 "Investor interest back in MFI sector, as loan portfolio set to touch record high")
The gross loan portfolio of India’s microfinance sector would touch a record figure of Rs 30,000 crore in FY14 on the back of a 50-55 per cent year-on-year (y-o-y) growth and a revival in investor interest, according to Microfinance Institutions Network (MFIN).
“Microfinance has substantially recovered in India, except for Andhra Pradesh, where things have not changed. The demand for microfinance was also very strong though that has not been met either by mainstream banks or by government-sponsored programmes,” MFIN’s CEO Alok Prasad said here on Monday, ahead of the sectoral body’s board meeting on Tuesday.
After showcasing a stellar performance in the current financial year, microfinance institutions’ (MFI) loan portfolio will repeat the feat in FY15 as well, which will see a 40 per cent growth despite a higher base, Prasad said.
He said the sector has been able to attract about $200 million in equity in the past 12 months in addition to debt flows that are three to four times that of equity. While there are 44 RBI-regulated MFIs in India, five more have come up recently.
Loan growth has mostly come from Uttar Pradesh, Punjab and Maharashtra, while the situation in Andhra Pradesh has remained the same with little progress on the recovery side as well as disbursement of new loans, Prasad noted.
About Rs 7,000 crore worth of MFI loans remains stuck since the state government introduced a legislation to regulate MFIs in the state in October 2010. The state government had brought in the regulations in response to a public outcry over a spate of suicides by poor borrowers due to alleged coercive recovery practices, as well as high interest rates of MFIs.
Prasad said ironically, the same poor borrowers are falling prey to money lenders in the absence of MFI activity. A recent study found a 19 per cent decline in consumption among the self-help-groups (SHG) in Andhra Pradesh, he added.
Although the microfinance sector lobbied hard for a central legislation to pre-empt any similar attempt by other state governments, the much-demanded microfinance regulation Bill is unlikely to see the light of the day as Lok Sabha is at its fag end.
“The Bill is unlikely to come into Parliament only because of the time constraints. It had received multi-party support when it was studied by the Parliamentary Standing Committee,” said Prasad.
On Tuesday, the MFIN board would consider changing the present bylaws to transform the industry body into a self-regulatory organisation based on RBI guidelines. These include constituting one-third of the governing council with independent directors and having wider representation of all the stakeholders, including banks and investors as its members, Prasad said.
“Microfinance has substantially recovered in India, except for Andhra Pradesh, where things have not changed. The demand for microfinance was also very strong though that has not been met either by mainstream banks or by government-sponsored programmes,” MFIN’s CEO Alok Prasad said here on Monday, ahead of the sectoral body’s board meeting on Tuesday.
After showcasing a stellar performance in the current financial year, microfinance institutions’ (MFI) loan portfolio will repeat the feat in FY15 as well, which will see a 40 per cent growth despite a higher base, Prasad said.
Also Read
Attributing the rise in MFI activity to the supportive policy stance taken by the Reserve Bank of India (RBI) and the Centre, Prasad said India is sitting on a huge unmet demand with a size as large as $200 billion.
He said the sector has been able to attract about $200 million in equity in the past 12 months in addition to debt flows that are three to four times that of equity. While there are 44 RBI-regulated MFIs in India, five more have come up recently.
Loan growth has mostly come from Uttar Pradesh, Punjab and Maharashtra, while the situation in Andhra Pradesh has remained the same with little progress on the recovery side as well as disbursement of new loans, Prasad noted.
About Rs 7,000 crore worth of MFI loans remains stuck since the state government introduced a legislation to regulate MFIs in the state in October 2010. The state government had brought in the regulations in response to a public outcry over a spate of suicides by poor borrowers due to alleged coercive recovery practices, as well as high interest rates of MFIs.
Prasad said ironically, the same poor borrowers are falling prey to money lenders in the absence of MFI activity. A recent study found a 19 per cent decline in consumption among the self-help-groups (SHG) in Andhra Pradesh, he added.
Although the microfinance sector lobbied hard for a central legislation to pre-empt any similar attempt by other state governments, the much-demanded microfinance regulation Bill is unlikely to see the light of the day as Lok Sabha is at its fag end.
“The Bill is unlikely to come into Parliament only because of the time constraints. It had received multi-party support when it was studied by the Parliamentary Standing Committee,” said Prasad.
On Tuesday, the MFIN board would consider changing the present bylaws to transform the industry body into a self-regulatory organisation based on RBI guidelines. These include constituting one-third of the governing council with independent directors and having wider representation of all the stakeholders, including banks and investors as its members, Prasad said.