Microfinance industry is out of an unprecedent crisis, thanks to regulations, diligent borrowers – the economic times

The aroma of flaming gingelly oil wafted through the air as 16 women employees of Thrissurbased Global Chips & Foods braced themselves for another long day at work. Kansas gas service login A black wooden board, hung on a recently white-washed wall, listed out their day’s chores: 20 kilograms of tapioca chips and 20 kgs potato chips.

The women — wearing maroon uniforms and white head-caps — were all raring to go. Electricity deregulation wikipedia Their “company” had just secured orders from over a dozen supermarket chains, apart from countless retail outlets across Kerala and a few buyers from the Gulf and even Thailand.

Global Chips, started with an initial loan of Rs 5,000 from ESAF Microfinance nine years ago, logs a monthly production of 65,000 packets (of fries), sales turnover worth Rs 3 lakh and profit of around Rs 70,000. Gas prices map “Microfinance helped me build my company.

It provided me with money whenever I wanted it,” says 44-year-old Sindhu Sethumadhavan, the proprietor of Global Chips, who pays Rs 1,410 every week on her outstanding microfinance loan of Rs 1.5 lakh. Electricity generation in california Sethumadhavan is part of a growing tribe of small entrepreneurs whose businesses were seeded by microfinance. Ortega y gasset This clan had shrunk in the wake of the Andhra Pradesh (AP) microfinance crisis of 2009-10, triggered by a series of borrower suicides, allegedly on account of unscrupulous MFI (microfinance institutions) practices of charging high interest rates and excessive lending, leading to increased indebtedness among poor borrowers, and turning to coercion to recover those loans.

The industry itself took some hard knocks. Npower electricity power cut Asset under management (outstanding loans or gross loan portfolio) fell Rs 3,000 crore to close at Rs 20,500 crore in 2011-12. Year 6 electricity MFIs that had large-scale operations in AP suffered the most. Gas oil mix ratio chart Non-repayment of loans by borrowers (at the behest of politicians and other community leaders) resulted in AP portfolios of most MFIs declining by 35%.

“Post the AP crisis, there was a massive overhauling of practices. K gas station jobs MFI were brought under strict rules and regulations,” says Bindu Ananth, chair of IFMR Holdings, a leading financial inclusion platform. Gas upper stomach Microfinance, which was skulking in the corners of that unprecedented crisis, is now out and about. Electricity voltage in paris Of the 10 small finance bank licences given by RBI in 2015, eight were bagged by MFIs. Cheapest gas in texas And a bunch of MFIs are now preparing to launch IPOs.

“The greenshoots you’re seeing now is a fallout of the AP crisis,” says Ananth. Gas utility bill One key reason for the resurgence of microfinance is the presence of diligent borrowers like Sethumadhavan, who says microfinance loans should not be used for personal purposes and were drawn by the strict measures put in place. Electricity usage They helped the industry rebuild faith and confidence among clients.

“There was a lot of external intervention then. Electricity transmission loss We could not even get in touch with borrowers who were willing to repay,” reminisces S Dilli Raj, the CFO of SKS Microfinance, which suffered the most during the AP crisis. Gas 2015 SKS witnessed a near-70% slump in its loan book when it was forced to exit AP.

“We had to shrink our loan book to make up for our losses in AP. 3 gases that cause global warming Out of the Rs 1,496 crore we loaned out to borrowers in AP, we could only collect Rs 130 crore. Electricity 1800s We had to write off loans worth about Rs 1,300 crore over several quarters,” Dilli Raj adds. Gas bubble in back The AP government was the first to review and censure.

The AP State Government Ordinance imposed stringent operating guidelines — mainly tightening screws around lending rates and collection mechanisms employed by MFIs till then.

Meanwhile, the RBI was waiting for the ‘Malegam Committee Report on Microfinance’ before listing out its own set of guidelines. Electricity human body The regulator turned in its first set of regulations in 2011 deeming for-profit MFIs as NBFC-MFIs (a new category of nonbanking finance companies). Gas up asheville It also directed all MFIs to maintain sufficient ‘net owned funds’ and structure portfolios with 85% of lending to “qualifying assets.”

In subsequent amendments, the regulator put in place lending limits per borrower, capped interest rates, employed measures to reduce excessive indebtedness, explicitly stated tenure of loans and worked out loan repayment schedules. A gaseous mixture contains (See RBI Measures…). Gas vs diesel cars These moves seemed like a bitter pill then, but were the ideal remedy for the industry’s ills. M gasbuddy “Prior to the AP crisis, there were no rules governing microfinance industry.

There were no models or reference points in terms of lending rates or how much we could lend,” says Equitas’ founder PN Vasudevan, adding, “these mandates came only after the crisis; it gave the industry a blueprint to operate.”

Visible Greenshoots The Indian microfinance industry is dominated by NBFC-MFIs with an 88% market share. Electricity voltage in china These institutions have been grouped on the basis of their ‘gross loan portfolio’ (GLP). Q gas station cleveland ohio As per Microfinance Institutions Network (MFIN) data, there are 18 small MFIs with GLP less than Rs 100 crore, another 18 medium-sized MFIs with GLP between Rs 100 crore and Rs 500 crore and 20 large MFIs with loan book above Rs 500 crore.

Large MFIs account for nearly 90% of industry GLP. Wd gaster theme Even though the number of active MFIs has fallen from about 70 in the pre AP crisis era to just about 55 currently, the industry loan book has leapfrogged 130% to Rs 47,200 crore in 2014-15. Electricity vocabulary words Average loan ticket size (first disbursement) has also grown from Rs 14,800 to about Rs 18,000 currently, according to industry sources (see Back With a Bang).

