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Microfinance loans double, cross Rs11k cr.........Sreejiraj Eluvangal
New Delhi: Even as India gets ready to see the first IPO by a microfinance organisation, the sector continued its scorching growth during the last financial year, according to the Bharat Microfinance Report, the biggest survey of non-government microfinance sector in the country.
Total outstanding loans by non-governmental microfinance institutions doubled from Rs 5,954 crore in 2007-08 to almost 11,734 crore last fiscal (2008-09), said ‘Sa-Dhan’, the umbrella organisation for independent microfinance institutions (MFIs), which carried out the survey.
Outstanding-loan growth rose 97% in FY09, faster than that the previous fiscal’s 72%. It is also faster than the loan-growth at Nabard, which is estimated to be growing at 35%.
As a result, independent MFIs are estimated to have increased their marketshare to about33% from around 26% during the previous year.
Mathew Titus, executive director of Sa-Dhan said more and more MFIs are trying to move to a for-profit model. The report noted: “The capacity of not-for-profits to expand is constrained by low net owned funds. Therefore, many MFIs are looking for transformation into for-profits,” adding that many are stuck due to legal and other impediments.
While 85% of the surveyed MFIs were registered as trusts or non-profits, they accounted for only 25% of total outstanding loans. Thanks to a lower loan size, they serviced about 38% of total borrowers. For-profit firms, though only 18% in number, accounted for 82% of all ‘own funds’ that were lent out.
Total active borrowers stood at Rs 2.26 crore in FY09 from around Rs 1.41 crore the previous year, up 60%. The average loan-size has quadrupled from around Rs 2,500 per loan five years ago, as the sector has grown more organised, Sa-Dhan said.
According to the report, around 38% of borrowers have loans higher than Rs 10,000, compared to 23% in the year before. Sa-Dhan said a small part of the overall growth may be because the survey included 233 MFIs, against 223 during the previous two years.
As expected, 90% of the borrowers were women, but contrary to expectations, only a “few clients” were daily labourers. The majority are small scale self-employed persons, the survey found.
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