SIDBI's outstanding to MFI sector to touch Rs 10,000 cr this fiscal, DMD, Prakash Kumar
SIDBI has commissioned a study which is being conducted jointly by the self-regulatory body Sa-Dhan and Indira Gandhi Institute of Developmental Research
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Kolkata: Outstanding of SIDBI to the micro-finance institutions (MFIs) will touch Rs 10,000 crore by the end of the current financial year ending March 2024, an official said on Thursday.
In the last financial year, the refinancing development financial institution (DFI) had an outstanding of Rs 5,000 crore to the NBFC-MFI sector, the official said. "SIDBI started supporting MFIs since 1995-96 and has done enough capacity building for the MFI sector. Last fiscal, the total outstanding to the MFIs was Rs 5,000 crore. This fiscal, this will touch Rs 10,000 crore", Deputy Managing Director (DMD) of SIDBI Prakash Kumar said.
Kumar told PTI on the sidelines of the Eastern India Microfinance Summit here that the DFI expects this outstanding amount to rise 40 per cent during the next financial year. He said to gauge the impact assessment of the MFIs in society, SIDBI has commissioned a study which is being conducted jointly by the self-regulatory body Sa-Dhan and Indira Gandhi Institute of Developmental Research (IGIDR) based out of Mumbai. He said that the sample size considered for the study is 5000, which according to him, is fairly large.
Kumar said this study is important to ascertain whether MFIs are run for purely commercial interests or do have a social impact. According to him, MFIs were considered to be poverty-alleviating entities. "But they are now considered a part of the financial inclusion programme of the state", he stated.
Kumar said that though there had been some criticism about the interest rates charged by them, the operational costs of the MFIs are very high as they deliver doorstep service. "The average cost of funds for the MFIs is around ten to 12 per cent. The cost is high for the small MFIs and low for the big ones. As defaults keep happening, this has to be factored in the credit costs", he said.
Earlier, there was a cap on interest rates charged by the MFIs. Now RBI has deregulated that which is very progressive in nature, he added. In the summit, CGM of Nabard Usha Ramesh viewed that there is a need for common accounting standards for the MFI sector.