Post the crisis, MFIs started spreading out their activity to newer territories. Gas relief while pregnant Instead of focusing on captive borrowers (which was banned by RBI when it introduced the ‘twolender rule), the industry started approaching newer set of borrowers. Gasbuddy app This strategy widened their customer base. Electricity symbols worksheet Borrowers too, warmed up to MFIs they had no other source to get non-collateralised debt.

“Loan portfolio of top 40 MFIs would tip Rs 70,000 crore by March 2017,” predicts Krishnan Sitaraman, senior director, Crisil Ratings. Kansas gas service bill pay “There’s robustness in the system now.”

MFIs, for their part, are keen to beef up their loan books as only that would increase their profitability. La gasolina daddy yankee mp3 Prior to the AP crisis, MFIs used to lend at rates as high as 40%. Electricity around the world This, however, ended immediately after the crisis.

Now, MFIs can charge a margin of 10% and add up cost of funds (margin of 10% + cost of funds) as interest on their loans. Electricity history in india This formula pegs rates at 23-24%. Gasoline p “MFIs are trying to reduce their costs and mark up profitability by increasing loan volumes. Electricity merit badge worksheet This is turning out to be a good strategy as a few large funds have managed to bring down their rates to as low as 19-19.5%,” says Ananth.

The rising profitability of large MFIs like SKS and Equitas is an indication that the industry has started capturing ‘economies of scale’, driving up loan volumes. U gas hampton The large MFIs are already seeing a jump in their operating margins.

After listing huge losses in 2012 and 2013, SKS turned around in 2014 (post write-off of bad loans) when it reported a PAT of Rs 70 crore. Electricity receiver definition Last year, it reported profits of Rs 187 crore on revenues of Rs 724 crore.

Equitas Holdings, now on the road to becoming a publicly listed company, declared an adjusted PAT of Rs 107 crore last fiscal. Youtube gas laws The Rs 2,170 crore Equitas public issue — which closed bids on April 7 — was oversubscribed 17 times. Electricity lab activities Another MFI, Ujjivan Financial Services, is also preparing for a public issue to raise about Rs 650 crore.

Industry watchers expect more listings in the months to come as MFIs that have received ‘in-principle licence’ to start small finance banks (SFBs) are required to reduce foreign shareholding to 49%. Electricity and magnetism online games Apart from Ujjivan and Equitas, Disha Microfin, ESAF Microfinance, Janalakshmi Financial Services, Suryoday Microfinance, Utkarsh Microfinance and RGVN North East Microfinance have received the regulator’s nod to operate as SFBs.

“We’re seeing a lot of MFIs raising capital. Gas out game commercial Even banks are not reluctant lenders anymore. Electricity omd They’re buying securitised assets under their PSL (priority sector lending) mandate now,” says Vishal Mehta, cofounder of Lok Capital. 935 gas block “Even opportunistic investors, who abandoned MFIs during the AP crisis, are coming back now.”

The microfinance industry itself pulled up its socks post AP. Current electricity definition physics According to Mehta, the industry is reaping benefits of enhanced collection efficiency, which is currently upwards of 95%. Electricity 2015 “A lot of technology is now being used to streamline and make the collection process more efficient. No electricity jokes Almost all leading MFIs use digitized data… Gas mask art Manual entries have gone out completely at least at the ground level,” he says.

The industry is also making good use of credit bureaus to weed out delinquent borrowers and restrict over-lending to borrowers. Electricity gif As per RBI rules, a borrower should not get loans from more than two MFIs. Online electricity bill payment The industry keeps a tab on this rule (‘two-lender rule’) by referring to credit bureau records. Gas zone pricing “MFIs are using our services for all loans disbursed at their end. M gastrocnemius medialis We maintain records of borrowers who are a part of a cluster or self-help group as well,” says Harshala Chandorkar, COO of CIBIL.

Deep industry-level focus around “disciplined lending” is yielding positive results as only 1% of loan instalments are ’30-dayspast-due’ currently. La gasolina Over 98% of loans are disbursed within the due date, say industry trackers. 9gag tv “Defaults are sporadic when you compare with NPAs in the banking system,” says Paul Thomas, founder – MD of ESAF Microfinance. Gas meter in spanish “Industry NPA has fallen from 0.8% to 0.3% currently. Monroe la gas prices MFIs are very careful while disbursing loans. Electricity powerpoint template Some of us even insist on Aadhar cards to complete the KYC process.”

MFIs now understand portfolio concentration risk much better than the pre-crisis days. Gas ks These days MFIs prefer to spread out their loan books across different states to reduce ‘state risk’ (or portfolio concentration risk). Electricity office near me MFIs are moving away from time-tested southern states to newer areas in North and North Eastern states.

“There’s an effort to move to untapped markets now like the NorthEast. Types of electricity generation methods By moving newer regions, MFIs are diversifying their liabilities,” says Ananth. Gas in babies how to get rid of it Going ahead, MFIs with in-principle SFB licences would benefit from low-cost funding in the form of deposits, thus improving profitability. Static electricity diagram An SFB licence would also allow the eight MFIs to offer a range of credit products to individual borrowers. Gas finder But this is not likely to make NBFC-MFIs redundant.

“Pure MFIs have more linkages with customers at the grassroot level. Gas x tablets himalaya Banks do not have the bandwidth to match the development focus of an MFI,” opines Thomas.

Echoing Thomas, Dilli Raj of SKS says: “We’ve not received SFB licence, but that will not affect us in a big way. Gas works park fireworks We’ve easy access to cheap funds as a result of good credit ratings. Electricity generation by country This market is big enough for NBFC-MFIs to survive.”