India Top 50 Microfinance Institutes: A Financial Awareness Initiative of CRISIL
This paper discusses the Indian microfinance market, and provides brief profiles of India's 50 largest MFIs.
MFIs are the main players in the Indian microfinance space. They adopt different lending models, loan repayment structures, methods of calculating interest rate, product offerings and legal structures. The paper states that:
- Strengths of Indian MFIs include strong business growth, improved geographic diversity, healthy asset quality and improved earnings profile;
- Challenges include lack of steady access to capital, heavy dependence on banks and financial institutions and absence of regulatory control;
- Problems such as political sensitivity of interest rates and pressure on processes and controls due to aggressive growth plans further weaken Indian microfinance.
Going forward, funding will not be a constraint for large players in Indian microfinance. The leverage ratio is expected to remain adequate for MFIs that are larger non-bank financial companies. Key factors that can drive MFI success include robust systems and processes, high efficiency and productivity levels, good asset quality, prevention of credit losses and capital erosion and adequate capitalization to fund growth plans.
