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                                                                                  Micro Finance Fund Providers

 

 

 

                                                                                                            Micro-Financing Agencies

                                                                                                                             in

                                                                                                              Rural & Urban Areas

 

 

 

 

 
 

Why MFIs ?

*

Greater accessibility of services
* Greater flexibility of guidelines
* Less formalities
* Speedier proposal processing
* Quicker sanction
* Faster disbursement
   
   

Target Segment are

Rural & Urban Poor

Small Farmers,artisans

Small shop owners & vegatable vendors

Small Business

Likely Negative Factors against MFIs

 
  Higher Rate of Interest  
Ticket size of Loans small
Greater hidden costs
More stringent recovery measures
 

MFI FactSheet as on Jan. 2010

* 84 Regional Rural Banks(RRBs) across regions

*About 1400 Urban Co-operative Banks(UCBs)

* About 32000 Urban Credit Co-operative Societies(UCCS)

 

 

Latest News on MFIs

A host of factors such as sloppy corporate governance , grant of benami loans, practice of writing off Bad Loans have brought the MFI sector under the regulatory glare of RBI and the latter has hinted at taking MFIs off priority sector lending list if the industry fails to improve its governance standards. This assumes significance since many MFIs have generated big returns often as much as 20-30% to the promoters and private equity players. Unregulated growth of the sector may result in a combination of indiscriminate lending and pressure on borrowers to pay on time--an explosive mix that can blow up from time to time. What is worrying the regulator and some of the stake holders  is that MFIs are still being run like small family owned firms. If de-linked from category of Priority Sector Advances, cost of funds for the Industry could rise by as much as 200-250 basis points which may make them unattractive sources of credit.

Micro finance sector is of late growing at a rate where it is hard to ignore it. In 2005, the segment had Rs 897 crore in outstanding loans. It grew 13 fold in four years to close 2009 with Rs 11700 crore.To meet the high growth target, they are opening more branches, increasing credit limits and adding more customers.SKS Micro Finance , for instance , is adding 1.5 lakh borrower every month.

On categorisation front, MFIs can be broadly classified into 3 categories--

1. Category I - about 5-6 in number , mostly NBFCs . Exa- SKS , SHARE, Spandan etc

2. Category II - about 10 - 15 in number,  are either for profit NGOs or NBFCs, Exa- Grameen Koota, Bandhan, ESAF

3. Category III - Bulk of 1000 odd MFIs , are mainly NGOs, weak financials and struggling for survival.

Sa-Dhan is the Association of Indian MFIs.

 

Latest News on RRBs

Out of 84 RRBs, 33 are with CRAR below 7% as on 31/03/2008 and out of 33, 22 have CRAR below 1%. Those with CRAR below 7% are dubbed as weak RRBs, and the road map is to augment CRAR to 9% by 31/03/2012. 11 RRBs whose CRAR is in excess of 1% but below 7% should achieve 7% by 31/03/2010.

Deputy Governor K C Chakraborty to look into the issue of recapitalisation for weak RRBs. Total capital requirement could be Rs 3000 crore including growth and enhanced credit flow to weaker sections. Earlier, Govt. re-capitalized 27 RRBs with negative net worth to positive CRAR at a cost of Rs 1796 crore.