Money & Banking

SIDBI plans to lend more to MFIs

Our Bureau Mumbai | Updated on August 16, 2011 Published on August 16, 2011

Mr N. K. Maini, Deputy Managing Director, SIDBI.

The Small Industries Development Bank of India is planning to gradually step up its exposure to microfinance institutions (MFIs).

The development financial institution plans to disburse about Rs 1,000 crore to MFIs in the current financial year, against Rs 940 crore last year, according to a top official of the development finance institution.

Though the situation in the MFI sector is still fluid, with operations of Andhra Pradesh-based MFIs being hobbled due to a State law and the draft MFI Bill still being debated, SIDBI wants to support MFIs so that it can reach out to the financially excluded, help reduce proverty, and improve the quality of life.

“We recently sanctioned loans aggregating around Rs 300 crore to five MFIs. The tenor of the loans ranges from three to five years. This clearly shows our commitment to the MFI sector,” said Mr N. K. Maini, Deputy Managing Director, SIDBI.

Loan portfolio

The MFIs to whom the loans have been sanctioned include a Kolkata-based MFI and a Bangalore-based MFI. SIDBI has an outstanding MFI loan portfolio of Rs 2,500 crore spread over 130 MFIs.

“Our funding to MFIs is subject to responsible actions by them, such as transparency in functioning and interest rates, good governance and adhering to codes of conduct. If microfinance institutions have the right business model, then SIDBI will ensure timely and adequate resources for them,” said Mr Maini.

To protect its interests and also provide expertise, SIDBI, deputes its representatives to the board of MFIs where its exposure is over Rs 25 crore.

Dedicated branches

The development financial institution has set up seven dedicated microfinance branches at Lucknow, Chennai, Hyderabad, Bangalore, Kolkata, Bhubaneswar and Guwahati to deliver microfinance services through intermediaries in a timely and customer-friendly manner.

While Hyderabad, Chennai, Bangalore are major hubs of microfinance activity in the country, the other centres — Lucknow, Kolkata, Bhubaneswar and Guwahati — have been targeted with the primary objective of giving an impetus to microfinance programmes in the underserved areas.

Published on August 16, 2011
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