MFIS
NBFC stocks in focus: Rising funding costs threaten margins despite robust loan growth and asset quality
The non-banking financial companies (NBFC) sector is set to enjoy robust earnings, thanks to strong credit demand and consistent asset quality. Nonetheless, the latter half of Financial Year 2026-27 could pose challenges with rising interest rates leading to higher funding costs. Analysts emphasize that successfully managing these costs will be key to sustaining growth, advising cautious investment in resilient NBFCs amid changing market dynamics.
Which NBFCs will gain the most from rate hike cycle? JM Financial lists top picks
JM Financial highlights how soaring bond yields and policy rate hikes impact Indian NBFCs. While housing finance companies like LIC Housing Finance and PNB Housing Finance stand to benefit on NIMs, vehicle and MFI lenders face headwinds. Top stock picks include Aditya Birla Capital, Piramal Finance, and CreditAccess Grameen.
Funding skew deepens in microfinance
Large microfinance companies received 98.1% of sector funding in Q1. This funding concentration reflects financiers playing safer during uncertain economic cycles. Smaller institutions face tighter liquidity and higher borrowing costs, impacting recovery pace. Banks contributed 80.4% of the Rs 21,407 crore debt funding received. NBFC-MFIs remain the largest micro-credit provider with a 44.3% market share.
Banks shifting microfinance strategy, prefer lending to entities over direct borrowers: Report
Banks are increasingly selecting microfinance institutions for loans instead of individual borrowers, leading to a reclassification of microfinance loans as part of retail portfolios. Despite this trend, non-banking financial companies focused on microfinance (NBFC-MFIs) received considerable debt support from banks recently. However, the overall microfinance sector saw a decline in its borrower base, with higher loan amounts being distributed to a lesser number of borrowers.
Rs 20,000 crore credit guarantee plan misses the mark
Banks have disbursed merely seventeen percent of the credit guarantee scheme funds. Loan sanctions remain slow as banks show caution with smaller microfinance institutions. Larger microfinance companies are hesitant to borrow under the government's guarantee program. About one thousand crore rupees went to small and medium-sized microfinance entities.
As banks shrink microfinance books, bigger MFIs prepare to grab the gap
Large microfinance companies including Muthoot Microfin and Satin Creditcare have raised their growth forecasts as private banks, small finance banks and smaller MFIs scale back lending. Improving asset quality is also supporting expansion by larger, well-capitalised microfinance lenders.
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Govt extends validity of Credit Guarantee Scheme for Microfinance Institutions upto August 31
The Finance Ministry has extended the Credit Guarantee Scheme for Microfinance Institutions-2.0 until August 31, 2026, or until Rs 20,000 crore in guarantees are issued. The maximum loan amount for large NBFC-MFIs and MFIs has also been raised to Rs 1,000 crore. These changes aim to boost credit flow to the MFI sector, with Rs 770 crore already sanctioned.
Government unveils Rs 20000 crore credit guarantee plan for MFIs
The government has announced an ambitious Rs 20,000 crore credit guarantee scheme targeting microfinance institutions, a lifeline for those grappling with funding challenges. This program not only seeks to ease liquidity constraints but also aims to invigorate credit distribution within the sector, specifically helping small and medium NBFC-MFIs.
Microfinance in revival mode; MFIs, private banks expand business in January
The microfinance sector is consolidating after a period of stress. Private banks and NBFC-MFIs have increased their lending portfolios. While overall market saw a slight dip, early delinquency rates are improving. Experts anticipate a return to normal growth by the end of the first quarter of FY27. This marks an inflection point for the industry.
Boost financial inclusion with fair rates: DFS Secy to MFIs
Microfinance institutions are urged to maintain fair interest rates. The Department of Financial Services secretary expressed concern over declining loan accounts and outstanding amounts. MFIs play a crucial role in financial inclusion and women's empowerment. Efforts are underway to address rising stress in the MFI sector and support rural borrowers. A new credit score framework is being developed.
