MICROCAPITAL BRIEF: Indian Microfinance Sector Expected to Decline by 20 to 40 Percent During Fiscal Year Ending March 2012

Data from India’s 39-member Microfinance Institutions Network (MFIN) for the first five months of fiscal year 2011-2012 indicate a decline in the industry’s loan portfolio. “For the first time in the history of Indian microfinance, the industry is likely to witness negative growth this year. At an aggregate level, the decline may be in the range of 20-40 percent by March 31, 2012,” MFIN CEO Mr Alok Prasad reportedly said.

According to Indian publication Business Line, the industry experienced a compounded annual growth rate of 70 percent over the five years leading up to October 2010, when a major downturn was taking hold of the industry in the state of Andhra Pradesh. Since then, several MFIs have been facing cash flow problems and shrinking balance sheets due to decreased funding support from banks. It is estimated that 150,000 field staff work for the affected MFIs.

By Kristha Abores, Research Associate

About Microfinance Institutions Network:

The Microfinance Institutions Network (MFIN) is a trade association of 39 Indian microfinance institutions that operate as non-banking finance companies and together reportedly account approximately 80 percent of the Indian market. MFIN is supported by the Omidyar Network, a US-based philanthropic investment firm, and the International Finance Corporation (IFC), a member of the World Bank Group.

Sources and Additional Resources:

[1] Business Line: “Microfinance sector may decline 20-40% this year”, http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2451041.ece

MicroCapital.org article, August 15, 2011, “MICROCAPITAL BRIEF: Commercial Banks, Private Equity Investors Reevaluate India’s Microfinance Sector in Light of Draft Microfinance Bill”, https://www.microcapital.org/indian-government-publishes-draft-of-microfinance-institutions-bill-would-make-reserve-bank-of-india-rbi-sole-regulator-establish-microfinance-development-council-microfinance-development-fund/

MicroCapital.org article, July 8, 2011, “MICROCAPITAL BRIEF: Microfinance Institutions in India Continue to Struggle for Funding After Loan Recast, Adoption of Malegam Proposals”, https://www.microcapital.org/microcapital-brief-microfinance-institutions-in-india-continue-to-struggle-for-funding-after-loan-recast-adoption-of-malegam-proposals/

MicroCapital.org article, May 10, 2011, “MICROFINANCE PAPER WRAP-UP: Microfinance in India – A Crisis at the Bottom of the Pyramid; Published by Legatum Ventures”, https://www.microcapital.org/microfinance-paper-wrap-up-microfinance-in-india-a-crisis-at-the-bottom-of-the-pyramid-published-by-legatum-ventures/

MicroCapital.org article, December 17, 2010, “MICROCAPITAL BRIEF: Local Government in Indian State of Andhra Pradesh Considers Additional Microfinance Regulation, Requires Disclosure of Operational Procedures”, https://www.microcapital.org/microcapital-brief-local-government-in-indian-state-of-andhra-pradesh-considers-additional-microfinance-regulation-requires-disclosure-of-operational-procedures/

MicroCapital Universe Profile: Microfinance Institutions Network, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Institutions+Network+%28MFIN%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

 

 

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