The State Bank of India (SBI) reportedly plans to grow its microfinance portfolio by 50 percent during the fourth quarter of the fiscal year. SBI reportedly aims to increase its exposure from the December 2011 level of INR 900 crore (USD 179 million) to as high as INR 1,400 crore (USD 278 million) by March 2012. The move is expected to improve confidence in microlenders among wholesale lenders. The CEO of microlender Ujjivan Financial Services, Samit Ghosh, was quoted as having said, “Although a few banks have started lending to this sector, most smaller and medium-sized [microfinance institutions] have not still been able to get bank funding…Some banks are still apprehensive.”
The Microfinance Institutions Network, an organization of 46 Indian microfinance institutions (MFIs), recently held a meeting thatwas attended by officials of SBI and the Small Industries Development Bank of India and private financial institutions HDFC Bank, IndusInd Bank, Kotak Mahindra Bank and Royal Bank of Scotland (RBS) to explore ways to boost lending to the sector. Referring to the improving state of the sector, the managing director of microlender Bandhan Financial Services, Chandra Shekhar Ghosh, was quoted as having said, “The meeting was to sensitise bankers about the latest developments in the sector. Things have changed drastically over the last 12 months.”
By Kristha Abores, Research Associate
About State Bank of India (SBI):
The State Bank of India (SBI), founded in 1955 by an act of Parliament, provides investment, consumer, commercial, retail and private banking services, as well as asset management, pension, mortgage and credit card services. For the fiscal year 2011, SBI reported total deposits of INR 933,933 crore (USD 185 billion), net profit of INR 8265 crore (USD 1.64 billion), return on assets of 0.71 percent and return on equity of 12.84 percent.
About Ujjivan Financial Services:
Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of March 31, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 159 million, a gross loan portfolio of USD 133 million, return on assets (ROA) of 2.01 percent, return on equity (ROE) of 10.1 percent and 847,000 active borrowers.
About Microfinance Institutions Network (MFIN):
The Microfinance Institutions Network (MFIN) is a trade association of 46 Indian microfinance institutions that operate as non-banking finance companies and together reportedly account for 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.
About Bandhan Financial Services Private Limited:
Bandhan Financial Services Private Limited is a microfinance institution (MFI) based in Kolkata, India, that was founded in 2002. As of 2011, it operates approximately 1,550 branches in 18 states in India. It offers microenterprise loans as well as loans for individuals to pay for health emergencies. As of 2010, Bandhan Financial Services reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 614 million, a gross loan portfolio of USD 565 million, approximately 3.2 million borrowers, return on assets (ROA) of 5.32 percent and return on equity (ROE) of 41.1 percent.
Sources and Additional Resources:
[1] The Economic Times: “SBI to expand microfinance portfolio by 50% in Q4,” http://articles.economictimes.indiatimes.com/2012-01-16/news/30632054_1_mfi-sector-sbi-executive-microfinance-portfolio
MicroCapital.org article, January 11, 2012, “MICROCAPITAL BRIEF: Indian Microfinance Institutions Allowed to Raise $10m Each in External Commercial Borrowings,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institutions-allowed-to-raise-10m-each-in-external-commercial-borrowings/
MicroCapital.org article, July 7, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) May Become Business Correspondents (BCs) for Commercial Banks,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institutions-mfis-may-become-business-correspondents-bcs-for-commercial-banks/
MicroCapital.org article, June 23, 2011, “MICROCAPITAL BRIEF: Spurned by Commercial Banks, Indian Microfinance Institutions (MFIs) Raise Funds from Social Investors IFC, ACCION, MicroVest, ShoreCap, Aavishkaar, BlueOrchard,” https://www.microcapital.org/microcapital-brief-spurned-by-commercial-banks-indian-microfinance-institutions-mfis-raise-funds-from-social-investors-ifc-accion-microvest-shorecap-aavishkaar-blueorchard
MicroCapital.org article, November 15, 2010, “MICROCAPITAL BRIEF: India’s Microfinance Industry on Brink of “Collapse” Due to Credit Freeze in State of Andhra Pradesh,” https://www.microcapital.org/microcapital-brief-indias-microfinance-industry-on-brink-of-collapse-due-to-credit-freeze-in-state-of-andhra-pradesh/
MicroCapital Universe Profile: State Bank of India, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=State+Bank+of+India
MicroCapital Universe Profile: Ujjivan Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujjivan+Financial+Services
MicroCapital Universe Profile: Small Industries Development Bank of India (SIDBI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Small+Industries+Development+Bank+of+India+%28SIDBI%29
MicroCapital Universe Profile: Microfinance Institutions Network (MFIN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Institutions+Network+%28MFIN%29
MicroCapital Universe Profile: Bandhan Financial Services Private Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bandhan+Financial+Services+Private+Limited
MicroCapital Universe Profile: HDFC Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=HDFC+Bank
MicroCapital Universe Profile: IndusInd Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IndusInd+Bank
MicroCapital Universe Profile: Kotak Mahindra Bank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kotak+Mahindra+Bank
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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