Growth of micro finance institutions (MFIs) have witnessed a declining trend in the southern region of the country with emergence of eastern states as the fastest growing region in the last fiscal.
“Eastern region has seen a rapid growth in recent years but still has a long way to go to catch-up South,” a release of Sa-Dhan, the national association of Community Development Finance Institutions said.
The organisation, today, released the outcome of its 12th Annual General Body Meeting and mentioned that the client outreach had reached 26.7 lakhs with a total (on balance sheet) loan portfolio of Rs 18,344 crores by the end of March, 2010.
The report also said that northern and western regions of the country were likely to be the next growth drivers for MFIs.
However, north-western region had witnessed dismal growth, especially outside Assam. Assam alone accounts for nearly two-third of outreach and portfolio of North-Eastern region, the report added.
The report also noted that many large south based MFIs were now expanding to other regions, particularly Eastern region of the country.
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One interesting trend catching up in the industry is that the dominance of ‘not-for-profit’ MFIs in terms of number is declining gradually in favour of Non-Banking Financial Institutions (NBFCs).
“Nearly, half of the nascent and young MFIs have directly registered themselves under ‘for-profit’ legal form,” the report said.
The classical ‘Grameen Bank Model’ emerged as the most preferred model among MFIs, the report added.
Individual lending model is also gaining ground, mainly as an alternative delivery model to old clients.
While ten largest MFIs constitute about 80 per cent sector’s portfolio, it covers 76 per cent of client outreach.
The report also said that NBFC-MFIs alone covered about 89 per cent of the total loan portfolio of all MFIs in India.
Sa-Dhan report also said that large equity infusion in recent years had helped MFIs to leverage their capital to finance their portfolio growth.
“Globally, India tops the list in terms of amount of institutional equity investment made in MFIs,” the report said.
Despite being small in number, the MFIs following ‘Individual Banking’ have registered highest growth rate, it said.
‘Sa-Dhan’ is one of the umbrella organisations for MFIs in the country with 262 enrolled members as of now. It oversees the functioning of these MFIs along with lobbying for enabling policy environment from the government.