After a turbulent 2010 when everything went wrong for microfinance institutions (MFIs) in India, there is now hope in the form of fresh investments.

Hope Microcredit, a Kerala-based MFI, received equity funding of Rs 10 crore ($2.3 million) in December last year from Belgium-based Incofin Investment Management (Rural Impulse Fund II). Incofin sees the investment as a long-term play. Aditya Bhandari, private equity expert, Incofin Investment Management, said, ?It is a tumultuous phase for microfinance institutions, but we will support them to ensure both social and commercial interests remain focused.? Incofin had also invested an undisclosed amount in Fusion Microfinance Pvt Ltd in June 2010.

This month, Bangalore-based Ujjivan Financial Services raised Rs 40 crore of debt capital from DWM (Cyprus) Ltd, an asset manager and investment bank, exclusively dedicated to making socially positive investments. Reportedly, DWM says it has plans to expand support to Indian MFIs in 2011.

Social investor Dia Vikas Capital, which invested $5,50,000 in Annapurna Micro Finance in March 2010, also confirmed it was considering fresh investments in the MFI space, seeking ?social returns and not commercial returns.? Managing director KC Ranjani warned, ?Unclear regulation may deflect investors, at least in the short term. There is also a risk of politicisation of the issue.? She added that while social investors will remain in the market once regulatory issues are sorted out, the real issue is the response from bankers and the government.

Meanwhile, PE and VC players are keeping their fingers crossed for the YH Malegam Committee report, to be submitted this month. The report will enable RBI to create a regulatory framework for microfinance institutions and frame guidelines for the Micro Finance Bill.

Alok Mittal, managing director, Canaan India, which invested $9.66 million in Equitas Micro Finance India in August 2010, said, ?Should the government put regulations in place, investments will flow in.?

Ash Lilani, managing director, SVB India Capital Partners, said he was hopeful that the industry would weather the current storm and get back on its growth trajectory. SVB invested in Vistaar Livelihood Finance in May 2010.