MICROCAPITAL BRIEF: Stymied by Local Regulation, Microfinance Institutions (MFIs) based in India’s Andhra Pradesh Expand Into Northern States

Following the enactment of the Regulation of Microlending Act in October 2010 by government of the Indian state of Andhra Pradesh (AP), which requires government approval of each microloan, microfinance institutions (MFIs) based in AP have began expanding into northern India. In the year following the Act, the industry in southern India shrunk from USD 6.36 billion to USD 2.12 billion. During the same period, AP-based microlender Share Microfin Limited added 108,900 new borrowers outside AP. Asmitha Microfin Limited, another microlender based in AP, has added 30,000 in states other than AP. The microloan recovery rate in Andhra Pradesh reportedly has fallen below 10 percent in the last year, while it is 92 percent in other states.

According to the US-based nonprofit data provider Microfinance Information Exchange (MIX), Asmitha had total assets of USD 321 million, a gross loan portfolio of USD 298 million, return on assets (ROA) of 1.3 percent, return on equity (ROE) of 10 percent and 1.34 million active borrowers as of March 31, 2011.

As of the same date, Share reported to MIX total assets of USD 553 million, a gross loan portfolio of USD 465 million, ROA of 0.33 percent, ROE of 2.4 percent and 2.84 million borrowers.

About Asmitha Microfin Limited

Asmitha Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. It offers collateral-free group and individual loans to women. Registered as a public limited company, Asmitha was founded in 2002 and operates primarily in rural areas. According to the US-based nonprofit Microfinance Information Exchange (MIX), Asmitha reported total assets of USD 321 million, a gross loan portfolio of USD 298 million, return on assets (ROA) of 1.3 percent, return on equity (ROE) of 10 percent and 1.34 million active borrowers as of March 31, 2011.

About Share Microfin Limited
Share Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. After beginning operations in 1989 as a nonprofit, Share was converted into a non-bank financial institution (NBFI) in 2000. It offers loans—primarily to women—as well as training and consulting to microentrepreneurs. As of March 31, 2011, Share reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 553 million, a gross loan portfolio of USD 465 million, return on assets (ROA) of 0.33 percent, return on equity (ROE) of 2.4 percent and 2.84 million borrowers.

By Ariana Malushi, Research Associate

Resources and Additional Resources:

Business Standard: “India: With Bastion in Andhra Pradesh Crumbling, MFIs Turn to Other States”
http://www.business-standard.com/india/news/with-bastion-in-ap-crumbling-mfis-turn-to-other-states/456422/

MicroCapital.org Story, January 26, 2011, “MICROCAPITAL BRIEF: Retail Microfinance Institution (MFI) Loans Taking Two Months to Process in Andhra Pradesh, India”
https://www.microcapital.org/microcapital-brief-retail-microfinance-institution-mfi-loans-taking-two-months-to-process-in-andhra-pradesh-india/

MicroCapital.org Story, May 19, 2011, “MICROCAPITAL BRIEF: Confusion Continues Over Regulation of Microfinance Institutions (MFIs) in India, State of Andhra Pradesh May Adjust Law to Reconcile With Federal Rules”
https://www.microcapital.org/microcapital-brief-confusion-continues-over-regulation-of-microfinance-institutions-mfis-in-india-state-of-andhra-pradesh-may-adjust-law-to-reconcile-with-federal-rules/

MicroCapital.org Story, October 11, 2011, “MICROCAPITAL BRIEF: Supreme Court of India Sends SKS Back to Andhra Pradesh High Court to Challenge Microfinance (Regulation of Moneylending) Act of 2010”
https://www.microcapital.org/microcapital-brief-supreme-court-of-india-sends-sks-back-to-andhra-pradesh-high-court-to-challenge-microfinance-regulation-of-moneylending-act-of-2010/

MicroCapital.org Story, November 11, 2008, “MICROCAPITAL EXCERPT: Sa-Dhan Publishes Online Interactive State-by-State Map of Microfinance Institutions in India”
https://www.microcapital.org/microcapital-excerpt-sa-dhan-publishes-online-interactive-state-by-state-map-of-microfinance-institutions-in-india/

MicroCapital Universe Profile, Asmitha https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asmitha+Microfin+Limited

MicroCapital Universe Profile, Share https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SHARE+Microfin+Limited

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/