MICROCAPITAL BRIEF: Wealthy Individuals in India Increasingly Look for Investment Opportunities in Microfinance Institutions (MFIs)

A recent article on Livemint.com, an Indian business newspaper owned by the Wall Street Journal, pointed to the growing tendency for individuals in India to invest in microfinance institutions (MFIs). Wealth managers including Mr Kunj Bansal, Chief Investment Officer at Sanlam Investment Management, a boutique asset manager, attribute this phenomenon to the higher returns that MFIs offer compared with other companies. “The returns are 25 to 30 percent. These are higher than any other standardized investments,” said Mr Bansal.

While investments from individuals widen access to capital for MFIs, “too many individual investors could become cumbersome for the promoters,” according to the Livemint article. While institutional investors tend to have an exit horizon of five to seven years, individuals generally invest over significantly shorter periods.

By Stefanie Rubin, Research Associate

Additional Resources:

Source Article: Livemint.com: “Individual Investors Look to Back Microfinance Institutions,” http://www.livemint.com/2010/03/30214635/Individual-investors-look-to-b.html

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