Mumbai: Betting big on the fast-growing microfinance sector, leading private and foreign banks are all set to scale up their MFI operations in the country.
Apart from providing financial support to fund-starved microfinance institutions (MFIs), banks are also active in launching schemes to support the growth of tiny units by providing training in management skills.
Foreign lender Royal Bank of Scotland (RBS) has chalked out a plan to increase its microfinance portfolio, which is currently at Rs300 crore, to Rs450 crore by the end of this fiscal.
The UK-based lender currently provides direct financing to around 30 MFIs across the country and has partnered another 41 MFI units to train them build up the administrative skills and strong business model.
“Despite the financial crisis, MFIs have been the least affected as they have managed to maintain the quality of the business. RBS will continue to expand its MFI portfolio and expects to grow the size to Rs450 crore by the fiscal-end,” RBS Vice-President Moumita Sen Sarma said.
The lender did not expect any deterioration in the asset quality of MFI units in 2009-10, she said.
India’s largest private-sector lender, ICICI Bank, also plans to significantly scale up its operations in the sector in the current fiscal. Over the last one year, ICICI Bank has nearly doubled its MFI portfolio to Rs2,600 crore and expects the segment to grow by at least 20% in 2009-10.
“We could nearly double our MFI portfolio over the last year. We have been working closely with 30 top MFIs to finance their projects and look forward for more such tie-ups in the future,” ICICI Bank General Manager (Agri, Rural and Micro Banking) Kumar Ashish said.
The bank is also training various other MFIs through its sister organisation ICICI Foundation, Ashish said.
Though the bank would be more cautious on the lending side in the face of the downturn and related risks in the economy, it has no plans to scale down its MFI portfolio, he said.
Foreign banking major HSBC has plans to enhance its MFI portfolio. The lender currently has tie-ups with 21 MFIs across the country.
“We are shortly launching a project in rural Maharashtra with a leading MFI... HSBC assists the MFIs to build up a strong business model in a number ways,” HSBC Group General Manager and CEO Naina Lal Kidwai said.