The turnaround has brightened the mood among the investor community as well. Private equity (PE) investments have risen to $200 million, which is significantly higher than the last two years. Talking to the media on the eve of its EGM, Alok Prasad, CEO, Micro Finance Institutions Network (MFIN), said: There has been a renewed interest among the investor community due to better transparency and governance by the industry. There was a fall of PE interest in 2010 by over 20% when the crisis broke out.
Due to repayment rates touching 99% across the industry and the RBI taking over their regulation, the industrys prospects have improved, he added. However, the proposed Microfinance Bill, which has received multi-party support, is yet to be taken up for further discussion. The aggregate gross loan portfolio (GLP) of the sector grew 30% to R22,138 crore against R17,032 crore in the year-ago period.
MFIN seeks to work closely with regulators and other key stakeholders to achieve larger financial inclusion goals through microfinance, said Prasad. Total loan disbursals increased 50% to R7,661 crore during the second quarter of the current fiscal. It was R5,117 crore during the corresponding period last fiscal. Funding to the industry grew by close to 300% to R3,780 crore. MFIs have received 86% funding from banks and the rest from other financial institutions. MFIs have grown at a higher rate in under-penetrated states such as Uttarakhand, Rajasthan, Punjab and UP.
Meanwhile, MFIN has decided to submit an application for becoming a self-regulatory organisation (SRO). An EGM has been called seeking approval from RBI to become an SRO and we have received the board approval for it, Prasad said.
For an association to become an SRO, it must to adhere to a set of functions and responsibilities, such as formulating and administering a code of conduct, having a grievance and dispute redressal mechanism for clients, and so on.