Bengaluru: Microfinance firm Grameen Koota Financial Services Pvt. Ltd on Wednesday said it has reduced interest rates in certain categories beginning 1 June.
The company said in a statement that it has cut interest rates on loans for education, water and sanitation from 20% to 18% and from 23% to 22% for income-generating loans.
“We have been working continuously on operating efficiency, so as to ensure better pricing to our customers. Coupled with our financial performance, social rating, MFI grading and credit rating, all our lenders are able to support us with improved pricing, which we are able to pass on to our customers," Udaya Kumar, chief executive and managing director of Grameen Koota, said in the statement.
Microfinance companies borrow from banks and lend to small businesses and individuals at a higher rate of interest. It is an easy and dependable borrowing option for those who need anywhere between a few thousand rupees to a few lakhs.
Founded in May 1999, the company started as a project under the T. Muniswamappa Trust (TMT), a non-governmental organization in South Bangalore. Grameen Trust, Bangladesh provided seed capital funding to replicate the Grameen Bank Bangladesh microfinance model.
Grameen Koota has 334 branches serving 1.4 million customers. The company said it will add 70 more branches by 2016 end.
Grameen has so far disbursed ₹ 4,000 crore on both portfolios, Kumar said. This year, the company will look to disburse ₹ 800 crore in the social-focused lending portfolio.
According to Microfinance Institutions Network (MFIN), an industry body and self-regulatory organization (SRO) for the microfinance industry, annual loan amount disbursements in 2015-16 reached ₹ 61,860 crore, up 65% from a year ago.
The total number of loans disbursed by microfinance institutions grew to 3.47 crore, up 36% over the previous fiscal. Even the average loan disbursed has increased to ₹ 17,805 in 2015-16 from ₹ 14,731 in 2014-15.
“Pricing is a core aspect of any industry in the business of provision of goods and services. In an industry like microfinance, it assumes greater significance as clients are from low-income households," said Ratna Vishwanathan, chief executive at MFIN, in a statement.