Speaking at a seminar organised by FICCI, Sushil Muhnot, CMD, of Small Industries Development Bank of India (SIDBI) said the margin cap imposed by Reserve Bank of India (RBI) for microfinance institutions (MFIs) would lead to consolidation in the sector. In order to prevent MFIs from charging usurious interest rates, the RBI earlier imposed a 12 per cent margin cap, which is the difference between cost of fund
Tag: MFIs
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RBI relaxes norms for bank credit to MFIs
Reserve Bank of India (RBI) relaxed the norms for categorising priority sector lending of commercial banks to microfinance institutions (MFIs). According to the present norms, banks can categorise credit extended to MFIs as priority sector lending if
if at least 75 per cent of loans given by MFIs is for income generating activity. Now, the central bank relaxed this limit to at least 70 per cent. Thus, according to the relaxed norm, bank credi
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Ratings of 3 MFIs upgraded by ICRA
Noting the resilience in the financial position of three microfinance institutions (MFIs), rating agency ICRA upgraded their ratings. The three MFIs are Grameen Financial Services Private GFSPL), Ujjivan Financial Services (Ujjivan) and Utkarsh Microfinance Private (Utkarsh). According to the agency, the upgrade reflects likely improvement in the resilience of their earnings, superior ability to scale up as well as strengthened capacity to cont
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Borrowers of MFI challenge HC order
Nine borrowers of microfinance institutions (MFIs) in Medak and Warangal districts of Andhra Pradesh filed a petition in the Supreme Court in early May 2013 challenging a state high court order. In February 2013, the Andhra Pradesh high court asked the state government to review a law that restricted multiple lending by MFIs to the same borro
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MFIs exercise caution on lending to MLMs
Microfinance institutions (MFIs) in the country have reportedly started scrutinising the investment of their large borrowers following the Saradha chit-fund scam. While so far MFIs were verifying the client profile mostly through word-of-mouth from group members, now they are seeking data on investments from borrowers who invested in multi-level-marketing (MLM) companies. Som
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Experts point to issues in microfinance sector
Experts and industry observers highlight some of the issues in the Indian microfinance industry which impede the ability of the microfinance model to eradicate rural poverty. Notable among them is small size of micro credit provided by microfinance institutions (MFIs) which makes investment unprofitable. Some experts argue that unless loans
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AP accounts for 22% of gross loan of MFIs
During Jan-Mar 2013, Andhra Pradesh accounted for 22 per cent of the gross loan portfolio held by all the microfinance companies (MFIs) that are the members of the industry body Micro Finance Institutions Network (MFIN). However, all of the above loan exposure turned non performing asset (NPA). According to a government repo
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Recovery in sight for small MFIs in FY14
Venkatesh N, Managing Director of Samasta Microfinance expects smaller microfinance institutions (MFIs) to regain their financial position in 2013-14. He expects recovery in the financial position of these MFIs to be driven by the renewed interest of banks and risk capital investors in the sector
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Banks exercise caution while lending to MFIs
While flow of bank credit to microfinance industry has recovered in the last two years, banks are said to be exercising great caution in choosing the right microfinance institution (MFI). Banks have become very selective in their funding decisions. They are looking for MFIs which are compliant with the code of conduct and with RBI norms, Mathew Titus
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Banks exercise caution while lending to MFIs
While flow of bank credit to microfinance industry has recovered in the last two years, banks are said to be exercising great caution in choosing the right microfinance institution (MFI). Banks have become very selective in their funding decisions. They are looking for MFIs which are compliant with the code of conduct and with RBI norms, Mathew Titus
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