Skip to main content

News Summary: MFIs still struggling to get funds..!

Microfinance news summary (June 15- June 30)

According to the first edition of Microfinance Institutions Network (MFIN)’s quarterly report, MFIs located outside Andhra Pradesh (AP) has shown growth during 2011-12 with gross loan portfolios growing by 22% over the previous year. However, if AP is also included, the gross loan portfolios shows a decline of 15% compared to previous year. In AP alone, the portfolio decreased by 38% over the previous area.  

Despite improvement of private equity deals in Indian microfinance sector in 2011 (second highest volume of capital flows after Peru) and some large MFIs managing to raise funds,  small and medium sized MFIs are still struggling for funds as banks are still reluctant to fund MFIs, and to make it worse, banks have raised their lending rates from 9-12% to 15-18% now. It should be noted that according to RBI guidelines, the interest rate that MFIs charge cannot be more than 26% , with a margin cap of 12%.
On the other hand, the Union Government  has suggested that every business correspondent outlet should be converted into an ultra-small branch and agents should reach out to individuals on their own and operate from home, however, Reserve Bank of India does not seem to be too happy with this suggestion. RBI told banks to set up branch for 8-10 BCs operating in an area.


Popular Posts

Vocationalisation of education in India: Current Scenario, Key Challenges and New directions

“Every handicraft has to be taught not merely mechanically as is done today, but scientifically. This is to say, the child should learn the why and wherefore of every process.” - Gandhi’s Philosophy of Education

The greatest challenge in Indian education system today is to provide skill based education to the youth. This is exacerbated by a mismatch in demand and supply for the skilled workforce. The penetration of vocational education and training remains poor not only in rural areas, but also in urban regions where there is a higher installed capacity to impart the same. This post is an attempt to make the readers understand the need of vocational education in India. Also, this is an attempt to summarise a few recommendations on the same. 
A recent survey (61st round) conducted by the NSSO found that:

1. The percentage of population that completed primary education was 70%, but less than 10% went on to complete a graduation course and above. Almost 97% of individuals in the age bracket…

Rockstar of Financial Inclusion: Business Correspondent Model of India

About Author:  Jatinder Handoo is a social business enthusiast and a branchless banking practitioner. Currently works at FINO PayTech Ltd and is based out of Mumbai. He is reachable at
India is a hot bed of financial exclusion. A country which houses nearly 16% of the global population  has more than 65% of its people outside the formal financial system (Global Findex 2012). The Indian banking system has adopted multiple approaches to make universal financial inclusion a reality right from early days Indian post-independence banking system. Be it bank nationalization in 1969 or formation of Regional Rural Banks. Formation of NABARD or fostering microfinance through Bank-SHG linkage programme in early 90’s. A shimmering ray hope was rekindled with the growth of JLG based microfinance, however later studies made it clear that the model is credit led, concentrated predominately in the southern region of India thus could not be seen as painting complete financial…

A Platform for Knowledge - Enabling people to learn ..

I received a rather interesting link/website via my email today. The link read as MR University and all I could think of was, "Ok, this must be another website portal of some university or college". Well, on clicking the link and looking through the contents of the site, I was pleasantly surprised. The site is an online education portal or platform that allows users or teachers to upload short videos on topics or lessons they wish to impart. First topic that I come across is Development Economics.
The intent of the website is eloquently put out by the two economists, Tyler Cowen and Alex Tabarrok in the intro video. What started as a blog focusing on economics and its various implications in understanding why things are the way they are around us, has now an interesting addition. A video portal titled MRUniversity or Marginal Revolution University that focuses on online education with subjects pertaining to economics. It brought back to my mind,…