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The MFI sector is rapidly expanding after the <keyword id="113684" type="COMPANY" weightage="100" keywordseo="microfinance">microfinance</keyword> 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 (<keyword id="187937" type="COMPANY" weightage="100" keywordseo="MFIN">MFIN</keyword>) in its 13th issue of <keyword id="1098591" type="UNKNOWN" weightage="100" keywordseo="MicroMeter">Micrometer</keyword>, 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 <keyword id="6373634" type="COMPANY" weightage="60" keywordseo="Bandhan">Bandhan</keyword> 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 <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword>’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)

Microfinance gross loan portfolio grew by 61% FY15: MFIN

On Thursday, the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword>) sought action against four non-banking financial companies (<keyword id="19938300" type="General" weightage="20" keywordseo="NBFCs" source="keywords">NBFCs</keyword>), barring them from making new loan sanctions and disbursements, effective October 21, 2024. A report by <keyword id="19977638" type="General" weightage="20" keywordseo="Morgan-Stanley" source="keywords" meta.keywordsubtype="org" meta.entityname="Morgan Stanley" meta.hostid="261" meta.entityid="Morgan Stanley">Morgan Stanley</keyword> suggests that more lending companies might face similar scrutiny in the coming days. As named by the RBI in its order yesterday, <keyword id="20146314" type="General" weightage="20" keywordseo="Asirvad-Microfinance" source="keywords" meta.keywordsubtype="org" meta.entityname="Asirvad Microfinance" meta.hostid="261" meta.entityid="Asirvad Microfinance">Asirvad Microfinance</keyword>, Arohan Financial Services, DMI Finance, and Navi Finserv failed to adhere to the <keyword id="21471399" type="General" weightage="20" keywordseo="Fair-Practices-Code" source="keywords">Fair Practices Code</keyword> and did not properly assess borrower's income and repayment capacities before disbursing loans, especially when it came to their microfinance loans. Additionally, these companies also resorted to dubious asset classifications and incomplete interest rate and fee disclosures, which in turn led to alarming practices like loan evergreening and more. RBI also found that the weighted average lending rate (WALR) and the interest spread charged over their cost of funds by these NBFCs were over the stipulated norms. Earlier this month, the apex had already issued a stern warning to the NBFC sector, discouraging them from pursuing aggressive loan book expansion at the cost of regulations and fair practices. Per the bank, it would be ideal if NBFCs self-corrected their ways and refrained from giving incentives and fixed targets to their employees for granting loans. As for these four NBFCs, RBI flagged significant deviations with respect to Income Recognition and Asset Classification (IR&amp;AC) norms in their functioning and gross mismanagement of their gold loan portfolios. As RBI noted, these NBFCs had outsourced several of their core financial services as well. The restrictions on these 4 NBFCs will be effective at the close of business as of October 21, 2024. But this will not affect the existing, active loans of the companies. Also, loan collection and recovery processes will also continue in line with existing guidelines. However, Morgan Stanley, in a recent report, has questioned this move, asking whether lending rates alone were the cause for concern by RBI against specified NBFCs or whether broader issues are at play. "Based on an observation of lending rate data collated and presented by MFIN (the industry body for microfinance lenders), we note that Asirvad Microfinance's lending rates are not very different from other lenders," the report said. The report also observes that more regulatory action might follow in the sector, but the intention here was not to shut down new lending by <keyword id="21739781" type="General" weightage="20" keywordseo="microfinance-institutions" source="keywords">microfinance institutions</keyword> and NBFCs entirely. RBI's restrictions will stay in place until these NBFCs show that they have fully aligned their practices with regulatory guidelines. In response, Navi Finserv Limited has noted that it is committed to conducting its business operations with the highest standards of compliance, customer service, and transparency. "The company is reviewing the directions received from the Hon’ble Reserve Bank of India and will work with them and address all the concerns raised with promptness and completeness," it further added.

Reserve Bank may act against more NBFCs to keep obscure lending practices in check, says Morgan Stanley

