The Microfinance Institutions Network (MFIN), an association of Indian microfinance lenders, recently reported that several small and medium-sized microfinance institutions (MFIs) in India may soon file for bankruptcy as a result of decreasing liquidity. According to Alok Prasad, chief executive of MFIN, the MFIs, which include Cresa Financial Services and Sharada’s Women’s Association for Weaker Section (SWAWS) Microfinance, had approximately 70 percent of their portfolios invested in Andhra Pradesh, a state that has experienced a dramatic slowdown in debt repayments.
Cresa Microfinance reportedly has approached public-sector banks to request a restructuring of its debts. As of 2009, Cresa reported to the Microfinance Information Exchange (MIX), the US-based data provider, total assets of USD 7 million and a gross loan portfolio of USD 5.5 million.
SWAWS Microfinance has already restructured some of its loans to be repaid over an eight-year period. Despite this refinancing and a decrease in its work force of approximately 30 percent, SWAWS may have to liquidate within the next six to nine months if its cash flow does not improve, according to a statement attributed to Rahul Kasinadhuni, the MFI’s chief executive. As of 2009, SWAWS reported to MIX total assets of USD 20.2 million and a gross loan portfolio of USD 19.8 million.
By Julie Moksim, Research Associate
About the Microfinance Institutions Network (MFIN): The Microfinance Institutions Network (MFIN) is a trade association of Indian microfinance lenders that is presided over by Chairman Vijay Mahajan of microfinance institution BASIX as of 2011. MFIN consists of 39 member microfinance institutions, all of which operate in India as non-banking finance companies and together reportedly account for more than 80 percent of the Indian market. MFIN is supported by 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:
Business Standard: “Small MFIs Facing Bankruptcy” by Namrata Acharya, April 23, 2011, http://www.business-standard.com/india/news/small-mfis-facing-bankruptcy/433231/
MicroCapital.org Brief, April 9, 2011: Indian Banks Seek Personal Guarantees From Microfinance Institution (MFI) Executives as Condition of Debt Restructuring, https://www.microcapital.org/microcapital-brief-indian-banks-seek-personal-guarantees-from-microfinance-institution-mfi-executives-as-condition-of-debt-restructuring/
MicroCapital.org Brief, December 24, 2010: State Bank of India (SBI) Considers Restructuring Loans to “Non-Performing” Microfinance Institutions (MFIs), https://www.microcapital.org/microfinance-brief-state-bank-of-india-sbi-considers-restructuring-loans-to-%e2%80%9cnon-performing%e2%80%9d-microfinance-institutions-mfis/
MicroCapital.org Brief, November 15, 2010: India’s Microfinance Industry on Brink of “Collapse” Due to Credit Freeze in State of Andhra Pradesh, https://www.microcapital.org/microcapital-brief-indias-microfinance-industry-on-brink-of-collapse-due-to-credit-freeze-in-state-of-andhra-pradesh/
MicroCapital’s Microfinance Universe Profile: Microfinance Institutions Network (MFIN)
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/tiki-index.php
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