Microfinance gross loan portfolio grew by 61% FY15: MFIN

The MFI sector is rapidly expanding after the microfinance crisis in Andhra Pradesh in 2010 with gross loan portfolio (glp) rising to 61 per cent in FY 15. According to data compiled by industry regulatory body Microfinance Institutions Network (MFIN) in its 13th issue of Micrometer, MFIs have attracted 84 per cent more funding in FY 2014-15 than previous this fiscal.

Over the past three years, microcredit has been a boost for millions of people with low income who often have limited access to traditional financial services. According to the data released by MFIN, MFIs provided micro-credit to over 30.5 million borrowers for FY 15, an increase of 29 per cent.

“The results for 2014-15 are a striking testimony to the resurgence of the industry and the extremely large core demand for micro credit. Over the last twelve months the PMJDY’s achievements promoting savings and micro finance industry’s achievements in promoting micro-credit have quite dramatically transformed the financial landscape in the country”, said Alok Prasad, Chief Executive Officer, MFIN.

Varam, Svatantrata and Adhikar were the top three MFIs in terms of highest growth rates in FY 15 over FY 14. MFIs are now more evenly distributed across various regions in the country. There have not only been more branches set up (20 per cent increase), but employee strength grew too by 8 per cent. West Bengal, Tamil Nadu, Karnataka are the top states in terms of number of branches.

Going by the demand, MFIs are expanding their operations too. One might remember that Bandhan Financial Services, a leading MFI is likely to get a final nod to start banking operations by May end.

Majority of debt funding came from banks as securitisation of MFIs increased by 39 per cent. Average loan amount disbursed per account increased by 14 per cent, which stood at Rs 16,327. These positive indicators indicate the growth of small businesses and employment rate over the years. Although study has shown that microfinance do not affect the economy hugely, nonetheless it has attracted foreign investors over the years, which are likely to increase in the future.

Microfinance was an initiative to provide financial services. Though it continues to do solely that, its indirect contributions to the economy cannot be downtrodden by studies and jargons. In a way, what Narendra Modi’s ‘Make in India’ campaign aims for, manufacturing everything indigenously, can be achieved by investing in these small businesses and entrepreneurial enterprises supported by MFIs. Now that the sector’s indicators are all positive, it is a good time to start.

(image credits: www.indiainfoline.com)