Do we need yet another refinance agency in the Indian financial system? Quite a few such agencies already exist; none of them can claim to be a success by any yardstick
For the quarter ended 31 December, the aggregate loan portfolio of India’s for-profit microfinance institutions (MFIs) registered with the Reserve Bank of India (RBI) as non-banking financial companies (NBFCs) were to the tune of ₹ 31,450 crore, disbursed to 28.7 million borrowers. In the December quarter, loan disbursements in terms of amount rose by 46% even as the number of loans grew by 33% over the year-ago period. The coverage of such institutions is now geographically well disbursed, with southern and eastern India accounting for 29% each of the market share, and the northern and western parts accounting for 21% each. If we include the not-for-profit MFIs, the portfolio will be slightly bigger, but even then, their overall exposure will be about half a percent of the loan assets of India’s banking system. Typically, an MFI does not give loans beyond ₹ 50,000 to a single borrower and the average loan amount disbursed per account by NBFC-MFIs is ₹ 16,194.