<ul><li>Women entrepreneurs account for 20% of <keyword id="3082456" type="General" weightage="20" keywordseo="indifi" source="Orion">Indifi</keyword>’s total loan disbursals. </li><li>Indifi said that it has disbursed 50,000 loans to over 30,000 micro <keyword id="44779" type="General" weightage="20" keywordseo="smes" source="Orion">SMEs</keyword>. </li><li>Over 64% of the loans for small business owners is concentrated in east, northeast and south regions. </li></ul> Indifi Technologies, a Gurgaon-based online lending platform, said that it has disbursed 50,000 loans amounting ₹2,800 crores in the last six years. These loans were given to 30,000 micro SMEs. As per the <a href="https://msme.gov.in/sites/default/files/MSME_gazette_of_india.pdf">ministry definition</a>, a micro enterprise’s annual turnover must be below ₹5 crore and its investment in plant, machinery or equipment must not exceed ₹1 crore. “Micro entrepreneurs have historically struggled with access to timely capital but, with advancements in technology and data, the industry today is equipped with great tailwinds to change that,” Alok Mittal, co-founder and CEO said. A fifth of Indifi’s loan disbursals went to women entrepreneurs. Further within the women-led businesses, 25% of the loans were given to first time borrowers and 25% to businesses from tier 2, 3 and 4 cities. The loans that are being disbursed to micro enterprises have been going up. The Non Banking Finance Company-Micro Finance Institute’s (NBFC-MFI) portfolio increased by 36.6% in India from Q3 FY 19-20 to Q1 FY 22-23, according to a report by <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">Microfinance</keyword> Institutes Network (MFIN). “During the first quarter, the sector was occupied with the implementation of new harmonized regulations of the RBI. Despite that the growth has been good and credit quality of post-Covid disbursements are at 95% plus. During the remaining period of FY 22-23, riding on robust branch expansion, pent up demand and conducive policy, the sector is poised for sustainable growth,” MFIN chairperson, Devesh Sachdev said. The report also said that over 64% of the loans for small business owners are concentrated in east and northeast and south regions. The microfinance network is made up of NBFC-MFIs, banks, Small Finance Banks (SFBs), <keyword id="6354598" type="General" weightage="20" keywordseo="nbfcs" source="Orion">NBFCs</keyword> and others (including Non-profit MFIs). As on 30 June 2022, 3.5 crore clients have loan outstanding from BFC-MFIs, which is 13.8% higher than a year before, MFIN reports. In spite of the recent growth, the credit gap to the <keyword id="6393272" type="General" weightage="20" keywordseo="msmes" source="Orion">MSMEs</keyword> is estimated at ₹40 lakh crore, owing to barriers of access, cost, and <a href="https://m.economictimes.com/small-biz/sme-sector/funding-and-msmes-can-banks-fintech-together-address-the-credit-gap-for-small-businesses/articleshow/81087510.cms">underwriting</a>. In India, microfinancing institutions (MFIs) are present in 27 states and five union territories. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/mobile/news/reliance-is-reportedly-planning-to-launch-jiophone-5g-launch-in-india-at-a-very-affordable-price/articleshow/94483655.cms">Specifications of JioPhone 5G with Codename 'Ganga' leaked - check all details here</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/amazons-2022-hardware-event-heres-whats-new-on-kindle-echos-fire-tv-cube-and-halo-rise/articleshow/94532586.cms">Amazon’s 2022 Hardware Event — here’s what's new on Kindle, Echos, Fire TV Cube, and Halo Rise</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sports/news/jasprit-bumrah-ruled-out-of-t20-world-cup-with-back-stress-fracture-report/articleshow/94532793.cms">Jasprit Bumrah ruled out of T20 World Cup with back stress fracture: Report</a>

Gurgaon-based Indifi disbursed ₹2,800 crore worth of loans to small business owners

<ul><li>The <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> industry’s gross loan portfolio has shown an increase of 23.5% on yearly basis to ₹2.93 lakh crore as on June 30, 2022 from ₹2.37 lakh crore last year.</li><li>According to the Reserve Bank of India, a microfinance loan is defined as a collateral-free loan given to a household having annual household income up to ₹3 lakh.</li><li>Among states, Tamil Nadu is the largest state in terms of gross loan portfolio followed by Bihar and West Bengal.</li><li>The microfinance industry began in India in the 1980s taking inspiration from Bangladesh.</li></ul>The Indian microfinance loan industry today serves 6 crore unique borrowers having 11.8 crore loan accounts with a portfolio of ₹2.93 lakh crore as of June 30, 2022 says a report by Microfinance Institutions Network (MFIN), the microfinance industry association at its the 42nd issue of its Micrometer report. The loan growth story among credit providers has been healthy in the last one year. The portfolio outstanding at NBFCs grew highest at 38.4%, microfinance NBFCs at 36.6%, small finance banks at 28.5% and banks at 9.9% during the period. It is worth knowing that the microfinance loan industry began in India in the 1980s taking inspiration from Bangladesh, which made successful reforms by distributing loans to the underprivileged and women in the region. According to the Reserve Bank of India, a microfinance loan is defined as a collateral-free loan given to a household having annual income up to ₹3 lakh. For this purpose, the household shall mean an individual family unit, i.e., husband, wife and their unmarried children. “The sector now caters to nearly 6 crore women entrepreneurs and is playing a critical role in inclusive growth as well as furthering the mission of Digital India,” Dr Alok Misra, CEO &amp; director at Microfinance Institutions Network (MFIN) said. The ₹3 lakh crore industry has grown 23.5% in the last one year The overall microfinance industry’s gross loan portfolio has shown an increase of 23.5% on yearly basis to ₹2.93 lakh crore as on June 30, 2022 from ₹2.37 lakh crore last year. A large portion of such small loans are distributed by banks, microfinance NBFCs and then small finance banks. And the rest of the portfolio is served by NBFCs and <keyword id="499387" type="General" weightage="20" keywordseo="microfinance-lenders" source="Orion">microfinance lenders</keyword>. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Loan providers </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Loan portfolio </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">% of overall portfolio </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Banks* </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.12 lakh crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">38.4% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Microfinance NBFCs </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.02 lakh crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">35% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Small finance banks </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹49,646 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16.9% </td></tr></tbody></table>(*These are 12 banks that hold the largest share of portfolio in micro-credit) The loan disbursals more than tripled in Q1 FY23 with ₹22,745 crore as compared to the Q1 FY22 with ₹6,279 crore. “During the first quarter, the sector was occupied with the implementation of new harmonized regulations of the RBI. Despite that the growth has been good and credit quality of post-Covid disbursements are at 95% plus. During the remaining period of FY 22-23, riding on robust branch expansion, pent up demand and conducive policy, the sector is poised for sustainable growth,” Devesh Sachdev, chairperson at MFIN said. Among states, Tamil Nadu is the largest state in terms of gross loan portfolio followed by Bihar and West Bengal. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">States </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Gross loan portfolio </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tamil Nadu </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹38,276 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bihar </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹37,412 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">West Bengal </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹33,116 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Karnataka </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹25,258 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Uttar Pradesh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹24,820 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Maharashtra </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹22,352 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Madhya Pradesh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹17,808 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Odisha </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹17,297 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rajasthan </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹13,467 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kerala </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹11,606 crore </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/the-adani-effect-ambuja-cements-rallies-40-in-one-month-analysts-suggest-good-days-ahead-for-the-cement-industry/articleshow/94366341.cms">The Adani effect: Ambuja Cements rallies 40% in one month – analysts suggest good days ahead for the cement industry</a> <a target="_blank" 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India’s microfinance loan portfolio stands at ₹3 lakh crore with 6 crore unique borrowers

