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Needing Rs 20k cr, microfin cos eye IPOs
Mumbai: The domestic micro finance sector needs Rs 20,000 crore of resources to reach out to 10 crore poor people living in the country. Keeping in view the huge requirement, the sector has kept all options of fund raising plans open including private equity and initial public offering (IPO). The sector is not averse to the idea of selling mutual fund products for the same purpose, said Vijay Mahajan, president, Microfinance Institutions Network (MFIN). MFIN is an initiative by the sector to help the segment grow to the next level. Mahajan was clarifying media queries why microfinance institutions (MFIs) are gearing up to raise resources via the IPO route.
SKS is the one such MFI which has already announced its decision to go for an IPO. As of now, two crore families living in the country are supported by MFIs, out of which 1.5 crore families hail from weaker section of society. On the high interest rates being charged by MFIs when compared to banks while lending to poor people living in remote areas, Mahajan suggested solutions to bring the rates down.
He demanded MFIs be permitted to act as business correspondent for banks so as to bring down their interest rates while lending to the poor. Currently, MFIs are charging interest rates over 24% per annum. However, if the MFIs are allowed to work as BC for banks, which are already rushing to appoint these banking internediaries in remote areas to achieve their financial inclusion targets, the interest rates which is being charged by MFIs will come down to 18-21%, claimed Mahajan
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