Microfinance News Digest

Analysing the MFI cost structure

By Puneet Gupta , Nitin Chaudhry

Having understood the deep transformative potential of access to finance and the barriers to accessing it, here’s a look at the fundamentals of the MFI cost structure in delivering finance.

Broadly, an MFI’s costs consist of four components. The first is the rate of interest at which the MFI borrows. MFIs do not accept deposits; the rates at which they raise money thus form the base rate for them to be able to lend. The second component is the cost to the MFI of running its operations — staff costs, and office and administration costs. The third component is the loan loss reserve for anticipated defaults. And the fourth is the cost of capital. Read the rest on Hindu Business Line

MFIs look beyond banks, explore other ways to meet credit need

Faced with heightened regulatory scrutiny, many microfinance institutions (MFIs) in the country are now exploring different ways, including the debt route, to meet funding requirements, reports PTI.

A number of micro lenders, especially small sized, are facing credit crisis as state-run as well as some private sector banks are not lending funds to them in the wake tighter regulatory scrutiny, industry experts told PTI. Read the rest on Money Life

bank loan MFI credit

AP Govt seeks revolving credit for SHGs

To prevent self-help group (SHG) women from falling prey to microfinance institutions (MFIs), the Andhra Pradesh government has requested the banks in the state to extend revolving cash credit to SHGs.

“We recently held discussions with the State Level Bankers Committee (SLBC). They (bankers) were positive about the proposal and a final approval from them in this regard is expected anytime during this week,” state minister for rural development, Vatti Vasantha Kumar, told mediapersons here on Monday. Read the rest on Sify

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