<ul><li>RBI’s new <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> framework has had a major adverse impact on new microfinance loans.</li><li>Earlier banks used to reject three out of ten — or about 30-35% — such microfinance applications.</li><li>A <keyword id="4298535" type="General" weightage="20" keywordseo="microfinance-loan" source="Orion">microfinance loan</keyword> is defined as a collateral-free loan given to a household having an annual income of up to ₹300,000.</li><li>The microfinance disbursement is expected to be muted for the April-June quarter, even though there may be recovery in June.</li></ul>One out of every two applications for small loans have been rejected ever since the Indian central bank implemented revised guidelines for microfinance loans in April 2022, a latest report by ICICI Securities has revealed. The brokerage firm noted that earlier banks used to reject three out of ten — or about 30-35% — such applications. But the <a href="https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12256&amp;Mode=0">revised guidelines</a> under the ‘Regulatory Framework for Microfinance Loans Directions 2022’ have made it even harder for customers to get small loans, leading to an increase in rejection rate. “Our channel checks suggest that, post the implementation of revised guidelines w.e.f. 1st April, 2022, as per the ‘Regulatory Framework for Microfinance Loans Directions 2022’, microfinance <keyword id="6970794" type="General" weightage="20" keywordseo="loan-rejection" source="Orion">loan rejection</keyword> rate increased to over 50% vs 30-35% pre-March 2022,” ICICI Securities said in a report published on June 9. A microfinance loan is defined as a collateral-free loan given to a household having an annual income of up to ₹300,000. <cmsannotation type="cmsannotation" annotationid="What has led to such micro loan rejection?" comment="subhead" text="What has led to such micro loan rejection?">What has led to such micro loan rejection?</cmsannotation> ICICI Securities — a subsidiary of ICICI Bank — has blamed this muted growth on two main factors of the revised guidelines. First, the maximum loan per borrower has been capped at an ‘EMI to income ratio’ of 50% with an annual household income at ₹300,000, which has left out many loan seekers. Previously the household income was kept at ₹200,000 in urban areas and ₹160,000 in rural areas. Secondly, the lender has to consider all outstanding retail loans at household level — and not only at microfinance institutions borrower level — while arriving at monthly EMI, which has increased the timeline of customer onboarding process. These provisions are applicable on all commercial banks, all co-operative banks and all non-banking financial companies (NBFCs). “Our interaction with field staff and branch managers suggests that centre timings have increased to capture details of all household members vs only borrower-level data earlier. The same is likely to impact productivity in the near term,” the report noted. <cmsannotation type="cmsannotation" annotationid="But it's not all bad, June may be better" comment="subhead" text="But it's not all bad, June may be better">But it's not all bad, June may be better</cmsannotation> According to data shared by MFIN, the microfinance loan portfolio of all lenders grew about 10% year-on-year to ₹2.56 lakh crore at the end of December 2021, compared to ₹2.33 lakh crore in the previous year. The ICICI Securities’ report also noted that the gradual increase in economic activities and steady improvement in collections led to robust microloan disbursements in the second half of fiscal year 2022. But the momentum was derailed due to the new microfinance loan directions. Even though the microfinance disbursement rate will be back to pre-Covid levels in June, it would not be enough to increase overall loan disbursal in the April-June quarter. Therefore, microfinance disbursement is expected to be muted this quarter. “The new regulatory regime will create a level playing field for all incumbents and the risk-based pricing approach is likely to enable the players to absorb cyclical lumpy credit costs more effectively than before. While, we believe, the impact of the revised regulation on SFBs and banks will vary from neutral to positive, NBFC-MFIs stand to benefit the most,” ICICI Securities concluded. The revised guidelines were also welcomed by other microfinance firms like Microfinance Institutions Network (MFIN), Village Financial Services and Ba-Dhan for similar reasons. SEE ALSO <a href="https://www.businessinsider.in/business/startups/news/pepper-content-raises-14-million-to-enter-the-us-market/articleshow/92084581.cms" style="">INTERVIEW: Pepper Content skip the traditional Middle East route, heads directly for the US market</a> <a href="https://www.businessinsider.in/business/ecommerce/news/flipkart-has-lived-up-to-expectations-so-far-says-walmart-ceo-confirms-ipo-plans/articleshow/92096890.cms" style="">Flipkart has ‘lived up to expectations so far’, says Walmart CEO, confirms IPO plans</a> <a href="https://www.businessinsider.in/business/ecommerce/news/meesho-recorded-5-35-million-orders-during-the-one-day-sale/articleshow/92100754.cms" style="">India's youngest ecommerce giant received more than 60 orders every second during its one-day sale</a>

1 in 2 micro loans are being rejected since April, thanks to RBI's new microfinance framework

