Micro-lenders are looking beyond core business to boost up their income

By | June 1, 2011

A recent press report said that Microfinance institutions are looking for a steady flow of income by going beyond the core business of micro-lending to the poor.

The MFI have started working on new offering in home loan, gold loan, mobile financing, among others  as the RBI has now permitted them to have up to 15 per cent of their portfolio in the non-priority sector. Mr. Rahul Kumar, Chief Financial Officer, Mimoza Enterprises Finance said that the crisis in Andhra Pradesh, the largest MFI market in the country, is one of the reasons for MFIs to venture into new areas. HE also said that the MFI’s entering the secured lending space should also ensure adequate internal control mechanisms.

Reports said that the MFIs should fine-tune their rates and operate in a differentiated way in order to sustain in these segments. SKS Microfinance, the country’s largest and only listed MFI, has recently entered into the gold loan segment.

Mr. Dr Reddy of Sa-Dhan, said that the bigger players can use their surplus for their non-priority sector portfolio, but the smaller players will find it difficult to carry out their operations. He also said that the small MFIs will find it difficult to sustain because the banks have not yet starts funding their operations.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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