Mumbai: With non-banking finance company-microfinance institutions (NBFC-MFIs) likely to have an overall debt of Rs 36,000 crore to Rs 42,000 crore by March 2016, refinancing from MUDRA Bank could constitute a major portion of the overall debt of the MFIs, according to rating agency Icra.
The MFI sector including self-help groups (SHGs) and NBFC-MFIs had a total portfolio of Rs 78,000 crore as of September 30, 2014, Icra said in a report here.
It said, assuming an annual growth rate of 10-15 per cent for SHGs and 30-35 per cent for NBFC-MFI for the next two years, the overall microfinance portfolio is likely to cross Rs 1 lakh crore.
"The NBFC-MFIs alone are likely to have overall debt of Rs 360-420 billion by March 2016. Refinance from Micro Units Development Refinance Agency (MUDRA) Bank could constitute a significant proportion of the overall debt of the MFIs," it noted.
It further said that since MUDRA Bank, announced in the Budget 2015-16, is likely to have access to low cost funds from short falls in priority sector lending, it is likely to pass on the same, leading to lower funding costs for players.
Given that the present funding costs of MFIs vary from 12-16 per cent with the median cost of funds being 14 per cent, NBFC-MFIs cost of funds for MFIs could come down by 100-400 basis points depending on the share of funding an MFI is able to receive from MUDRA bank.
However, it pointed out that it would be important to understand the criteria MUDRA Bank could follow for onward lending to players in the MFI space with respect to interest rates and allocation among various players.
A single regulator for all entities engaged in microfinance could lead to adoption of a uniform code of conduct for all players in the industry, which could also define the best practices for delivery of financial services to the underserved, it added.
Currently, there are differences in regulations by different regulators.
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