<ul><li>Reserve Bank of India’s (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>) deputy governor M Rajeshwar Rao on Friday outlined several measures in the central bank’s revamped <keyword id="113684" type="General" weightage="20" keywordseo="Microfinance" source="Orion">microfinance</keyword> framework to safeguard customers. </li><li>RBI had announced a revamped regulatory framework for <keyword id="164768" type="General" weightage="20" keywordseo="Microfinance-Institutions" source="Orion">microfinance institutions</keyword> in March this year. </li><li>From transparent pricing of loans to preventing intimidation of borrowers, here are the key aspects of the revamped guidelines for microfinance institutions. </li></ul>Customer protection is the ‘guiding light’ of the central bank’s revamped microfinance regulations that came into effect in April, Reserve Bank of India’s deputy governor M Rajeshwar Rao said on Friday. Rao said that with the new regulations the RBI has moved from a rule-based approach to a principle-based one in order to expand the availability of credit to the last mile, while improving the transparency and competition to foster a healthy environment. In his keynote address at the India Microfinance Review organised by industry body MFIN, the deputy governor said the measures were intended to ensure customer protection, which was the “guiding light while revamping the regulatory regime for the microfinance sector”. RBI’s revamped regulatory framework for microfinance institutions also relaxed norms for household income and repayment criteria to address the growing needs of borrowers. For instance, the limit on maximum annual household income to avail credit from microfinance institutions was ₹1.25 lakh in rural areas, while in urban and semi-urban areas it was ₹2 lakh. This has now been increased to ₹3 lakh for all the three areas. Rao, in his address, highlighted the following key new customer protection measures that are part of RBI’s revamped microfinance framework. <cmsannotation type="cmsannotation" annotationid="Transparent pricing of loans" comment="subhead" text="Transparent pricing of loans">Transparent pricing of loans</cmsannotation> Under the revamped framework, microfinance institutions will have to ensure transparency in the pricing of loans by clearly disclosing the methodology used in calculation of the effective interest rate. Effective interest rate includes the impact of compounding, showing exactly how much a borrower is paying in the form of interest on a loan. Rao said that this measure would not only help the borrower understand the total cost of a loan, but also help in comparing the cost amongst lenders to choose the best option. <cmsannotation type="cmsannotation" annotationid="Policies for conduct of employees" comment="subhead" text="Policies for conduct of employees">Policies for conduct of employees</cmsannotation> Rao also underlined that the boards of microfinance institutions should approve policies for the conduct of employees, including their recruitment, training and conduct. These policies should also include programmes to train employees in interacting with customers and link it with their compensation matrix, he said. <cmsannotation type="cmsannotation" annotationid="No coercive recovery measures against borrowers" comment="subhead" text="No coercive recovery measures against borrowers">No coercive recovery measures against borrowers</cmsannotation> Lastly, the updated guidelines also require the microfinance institutions, or the recovery agencies outsourced by them, to not indulge in coercive recovery measures. This includes preventing recovery agents from intimidating borrowers or calling them before 8 am or after 7 pm. The guidelines also require the boards of these institutions to lay down policies for grievance redressal mechanisms so that customer complaints can be addressed appropriately. “While we acknowledge the rights of the lenders to recover overdue loans, I would like to make it clear in no uncertain terms that the Reserve Bank has zero tolerance for misconduct towards the borrowers,” Rao said. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/meta-expected-to-announce-massive-layoffs-this-week-that-could-impact-thousand-as-tech-bloodbath-continues-wsj/articleshow/95343558.cms">Meta expected to announce massive layoffs this week that could impact thousand as tech bloodbath continues: WSJ</a> <a href="https://www.businessinsider.in/stock-market/news/sensex-rises-over-360-pts-to-scale-61k-level-in-early-trade-nifty-above-18220/articleshow/95348184.cms">Sensex rises over 360 pts to scale 61k-level in early trade; Nifty above 18,220</a> <a href="https://www.businessinsider.in/tech/news/twitter-backtracks-elon-musks-platform-will-delay-its-paid-blue-check-verification-plan-until-after-midterms-nyt/articleshow/95343175.cms">Twitter backtracks: Elon Musk's platform will delay its paid blue check verification plan until after midterms: NYT</a>

Customer protection 'guiding light' of revamped microfinance regulations, says RBI deputy governor

Mumbai, Feb 26 () Microfinance industry growth slowed to 24.22 per cent year-on-year in the third quarter of the current fiscal with total loan portfolio standing at Rs 2.11 lakh crore, says a report. As on December 31, 2019, the industry served 5.64 crore unique borrowers through 10.11 crore loan accounts with operations in 619 districts in 36 states and union territories, according to a quarterly report released by Microfinance Institutions Network (MFIN). "The industry has reached 30 per cent of the potential households in the country that need microfinance. There is hence immense scope for growth and expansion," MFIN chief executive officer Harsh Shrivastava said in the report. Banks hold the largest share of portfolio in micro-credit with total loan outstanding of Rs 83,876 crore, of the total micro-credit universe mainly due to merger of Bharat Financial Inclusion (BFIL) with Induslnd Bank during the first quarter of FY2019-20. Non-banking financial company - microfinance institutions (NBFC-MFIs) are the second largest provider of micro-credit with a loan amount outstanding of Rs 66,159 crore. Small finance banks (SFBs) have a total loan amount outstanding of Rs 37,282 crore, NBFCs with total loan outstanding of Rs 21,591 crore and other MFIs account for Rs 2,395 crore in the microfinance universe. Based on the third quarter data available for 48 NBFC-MFI members, loan amount disbursed via cashless mode stood at 90 per cent. Close to 80 per cent of the MFI members reported more than 90 per cent loan disbursements through cashless mode, according to the findings. In terms of regional distribution of portfolio (GLP), East and North-east accounts for 40 per cent, South accounts for 28 per cent, North holds 10 per cent, West has a share of 14 per cent and Central contributes 8 per cent. During October-December, NBFC-MFIs received a total of Rs 10,960 crore in debt funding, which was an increase of 16 per cent from the second quarter of FY2019-20, the report showed. Total equity grew by 8 per cent during the same period and stood at Rs 15,567 crore, it said. HV MRMR

