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We hope to have 1 million microfinance clients in 2 yrs……….Sanjeev Sinha
Fullerton India’s Ravi Shankar says they plan to cover over 300 locations
NEW DELHI: Having gained a firm foothold in the urban micro credit segment, Fullerton India Credit Company, a subsidiary of Fullerton Financial Holdings, has forayed into the country’s microfinance segment.
India is the first market where Fullerton Financial has forayed into microfinance as it believes there is a large under-served segment here.
“Our core business is the urban mass market where we offer short-term loans to small commercial establishments and the salaried segment. We cater to the middle and upper mass market segment.
We have been in operation in India for over three years and are already well entrenched in the urban segment, offering loans in over 250 cities. We have recently forayed into microfinance with the objective of enhancing financial inclusion in the lower mass market.
This helped us cater to the lower mass market both in urban and rural areas,” says Ravi Shankar, executive vice-president, marketing & microfinance of Fullerton India.
Fullerton India plans to take its microfinance business ‘Gramshakti’, which is already present in six states, to over 300 locations. “Within the next two years, we hope to have nearly a million microfinance customers in our fold,” said Mr Shankar, adding that Fullerton India already offers micro credit and micro insurance.
Fullerton Financial Holdings have several arms doing business across Asia which focus on mass market financial services. “India, however, is the first country where Fullerton Financial has forayed into microfinance as there is a large under-served segment here and it completes our product portfolio as well as it helps cater to the various categories in the mass market,” he says.
The microfinance segment in India is growing rapidly. This reflects the large segment of the Indian population which is still not served by any organised financial institution.
The microfinance model being used in the country allows a financial institution to reach financial services deep into the heartland of the country at a low cost, making it affordable for rural households to fund their livelihoods and growth. MFIs, however, face certain challenges in their operations.
Mr Shankar said: “A significant development in the microfinance space, however, is the formation of strong industry bodies that are developing systems for self-regulation to ensure that the problems of overleveraging, credit losses and manpower attrition do not affect business.”
He further informed that “a credit bureau to check the credit history of borrowers is on the cards and will soon be in operation.
Besides, the UID programme of the government will greatly enhance the operations of MFIs as UID will help verify borrowers more easily than the physical house-to-house verification process now, which is not very cost-effective.”
The UID is also expected to give a fillip to the efforts of the government in enhancing financial inclusion in the mass market segment, he added.
Mr Shankar said the growth of microfinance is extremely important for the economy as this will enable the large rural mass market and the rapidly-growing lower mass segment in urban areas to fund the growth of their livelihoods.
The growth of the economy is dependent on the growth of the mass market in the country. Therefore, greater financial inclusion in these segments is imperative to the overall growth of the economy.
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