P K Saha - SIDBI - Sa-Dhan
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Transcript P K Saha - SIDBI - Sa-Dhan
Microfinance - SIDBI’s Perspective
Lending & Investment
P. K. Saha
Chief General Manager
Nurturing of MFIs
1994:
SIDBI launched its microfinance programme on pilot basis to
tap the huge potential of unmet demand for credit in
unorganized and informal sector
serve its mandate for promoting, financing and developing
the micro, small and medium enterprises in India
1999:
Upscaling and re-orientation of microfinance programme of
SIDBI.
SIDBI Foundation for Micro Credit (SFMC), a specialized deptt.
set up to create a national network of strong, viable and
sustainable Micro Finance Institutions (MFIs) from the informal
and formal financial sector.
Strategy of SIDBI
Utilise existing grassroot institutions for channelising credit
Institution building of MFIs
Build access and capacity at grassroot level, instead of focusing
on subsidies
Provide customized financial assistance and capacity building
support
Encourage investment in microfinance by formal financial sector
Strategy of SIDBI
Shift towards commercial sources of microfinance
Nurture and equip financial intermediaries to deliver quality
micro finance services
Scientific appraisal, instead of collateral – based lending
Build favourable policy and regulatory framework to facilitate
orderly growth
Features of MCS: Core product of SFMC
Focus on poor, mainly women
Customised need based package of loan, grant and equity to
partner MFIs
Capacity building of beneficiaries, MFIs and sector/ training
institutions
Capacity Assessment Rating (CAR) and Capacity Building Need
Assessment (CBNA) prior to sanction
Market driven flexible approach for credit delivery with focus on
financial sustainability
Products of SIDBI
Products
Direct loan support:
Term loan to
partner MFIs
Quasi-equity
type support:
Transformation
Loan product
Credit plus support:
Capacity
building
support
Growth Phase
Modified products to match up the growing needs of the sector.
Corpus Support for Transformation (CST), a new product
developed specifically for small grassroot NGOs operating in
underserved areas.
Risk Fund for wholesaler MFIs to encourage operations in
underserved regions.
Loan Syndication
Microenterprise promotion
Portfolio Risk Fund
Growth Phase
Equity Funding - SIDBI Growth Fund for MFIs (Corpus of Rs.50
crore) set up to
equity investment in well-managed corporate MFIs, in the
form of quasi-equity / mezzanine finance in medium rung
non-corporate / start-up institutions
resource support to Private Equity (PE) funds for equity
investments in Indian MFIs
Corpus increased to Rs. 500 crore
Specialized Microfinance branches at 7 locations
Pre-requisites for SIDBI while lending
Acceptable
rating grade
Satisfactory
credit
opinion
Adequate
capitalization
Compliance
with AML,
KYC,
defaulter’s
list
Quality of
Audited
financials
Good portfolio
quality
Number
of lenders
Good track
record of
promoters
Professional
management
Pre-requisites for SIDBI while
investing in equity
Pre-requisites for lending
Legal form
Quality of
other investors
Realistic
projected
financials
Exit
options
Good
growth
potential
SIDBI
stake < 20 %
Profitability
Attractiveness of
valuation
Concerns
Transparent and fair practices –
Credit discipline
Fair practices at field level
Competition / multiple financing / client overlap
Information sharing
Governance and Ownership Issues
Boards not diversified
Ownership (?) in case of MFIs having PE investors
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Concerns
Transaction costs –
Cost-effective delivery
Leveraging technology
Capital -intensive – grant funds required in initial stages
Regulation
Conducive policy environment needed given the present size
and scale
MF Bill yet to be enacted
Self-regulation
12
Concerns
Capital Adequacy
Low level, for the sector at large
Improvement in case of larger MFIs
Mid-scale MFIs still capital deficient
Need to have quasi-equity funding
Regional / balanced growth
13
Thank You