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.