Microfinance industry growth slows to 24.22 pc in Q3

By Hitesh Vyas Mumbai, Apr 21 () Only a dozen-odd of the 52 micro lenders have investment grade ratings and are thus eligible to issue debt instruments that can be picked by banks using the Rs 50,000-crore special liquidity tap that the Reserve Bank of India has opened up over the weekend. Last April 17, the central bank announced a Rs 50,000-crore focused liquidity injection through what it calls a new model of its targeted long-term repo operations (TLTRO 2.0) aimed solely at small and medium non-banking financiers, housing finance companies and micro-lenders. "Our own survey shows that only 12 members, one with 'AA' and 11 with 'A', have investment grade ratings, and, therefore, they are the ones who are most likely to get the money under TLTRO 2.0," Micro Finance Institutions Network (MFIN) Chief Executive Harsh Shrivastava told . MFIN is a self-regulatory organisation (SRO) of NBFC-MFIs. The rest of the players have either BBB/BB or lower ratings, he added. Shrivastava, however, welcomed the TLTRO 2.0 saying it can help large micro-lenders with investment grade ratings to get cheaper funds. Of the 52 MFIs, 21 are large with a portfolio of over Rs 500 crore, 19 are mid-sized with a loan portfolio of Rs 100-500 crore and 12 are small ones with under Rs 100 crore loan book, he said. Typically, debt instruments with AAA rating carry the lowest credit risk, thus have the highest degree of safety regarding servicing of financial obligations. A 'BBB-' is the lowest investment grade rating on a debt instrument that can attract investments. And, any rating below this is riskier debt and thus attracts higher coupons, given the inherent risks the issuer faces in meeting debt obligations. The RBI will conduct the first auction for the three-year TLTRO 2.0 for Rs 25,000 crore on April 23 at 4.40 per cent. The funds availed under TLTRO 2.0 will have to be deployed in investment grade bonds, commercial papers and non-convertible debentures (NCDs) of non-banking financial companies (NBFCs) and at least 50 per cent of the fund should go to small and mid-sized NBFCs and micro-finance institutions (MFIs). Of the 50 per cent, 10 per cent or Rs 5,000 crore will have to be invested in debt issued by MFIs, 15 per cent into debt issued by NBFCs with an asset size of Rs 500 crore and below and 25 per cent in securities issued by NBFCs with assets size between Rs 500 crore and Rs 5,000 crore. The deployment of funds availed under TLTRO 2.0 in the primary market cannot exceed 50 per cent of the amount availed of, the RBI had said last Friday announcing the liquidity window. According to India Ratings Director Prakash Agarwal, "Small and medium NBFCs have limited presence in the capital market and thus investments through secondary market transactions are not feasible for them." NBFCs with an asset size between Rs 500 crore and Rs 5,000 crore generally have BBB/A-rating though may have weaker liquidity and other buffers than higher-rated issuers. With a large segment of NBFC customers likely to be significantly hit by the COVID-19 lockdown, delinquencies can disproportionately rise for them with weaker collections, impacting their overall liquidity. "Thus, banks' risk appetite to take additional exposures on NBFCs through their debt, in the absence of any credit guarantee support, that too for a long three-year period, remains to be seen," Agarwal pointed out. It can be even more challenging for NBFCs with a balance sheet size of under Rs 500 crore, especially as a large number of them will not have investment grade ratings. According to rating agency ICRA, only 23 MFIs or around 60 per cent of the industry, have investment grade ratings. Shrivastava also said MFIs may face challenges in issuing bonds or commercial papers during the COVID-19 lockdown period and that "for others who have BB or lower ratings, giving moratorium is still the simplest and fastest way to get money". On Sunday, State Bank of India Chairman Rajnish Kumar had said banks could support NBFCs/MFIs by helping them issue bonds that can be funded through the TLTRO scheme. Kumar also said he was even ready to provide liquidity to those MFIs that don't have an investment grade rating, if they have a good credit history. "If MFIs are not eligible for bonds because they do not have the required investment grade ratings, then we may be comfortable giving loans to them on the basis of their credit history," Kumar had said. NBFCs and MFIs have been demanding that banks extend the three-month moratorium announced by the RBI on March 27 to them. Despite not getting a moratorium from banks, MFIs have extended the same to their borrowers. Many analysts have said that in the absence of moratorium, these micro lenders can face severe liquidity challenges, which would affect their debt servicing capability. The last week's meeting of the Indian Banks' Association (IBA) to decide on granting loan moratorium to NBFCs and MFIs was inconclusive as lenders could not come to a consensus. IBA will now approach the RBI to seek some clarification on the issue. HV HRS

