MICROCAPITAL BRIEF: Equitas Microfinance of India to Reduce Loan Portfolio to $187m by March 2011

Equitas Microfinance, a microfinance institution (MFI) that was established in Chennai, India, in 2007, recently announced plans to reduce its loan portfolio from INR 9.5 billion (USD 210 million) to INR 8.5 billion (USD 187 million) by its fiscal yearend of March 2011. The move is framed as a precautionary step to reduce overlending in an environment in which more borrowers are unable or unwilling to pay back their loans. PN Vasudevan, managing director of Equitas Microfinance, cautioned, “It is only two percent of our loan portfolio, but the customer psyche of not wanting to repay is alarming. Today it has happened in Andhra Pradesh. Tomorrow it may happen elsewhere.” Mr Vasudevan further commented on the need for a central credit bureau to identify multiple lending to borrowers from different sources, including moneylenders. As of March 2010, Equitas Microfinance reported to the Microfinance Information Exchange (MIX), the microfinance information clearinghouse, return on assets of 4.5 percent, return on equity of 12.38 percent and 889,000 active borrowers.

By Julie Moksim, Research Associate

About Equitas Microfinance: Equitas is a microfinance institution (MFI) that was created in December 2007 and is located in Chennai, India. The company provides microcredit to low-income households in India. The objective of the company is to make credit available at a reasonable cost and in a transparent manner to the underbanked population of India, as well as achieve sufficient returns on investment in order to attract capital. As of March 2010, Equitas reports to the Microfinance Information Exchange (MIX) 889,000 active borrowers, return on assets of 4.5 percent and return on equity of 12.38 percent. In October 2010, Equitas reported a gross loan portfolio of USD 210 million.

Sources and Resources:

Financial Chronicle: “Equitas Microfinance to Shrink Loan Book to Rs. 850 Crore by March”, by R Srividhya, February 7, 2011, http://www.mydigitalfc.com/banking/equitas-microfinance-shrink-loan-book-rs-850-cr-march-956

MicroCapital.org Brief, July 20, 2010: Credit Rating and Information Services of India Ltd. (CRISIL) Rates Equitas Microfinance Private Ltd ‘BBB/Stable’, https://www.microcapital.org/microcapital-brief-credit-rating-and-information-services-of-india-ltd-crisil-rates-equitas-micro-finance-private-ltd-?bbbstable?/

MicroCapital’s Microfinance Universe Profile: Equitas Microfinance

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equitas+Micro+Finance+India+Private+Limited

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

Similar Posts: