A Microfinance Focus article by Asma Azmi has described 2009 as a “watershed” year for microfinance in India due to a surge in private equity investment [1].
According to the article, the microfinance sector accounted for 40 percent of all the private equity (PE) deals in India in the last 18 months. Fiscal year 2009 saw 11 PE deals worth USD 178 million, while fiscal year 2008 saw 3 worth a total of USD 52 million. The article cites an untapped rural market, low delinquency rates, and high resilience as contributing factors to the massive investment. Microfinance institutions (MFIs) also appear to be utilizing other financial instruments such as commercial paper, mutual funds, and non-convertible debentures (NCDs), which are unsecured loans to corporations which cannot be converted into equity.
By Christopher Maggio, Research Assistant
Bibliography:
[1] Microfinance Focus article entitled ‘India: Microfinance Investments Make 2009 a Watershed Year’: http://www.microfinancefocus.com/news/2009/12/31/microfinance-investments-make-2009-a-watershed-year/
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