Only dozen-odd MFIs can gain from RBI's special liquidity window

Mumbai, Jan 22 () Small finance lender Ujjivan Small Finance Bank on Wednesday said its profit doubled to Rs 90 crore in October-December 2019, helped by improvement in operational efficiency, stable margins and cost controls.
 In the year-ago period, the lender had reported a profit after tax of Rs 45 crore.
 "We saw improvement in all parameters. We could maintain our NIMs, costs were under control and operational efficiency also improved," the bank's managing director and CEO Nitin Chugh told .
 Net interest margin stood at 10.9 per cent in the third quarter of 2019-20, against 11 per cent in last year.
 The bank saw its cost of funds reducing to 8.1 per cent during the quarter from 8.6 per cent in the year-ago period.
 Gross advances grew by 46 per cent to Rs 13,617 crore.
 Non-micro banking portfolio contributed 22 per cent to the total loan portfolio.
 Chugh said the bank faced some issues on repayments in its microfinance portfolio in Assam and a few neighbouring areas after the protest erupted following the passage of the Citizenship Amendment Bill in December.
 Of the total microfinance lending book of Rs 10,000 crore, the lender has an exposure of Rs 430 crore in Assam.
 As a prudent measure, it has made a provision of Rs 4.9 crore towards its loan portfolio in the north-eastern state.
 "We are working with the state government and Microfinance Institution Networks (MFIN), a self-regulatory organisation (SRO), to resolve issues at Assam," Chugh said.
 Gross NPA was at 0.9 per cent as against 1.4 per cent while net NPA stood at 0.4 per cent from 0.3 per cent.
 It wrote-off of Rs 12 crore of loans in the third quarter.
 Its deposit base stood at Rs 10,656 crore as of December 31, 2019. It serves over 51.0 lakh customers through 574 branches and 17,783 employees spread across 244 districts and 24 states and union territories in the country. HV DP MR
MR

Ujiivan SFB posts 2-folds growth in Q3 profit

Mumbai, Apr 17 () Non-bank financial players have welcomed the Reserve Bank of India's decision to provide Rs 50,000 crore of additional liquidity support to the sector by conducting targeted long term repo operations (TLTRO 2.0). Shadow banking players also hope to get more liquidity support from banks after the RBI reduced the reverse repo rate by 25 basis points to 3.75 per cent from 4 per cent. The RBI on Friday said it will conduct (TLTRO 2.0) for an aggregate amount of Rs 50,000 crore, to begin with, in tranches of appropriate sizes.The funds availed by banks under TLTRO 2.0 should be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50 per cent of the total amount availed going to small and mid-sized non-banking financial companies (NBFCs) and micro-finance institutions (MFIs)."It (TLTRO) is a very-very favourable decision. Now, they (RBI) have specifically allotted (liquidity through TLTRO) to NBFCs, of which 50 per cent will be for small and medium NBFCs. It is a great liquidity support from the RBI," Mahindra and Mahindra Financial vice chairman and managing director Ramesh Iyer told . MFIN's CEO Harsh Shrivastava said the microfinance sector is highly appreciative of RBI for acknowledging the industry concerns and for infusing liquidity of Rs 50,000 crore, a substantial part of which will help the small and medium NBFC MFI's to support the bottom of the pyramid customers.In order to encourage banks to deploy their surplus funds in investments and loans in productive sectors of the economy, the RBI reduced the reverse repo rate to 3.75 per cent. Shriram Transport's managing director and CEO Umesh Revankar, said the decision to cut the reverse repo rate by 25 bps will encourage banks to look for lending opportunities. "We would appreciate it if banks reciprocate positively to NBFCs request on moratorium to manage cash flow smoothly," Revankar said.The RBI, on March 27, had permitted all lending institutions (LIs) to grant a moratorium of three months on payment of current dues falling between March 1 and May 31, 2020.On Friday, the RBI said in respect of all accounts for which lending institutions decide to grant moratorium or deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period,"There would be an asset classification standstill for all such accounts from March 1, 2020 to May 31, 2020," it said.It also allowed NBFC players to extend the date for commencement for commercial operations (DCCO) for loans given commercial real estate by additional one year without considering it as restructuring."The 90 day NPA norm won't be applicable to loans where the moratorium is granted. This along with a one year extension on loans given to the real estate sector will help preserve asset quality," Centrum Group executive chairman Jaspal Bindra said. The central bank announced to provide special refinance facilities for a total amount of Rs 50,000 crore to Nabard, Sidbi and NHB to enable them to meet sectoral credit needs."The special refinance facilities of Rs. 50,000 crore to NHB, Sidbi and Nabard will help meet credit needs of MSME sector and housing finance which has been severely affected by Covid-19," Capri Global Capital's managing director, Rajesh Sharma said. Edelweiss Group chairman and CEO Rashesh Shah said RBI has shown its commitment to go the extra mile and more stimulus measures will help in reviving the financial sector. Tourism Finance Corporation of India (TFCI) managing director and CEO Anirban Chakraborty said the RBI's announcement brings much needed relief to the sectors with an eye on the developing situation at the ground level. HV MKJ

