HDFC to diversify lending to MFIs

HDFC Bank aims to increase the number of states where it lends to microfinance institutions. In addition, to the southern states where it has a presence, microfinance institutions Uttar Pradesh, Madhya Pradesh, West Bengal and North Eastern states are likely to be targetted by the bank.

N S Kishore Kumar, head-agriculture business and micro finance, HDFC Bank, told Business Standard, "We plan to treble the advances made to microfinance institutions to Rs 225 crore during the current fiscal from Rs 75 crore the previous year."

Kumar points that the reason for the bank to focus its reach in north and eastern states is that microfinance has been successful in the South particularly Tamil Nadu and Andhra Pradesh on account of the significant presence of Self Help Groups.

We like to extend credit disbursement so that the existing non governmental organisations can upgrade themselves to larger microfinance institutions in poor regions like Bihar and Uttar Pradesh so as stimulate local employment, he said.

HDFC Bank has already tied-up with 20 microfinance institutions and plans to tie-up with 15 more institutions based in the above mentioned states, he added.