Following the crisis period, the Indian microfinance industry has returned to its growth phase. Well, the growth is especially in the stable regulatory framework, claims a recent report.
As the industry is witnessing a better growth prospect, the companies such as SKS Microfinance are believed to be befitted, stated Karvy Stock Broking in a Tuesday’s report.
The Indian microfinance industry is returning to the growth phase in terms of the gross loan portfolio value. It is back with a stable net interest margin of more than 10 percent of the brand networks and total number of borrowers after the crisis period that lasted for a few years.
The report stated that SKS Microfinance is believed to be benefited from the rebound in the growth of the microfinance sector in the light of the regulatory clarity after the crisis. It added that the firm’s presence that is well diversified, strengthened balance, credit rating, efforts to get the small finance banking license and track record in dealing with crisis have promised in the long term.
The Indian microfinance industry had seen a phenomenal growth since the year 2000, but it witnessed a major crisis in the state of Andhra Pradesh in 2010. The industry recorded 55 percent growth in the new loan disbursements that resulted in 61 percent growth in the overall gross loan portfolio during the current fiscal year 2015.
It is stated that the Indian microfinance industry might present huge chances along with challenges of the same level. This will make the industry a high risk, high reward type of business.
The sector is expected to see a very high growth in opportunities in the stable regulatory conditions. This growth will be in the volume of addressable rural households with an income of Rs 1,00,000 and the non-rural households with Rs 1,60,000 income.
The value of growth is likely to come in the form of big ticket loans of Rs 60,000 for the first cycle and Rs 1,00,000 in the next cycle. The report stated that it will also provide opportunities for the loans in both the income and non-income generation activities.
