As the old guard in the microfinance industry struggles to survive, a new breed of firms has taken its place, raising large amounts from private equity investors and issuing record amounts of new loans, while signalling a way forward for the industry
The first anniversary of the The Andhra Pradesh Microfinance Institutions (Regulation of Moneylending) Act, 2010, coincided with an interesting development in the business of microlending in India. Around October 2011, West Bengal-based Bandhan Financial Services, overtook Andhra Pradesh-based SKS as the biggest microfinance institution (MFI) in the country.
Just about a year back, Bandhan did not even show up in a list of the top three MFIs in the country.
At the end of the financial year 2010, Bandhan was less than half of the SKS.
A year later, on December 2011, Bandhan was almost double the size of SKS.
In a very short space of time, a whole new breed of MFIs has risen from the ashes of the industry.
In effect, they are breaking the decade-old monopoly of a handful of Andhra Pradesh-based MFIs, registering soaring loan numbers and pointing to a new way of doing business in the industry.
Text: Namrata Acharya, Business Standard
Image Courtesy: Bandhan