NBFCs hail RBI's additional liquidity support move to tide through Covid crisis

Mumbai, May 22 () Bankers on Friday said the 40 basis points reduction in repo rate by the Reserve Bank of India will give a big support to the sagging economy. The RBI on Friday reduced the repo rate by 40 basis points to 4 per cent, the lowest since it came into being in 2000. The central bank also announced a slew of measures, including extension of moratorium on loan repayments by another three months and increasing bank exposure to corporates to 30 per cent of the group's net worth from the current limit of 25 per cent. "The RBI policy announcement in response to the fallout of COVID-19 pandemic is timely. The reduction in policy rate by 40 bps under the assumption that growth in FY21 will be negative is an appropriate move to support economic activity," State Bank of India (SBI) Chairman Rajnish Kumar said. RBI Governor Shaktikanta Das said given the uncertainties, GDP growth in 2020-21 is estimated to remain in the negative territory, with some pick-up from the second half of the current fiscal. "The RBI continued with its extraordinary commitment in its fight against COVID-19. The latest round of rate cuts, moratorium extension, deferment of interest on working capital facilities and relaxation in asset classification will provide the requisite balm to the economy," Standard Chartered Bank India CEO Zarin Daruwala said. RBI extended the three-month moratorium on loan repayments from June 1 to August 31, 2020. "It was a good decision. There was a requirement of extension of moratorium since the lockdown has not been lifted 100 per cent," Central Bank of India Managing Director and CEO Pallav Mohapatra said. RBI permitted to convert the accumulated interest on working capital facilities over the deferment period up to August 31 into a funded interest term loan which will be repayable not later than the end of the current financial year. "Conversion of interest on working capital loans for the moratorium period into funded interest term loan (FITL) will give a breather to the borrowers," Indian Bank's Managing Director and CEO Padmaja Chunduru said. The time period for repayment of that component could have been longer than just seven months, she added. According to Bank of Baroda's Chief Economist Sameer Narang, RBI has room for another 25 basis points reduction in policy rate as GDP is likely to contract by 4.7 per cent in FY21 with CPI inflation at 3.5 per cent. Yes Bank's Senior Economist Vivek Kumar said there could be further support from RBI in the form of another 50 basis points cut in the repo rate amid widening of negative output gap and assertion of disinflationary pressures. "We also expect RBI to come up with a large scale bond purchase program (via OMOs) covering both g-secs and SDLs to lower elevated term premium and credit spreads in the economy," he said. Harsh Shrivastava, chief executive officer of Microfinance Institutions Network, said, "MFIN and its members will be happy to extend moratorium to those customers who need it the most while welcoming clients who are able to pay if they have cash flow." Religare Finvest President and Head (Corporate Planning and Strategy) Pankaj Sharma said extension of loan moratorium and permission to convert accrued interest on the moratorium into a funded interest term loan to be paid during the tenure of the loan will ease the pressure on the lending entities, especially NBFCs. "The group exposure limit enhancement for banks will help channelize the credit flow to the NBFC sector. The 3 month extension of the moratorium relief was expected due to the extended lockdown of COVID-19," Tata Capital Managing Director and CEO Rajiv Sabharwal said. Clix Capital CEO Bhavesh Gupta said for banks and NBFCs, moratorium may lead to an increase in NPAs in the long term and it would have been better had RBI also announced directions on one-time restructuring of loans and other support measures. HV ABM ABM

