Ashish said.         

Though the bank would be more cautious on the lending side in the face of the downturn and related risks in the economy, it has no plans to scale down its MFI portfolio, he said.         

Foreign banking major HSBC has plans to enhance its MFI portfolio. The lender currently has tie-ups with 21 MFIs across the country.         

"We are shortly launching a project in rural Maharashtra with a leading MFI...HSBC assists the MFIs to build up a strong business model in a number ways," HSBC Group General Manager and CEO Naina Lal Kidwai said.