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Major microfinance institutions (MFIs) appear to be overcoming the acute credit crunch they have been facing since the October 2010 crisis.
At least three of the top MFIs in the country have reactivated credit lines and were able to secure credit/assurances of about Rs 2,000 crore from banks.
Bank-lending to MFIs came to a sudden halt following allegations of harassment of clients by recovery agents and a legislation brought in by Andhra Pradesh (biggest MFI market in the country) to regulate MFIs in October last.
SKS Microfinance Ltd, the largest and only-listed MFI in the country, has secured Rs 1,500 crore credit from banks, according to its Chief Financial Officer, Mr S. Dilli Raj.
The Hyderabad-based company had drawn about Rs 400 crore out of this. It has, in addition, closed a securitisation deal for Rs 60 crore with a non-banking finance company.
Spandana Spoorthy, the second largest MFI in the country with Rs 3,600 crore outstanding loan portfolio in 11 States, has kept non-AP portfolio buyout deals with three large private banks on hand.
“Now we have Rs 200 crore cash balance on hand and do not immediately require funds. We use securitisation offers as we need them,” Ms Padmaja Reddy, Managing Director, Spandana Spoorthy, told Business Line .
Bharatiya Samruddhi Finance Ltd (BSFL), the MFI arm of Vijay Mahajan's Basix Group, had also made progress in the regard.
“We have just secured Rs 100 crore from Central Bank of India. As there is a consortium of bank, we expect this to go up to about Rs 400 crore,” Mr Sajeev Vishwanathan, CEO, BSFL said.
PARAMETRES
The extension of credit is now being considered on the grounds of good reputation, significant presence in non-AP regions where MFIs are able to show over 95 re-collections of loans, he added.
While awaiting policy from the RBI, banks seem to be coming out of the ‘stigma' they had attached to MFIs since October 2010 as the ‘tendency to default' MFI loans had not spread to other States from Andhra Pradesh, said the CMD of a public sector bank.
SMALL PLAYERS
The small MFIs, however, continue to face blockade from banks which are now seeking securities to extend any credit.
“At the moment, it is true that small players are not being extended credit,” Mr Vishwanathan said.
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