India’s Microfinance Institutions Network (MFIN), a self-regulatory organization of 31 of India’s largest microfinance companies, recently said its members will provide borrowers’ names, addresses and loan details to a credit bureau they have created, Alpha Micro Finance Consultants P Ltd (Alpha), in an effort to prevent client overindebtedness and maximize repayment. MFIN is investing INR 20 million (USD 400,000) towards this effort, and Alpha will work with established credit bureaus, Credit Information Bureau (India) Ltd. (CIBIL) and High Mark Credit Information Services Pvt. Ltd to create the register of over 20 million borrowers that have loans through the members of MFIN. Vijay Mahajan, president of MFIN, said “the overlap between MFIs [microfinance institutions] is increasing. Since there is a general attempt by everybody to grow their portfolios, there could be a negative impact. There have been some pockets where there was multiple lending which leads to over indebtedness.” Through this effort MFIN members intend to be able to more comprehensively ascertain the overall indebtedness of clients and better assess their repayment capabilities.

By: Christine Chang, Research Associate

About the Microfinance Institutions Network (MFIN):

The Microfinance Institutions Network (MFIN) is a trade association of microfinance lenders. Vijay Mahajan, Chairman of MFIN, is also the Chairman of the BASIX Group, an Indian microfinance institution established in 1996. BASIX Group consists of several companies that provide savings and insurance services to poor households in rural India as well as agricultural/business development services and institutional development services. MFIN website: unavailable. BASIX Group website: http://www.basixindia.com/

Additional Resources:

The Wall Street Journal: India’s Micro Industry to Share Data, March 9, 2010: http://online.wsj.com/article/SB10001424052748704784904575111470418555624.html

Domain-b.com: Microfinance lenders set up self-regulatory body, March 9, 2010: http://www.domain-b.com/finance/financial_services/20100309_microfinance.html

MICROCAPITAL BRIEF: Mr Vijay Mahajan and Mr P N Vasudevan Debate Self-Regulation in Indian Microfinance Industry, January 20, 2010: http://www.microcapital.org/microcapital-brief-mr-vijay-mahajan-and-mr-p-n-vasudevan-debate-self-regulation-in-indian-microfinance-industry/

MICROCAPITAL BRIEF: Indian MFIs Agree to Voluntary Credit Code Enforced by Microfinance India Network (MFIN) And Take Equity Stake in Credit Information Bureau, December 29, 2009: http://www.microcapital.org/microcapital-brief-indian-mfis-agree-to-voluntary-credit-code-enforced-by-microfinance-india-network-mfin-and-take-equity-stake-in-credit-information-bureau/