RBI's rate cut to support economy, say bankers

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="https://www.flickr.com/photos/22103696@N07/4897148234/">Angela Mueller/Flickr</a></div></div></div>While parents may like to think otherwise, the reality is that children are "active decision makers" in family economies.We're not going by what we've heard or seen, but rather by the data from YouGov that confirms this influence.Moreover this influence is fairly well spread among the purchases ranging from clothes, footwear and personal care products to be worn by the teenager, but also entertainment content and where to eat.Per YouGov:<ul><li>Apparel for the teen to wear (96% of teens having some degree of influence);</li><li>Where to shop for clothes for the teen (90%);</li><li>Personal care products for the teen (93%);</li><li>Footwear for the teen (93%); </li><li>Which fast-food restaurants to go to (95%); and</li><li>Types of out-of- home entertainment/sports/recreation to attend or do (93%);</li></ul>Why is this important now?We are in the midst of Back to School (BTS) shopping season, and the National <keyword id="6354851" type="ORGANIZATION" weightage="60" keywordseo="Retail">Retail</keyword> Federation sees BTS 2016 spending hitting $75.8 billion. And yes, that is up compared to the $68 billion spent last year.When we see aggregated numbers like that we also prefer to look at them on an individual or household basis as it tends to provide some much needed perspective. This year the NRF sees shoppers spending an average of $674 per household, up from $630 last year.<div class="KonaFilter image-container display-table float_left"><div><div class="image on-image">Reuters/Rick WilkingT-shirts made in the USA are on sale for $4.88 at the Walmart Supercenter in Bentonville, Arkansas June 5, 2014.</div></div></div>The two big winners this year are online shopping, which comes as hardly a surprise given our connected society investing theme, and discount stores, again little surprise given our cash-strapped consumer theme.But what will these back to schoolers be buying from online retailers like Amazon (AMZN) and at Costco (COST) or Wal-Mart's (WMT) Sam's Club?To ferret out some answers we turn to data published by Piper Jaffray (PJC). Each spring since 2001, Piper Jaffray has conducted a study of teenage shopping habits. In the process, Piper has surveyed more than 130,000 teens and collected more than 35 million data points about teenage spending habits over the past 15 years. This year's study surveyed 6,500 US teens across 46 US states with an average age of 16.5 (broken down to 56% male, 44% female).Contrary to the NRF Back to School spending forecast, Piper's finding show teen spending is down compared to 2015. Even so, upper-income teens spent 38% of their "wallet" on fashion categories, such as clothing, accessories, footwear, etc. That's a 2% uptick from a year ago, according to the study.So where are teens spending that wallet or otherwise influencing spending decisions?Rise &amp; Fall of the Middle ClassAthletic apparel accounted for 17% of spending total. While Nike (NKE) was the most popular brand at 21%, followed by: American Eagle (AEO) 8%; Forever 21 (7%), Ralph Lauren (RL) 6%; and Hollister (ANF) at 4%). <div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://www.flickr.com/photos/smull/3531645605/sizes/m/in/photostream/">&amp;y</a></div></div></div>Affordable LuxuryAmong upper-income teenage females, beauty products amounted to 10% of overall spending, which is the highest percent the survey has seen in 10 years. While no specific retailer was called out, one of the best positioned companies that continues to see more of its business conducted online is Ulta Salon (ULTA).Sales of denim jeans also rose to 14 percent of total spending among upper-income females, the first time it's showed up as a top trend in spending since 2013. Again, there were no specific denim brands mentioned but several contenders include VF Corp.'s (VFC) 7 for all Mankind; Guess? (GES), True Religion, and brands owned by PVH Corp. (PVH).Food with Integrity, Guilty Pleasure and other food optionsRestaurant spending made up 22 % of total overall spending for upper-income teens and they tend to frequent limited-service restaurants rather than the full-service dining experience (and heftier price tag).The average check for a teenage meal was $4-$17 Starbucks (SBUX) was the most at 14%, followed by Chipotle (CMG) 9%; Chick-fil-A 7% and then Panera (PNRA) and McDonald's (MCD) both at 4%.Online shoppingAmazon (AMZN) dominates teen spending habits with 41% of all online teenage sales occurring there, while Nike (NKE) and Forever 21 tied for second at 5% apiece and eBay (EBAY), American Eagle (AEO) and Victoria's Secret (LB) all tied for third at 3% each. <div class="KonaFilter image-container display-table float_left"><div><div class="image on-image">Myles Aronowitz/Netflix"The Get Down" stars, from left, Jaden Smith, Skylan Brooks, Tremaine Brown Jr., Justice Smith, and Shameik Moore.</div></div></div>Media consumptionTeens are also watching much more Netflix (NFLX) and YouTube (GOOGL) than traditional TV channels and shows.Teens spent 65% of their time watching Netflix (NFLX) and YouTube, compared to just 26% of their time watching "traditional TV."Netflix is clearly dominating teen view habits at 38%. Given the influence that teenagers have on overall spending, it's what's not mentioned above that is rather revealing. Given the respondent age range, there is too little data to conclusively say anything about the automotive, travel or markets; however consumer electronics is notably lacking this Back to School season.We find that rather interesting given the ongoing shift in schools to Bring Your Own Device (BYOD) vs. school districts purchasing millions of dollars of computer equipment. This of course pushes the spend to families, and helps explain the continued year over year increase in Back to School spending this year.As we mentioned, there is no mention of automotive preferences from the Piper Jaffray findings, but we did come across a new study by Michael Sivak and Brandon Schoettle at the University of Michigan Transportation Research Institute that showed a drop in the number of people with a driver's license.What we found hard to fathom was the drop in people with a driver's license has been steadily falling since 1983 among people aged 16-44. Then we dug into the report and found something even more shocking - in 2014, just 24.5% of 16-year- olds had a license, a 47% decrease from 1983, when 46.2% did. If we expand the age range, we still find far fewer teens getting their driver's license by the time they are 19 - 69 percent of 19-year-olds had licenses in 2014, compared to 87.3%t in 1983.<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Thomson ReutersPhoto illustration of logo of car-sharing service app Uber on a smartphone over a reserved lane for taxis in a street in Madrid</div></div></div>Perhaps all the various ways to communicate today as part of our increasingly connected society - thank you iMessage, Facebook (FB), Messenger, Skype, Snapchat, Instagram, FaceTime and now Google Duo (GOOGL) - means 16-18 year olds no longer feel the itch to get out of the house and hit the road to see friends.While it has little bearing on 2016 Back to School spending, we have to wonder what the longer-term implications are for auto demand?Will it shift from more individuals owning cars to consumer facing car services, like Uber and Lyft, driving new car purchases? Could it have the same effect on Ford (F), General Motors (GM) and other companies like the one Uber and Lyft have had on shares of Medallion Financial Corp. (MFIN)?Shares of Medallion Financial peaked in November 2013 at just below $18, but before too long the impact of Uber's 2011 launch in New York City would weigh on the shares. Add in Lyft and the adoption of smartphones, and before too long Medallion Financial shares would cross the $10 mark and continue to fall even though the company instituted a quarterly dividend.The answers to those questions will come in time.Chris Versace is the chief investment officer of <a href="http://www.tematicaresearch.com/">Tematica Research</a>. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/empty-olympic-stadiums-today-athens-sarajevo-beijing-2016-8">What abandoned Olympic venues from around the world look like today</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="Vscm85NTE6Jvvo3bX9wNq5uyw6gvbiuZ" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

You Searched For "MFIN" and got 12 results

Microfinance gross loan portfolio grew by 61% FY15: MFIN

Usha Rani Das

Reserve Bank may act against more NBFCs to keep obscure lending practices in check, says Morgan Stanley

Ira Alok Puranik

Gurgaon-based Indifi disbursed ₹2,800 crore worth of loans to small business owners

Eetika Kapoor

India’s microfinance loan portfolio stands at ₹3 lakh crore with 6 crore unique borrowers

Bhakti Makwana

1 in 2 micro loans are being rejected since April, thanks to RBI's new microfinance framework

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