Bank funds have started flowing into microfinance institutions (MFIs), although slowly and in small amounts.
Mr. Samit Ghosh, CEO and Managing Director, Ujjivan Financial Services said that the company has received Rs. 100 crore from both public and private sector banks, in August; and in September Rs. 25 crore from another PSU bank.
Reports said that MFIs are required to be fully compliant with the RBI regulations and also Malegam Committee recommendations in order to get bank funding. Mr. Suresh Krishna, Managing Director, Grameen Financial Services said that the MFI’s are required to get a chartered accountant’s certificate for compliance of regulatory requirements. The microfinance institutions also need to ascertain the credit worthiness of the customer from the credit bureau.
Mr Ghosh said that major microfinance institutions in northern and southern India have submitted their client data to High Mark, the credit bureau set up for MFI customers. He also said that the company can clearly find out if customers have defaulted earlier or have borrowed over Rs 50,000.
Mr. Krishna said that Grameen Financial Services also received bank funding and some of the banks have started giving loans, though the amounts are small.