Microfinance institutions (MFIs) in Andhra Pradesh, India, have started talks to recover outstanding loans amounting to INR 7,000 crore (approximately USD 1.4 billion), which they have been unable to collect since the repayment dropoff in the state started in 2010. Mr Vijay Mahajan, President of Microfinance Institutions Network (MFIN), was quoted as having said, “We have started negotiations with bodies of self-help groups (SHGs) like Mandala Mahila Samakhyas (MMS) to convince them about the need to repay the old dues.” [1]
Mr Alok Prasad, Chief Executive Officer of MFIN, reportedly said that “Protection of credit record is vital for clients of MFIs as already 80 per cent of major MFI transactions are captured by the credit bureaus.” In addition to maintaining good credit records, borrowers that repay the old debts will be offered an incentive package, the details of which are yet to be disclosed [1].
MFIN is also in talks with banks and the state government of Andhra Pradesh to establish a “collective customer-friendly” approach to recover loans [1]. MFIs that are members of MFIN have previously reaffirmed that they do not use coercive policies, in accordance with the MFIN Code of Conduct [2].
By Kristha Abores, Research Associate
About Microfinance Institutions Network:
The Microfinance Institutions Network (MFIN) is a trade association of 39 Indian microfinance institutions that operate as non-banking finance companies and together reportedly account approximately 80 percent of the Indian market. MFIN is supported by the Omidyar Network, a US-based philanthropic investment firm, and the International Finance Corporation (IFC), a member of the World Bank Group.
Sources and Additional Resources:
[1] The Hindu Business Line: “Micro-lenders to roll out special package to recover Rs 7,000 cr dues in AP”, http://www.thehindubusinessline.com/industry-and-economy/banking/article…
[2] MFIN: “MFIN initiates pro-active steps to address issues”, http://www.mfinindia.org/content/mfin-initiates-pro-active-steps-address…
MicroCapital.org article, September 22, 2011, “MICROCAPITAL BRIEF: Government of Andhra Pradesh, India, Launches Cooperative Microfinance Bank for Self-Help Groups (SHGs)”, https://www.microcapital.org/microcapital-brief-government-of-andhra-prad…
MicroCapital.org article, April 1, 2011, “MICROCAPITAL BRIEF: Funding Shortage Continues in Indian State of Andhra Pradesh, Loans Overdue to SKS Microfinance Total $27m”, https://www.microcapital.org/microcapital-brief-funding-shortage-continue…
MicroCapital.org article, March 14, 2011, “MICROCAPITAL BRIEF: India’s Andhra Pradesh State to Tighten Local Microfinance Institutions (Regulation of Moneylending) Act”, https://www.microcapital.org/microcapital-brief-indias-andhra-pradesh-sta…
MicroCapital.org article, February 8, 2011, “MICROCAPITAL BRIEF: Government of India’s Andhra Pradesh Considers Requiring Microfinance Institutions (MFIs) to Compensate Families of Suicide Victims”, https://www.microcapital.org/microcapital-brief-government-of-indias-andh…
MicroCapital Universe Profile: Microfinance Institutions Network, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Institutions+Network+%28MFIN%29
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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