NBFC-MFIs largest provider of micro-credit: Report
NBFC-MFIs and scheduled banks dominate micro-credit disbursal in India, with NBFC-MFIs leading. The gross loan portfolio for micro-credit reached Rs 4.33 lakh crore by March 31, 2024.
Is the market share growth in NBFCs and MFIs vis-a-vis banks sustainable? Gaurav Dixit answers
"The ticket size, which used to be about Rs 30,000 maybe two to three years back, has now inched to about Rs 40,000-42,000 for FY23. In addition to it, NBFCs and MFIs are operating in a segment which is susceptible to many disasters as we have seen in the past. We keep on monitoring all those things. However, in terms of demand and growth prospect, things look pretty good for the sector."
RBI guidelines creating difficulties for MFIs: Sa-Dhan
Sa-Dhan executive director P Satish said the rule is not practical for the MFIs, which maintain various current accounts with banks based on the location of their branches.
MFIs in India should be allowed to accept deposits from public: Muhammad Yunus
As MFIs are not allowed to accept deposits, the cost of funds at the hands of the beneficiaries become high because they borrow money from banks -- SIDBI and NABARD.
NBFC-MFIs to begin fresh lending only after expiry of moratorium
The total estimated collective disbursements by NBFC-MFIs up to September could merely be Rs 2,884 crore, Microfinance Institutions Network (MFIN) said in a report. This is significantly less than the average disbursements of around Rs 6,600 crore per month seen in FY20.
Banks denying loans to MFIs, even for amounts sanctioned
While the denial of liquidity support from banks has already made life difficult for the MFIs, the refusal of even sanctioned loans is further crippling them. This could result in lower on-lending to end-borrowers leading to a surge in defaults by them, even after the moratorium is lifted. Many of the businesses dependent on MFIs can’t survive without the money flow.
No moratorium from lenders can impact MFIs debt servicing liabilities: ICRA
ICRA expects the credit costs for microfinance institutions (MFIs) to be at least double from the present levels of 1-1.5 per cent to 2.5-3 per cent for most players.
MFIs making capital of new business models, need less funds
The cost of funds for MFIs may remain at elevated levels until systemic liquidity improves.
MFIs plan to create common pool of assets for securtisation
The common pool, essentially by smaller MFIs, is aimed at creating economies of scale and making it easier for banks to buy it.
Financial outreach grows with MFIs working as business correspondents contributing 20% of total loans
RBI allowed MFIs, NGOs and other civil society organizations to work as banking intermediaries for providing financial and banking services in January 2006.
Over 60% of MFIs adopt cashless disbursement: MFIN
While 88 per cent of the total cashless disbursements were through NEFT/IMPS by MFIs in 2016-17, repayments through cheques constituted 50 per cent and 33 per cent in ECS.
Loan portfolio of MFIs grows 47 per cent to nearly 29K crore in Q2
According to the latest MFIN MicroMeter, 10 largest MFIs in terms of GLP account for 75 per cent of the total industry loan portfolio.
Get code of conduct rated to avail loans: Sidbi to MFIs
Sidbi, with support from World Bank, is funding the assessment of the codes of conduct done on MFIs.
Commercial MFIs can make markets work for the poor
The role of fully-commercial, profit-seeking institutions in providing such microfinance loans remains controversial.
MFIs: Confusion still reigns
The impact of the Andhra ordinance on MFIs must yield useful clues to design future regulatory policies.
SBI likely to seek restructuring of MFIs loan
Restructuring of loans involves deferment of loan repayment by the borrowers in case of problems. MFIs are facing tough time following crisis that erupted in AP.
No cap on rates, but RBI won't let MFIs off the hook
RBI voices concern over lending practices, but will wait for Malegam report before taking a final call.
RBI rules out intervention to support MFIs
The Reserve Bank of India (RBI) has ruled out any immediate policy intervention to support cash-strapped microfinance institutions (MFIs).
MFIs in Orissa under scanner, sub-committee to look into high interest issue
The Orissa government has constituted a sub-committee to study the operations of the MFIs in the state and prepare guidelines that would be sent to the Reserve Bank of India for its consideration.
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