Microfinance sector is said to be attracting funds from investors like private equity, venture capital funds as risk appetite in the sector improved.
One of the reason for the return of investor confidence in the sector is the 40 per cent growth in the gross loan portfolio of NBFC-microfinance institutions (NBFC-MFIs) during 2012-13, sources said. For a long time after the Andhra Pradesh Ordinance of 2010, credit growth of MFIs remained muted.
Some experts feel that the return of confidence in the sector may help the government achieve its aim of financial inclusion by enabling NBFC-MFIs to reach the un-served sections of society.
Regulated microfinance institutions play a critical role in addressing the needs of the un-banked people in rural India. They filling the credit delivery gap unmet by banks and other formal financial institutions.
Increased private investment and funding in NBFC-MFIs has a direct positive impact on the ground as it enables them to reach more borrowers in unbanked regions of the country, experts argue.
Recently, Microfinance Institutions Network (MFIN) and Indian Private Equity and Venture Capital Association (IVCA) organized a conclave on Microfinance Investment. Participants in the conclave were optimistic about the sector as a whole.
MFIN is the premier industry association for the microfinance industry in India and its current membership consists of 44 leading NBFC (Non-banking Financial Company) Microfinance Institutions (MFIs) in the country.