As banks shrink microfinance books, bigger MFIs prepare to grab the gap
Large microfinance companies including Muthoot Microfin and Satin Creditcare have raised their growth forecasts as private banks, small finance banks and smaller MFIs scale back lending. Improving asset quality is also supporting expansion by larger, well-capitalised microfinance lenders.
Large microfinance institutions (MFIs) are preparing to expand their operations as banks gradually reduce their microfinance portfolios, according to recent reports. Muthoot Microfin and Satin Creditcare Network, two of the largest NBFC-MFIs, have increased their growth projections by around 500 basis points each. This shift is due to the fact that banks, including small finance banks, are cutting back on their microfinance offerings.
In the first quarter of the fiscal year, the cumulative microfinance portfolio of private banks shrank by 12%, while that of small finance banks fell by 11%. Several smaller NBFC-MFIs have either ceased operations or reduced their activities due to the lack of institutional support. This situation presents an opportunity for larger, well-capitalized MFIs to step in and fill the gap.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
