INDIA MICRO FINANCE
Transcript of INDIA MICRO FINANCE
ALOK PRASAD
CEO
MICRO FINANCE INSTITUTIONS NETWORK (MFIN)
19th MARCH 2014
INDIA MICRO FINANCESTRAIGHT TALK!
2014 ASIA-PACIFIC FORUM ON FINANCIAL INCLUSIONSHANGHAI, CHINA
INDIAN BANKING & FINANCIAL INCLUSION
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….. yet
Half the country does nothave bank accounts
(90% of the 100+ Million openedunder the FIP’s are dormant)
8% have access to bank creditfacilities
Plethora of Institutions & Policies
Commercial Banks
Public Banks
Private Banks
LABs
RRBs
BCs
DFIs
All India Finance Institutions
Specialized Financial Institutions
State Level Institutions
NBFC
NBFC MFIs
Co-operative Institutions
Urban Co-op Banks
Rural Co-Op Banks
Post Offices
MFI FINANCIAL INCLUSION PROGRAM BUSINESS
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Strong, Resilient and Growing, Profitably !
ArabianSea
Bayof
Bengal
Indian Ocean
Maharashtra
AndhraPradesh
Tamil Nadu
Odisha
Lakshadweep
Goa
Puducherry
Andaman
and
Nicobar
Islands
Madhya PradeshWestBengal
Bihar
Jharkhand
Uttar Pradesh
Uttarakhand
Assam
Arunachal
Pradesh
Nagaland
Manipur
MizoramTripura
Sikkim
Meghalaya
Rajasthan
Gujarat
Haryana
HimachalPradesh
Punjab
Delhi
Chandigarh
Jammu
andKashmir
Daman
and Diu
Dadra and Nagar Haveli
Map not to scale
> 3 mn 200k-300k
2 mn -3 mn 100k-200k
1.5 mn-2 mn 50k-100k
1 mn - 1.5 mn 25k-50k
0.5 mn - 1 mn 10k-25k
< 0.5 mn < 10k
PRICING & TRANSPARENCY
Microfinance India 4
MFTransparency India Price Graph
Country APR Range (MFT data)
India 20% to 31%
Pakistan 04% to 51%
Philippines 12% to 143%
Tanzania 10% to 95%
Ethiopia 10% to 46%
Bolivia 07% to 69%
Ecuador 10% to 30%
(i) Dynamic Cap: - The average Base Rate of five largest commercial banks by assets multiplied by 2.75 per annum or cost of funds plus margin cap, whichever is less. The average of the Base Rate shall be advised by Reserve Bank of India.
(ii) Margin cap: Further, with effect from April 1, 2014, the margin cap shall not exceed 10 percent for MFIs having loan portfolio exceeding Rs.100 crore and 12 percent for others, as against 12 percent for all hitherto
PROVEN RESILIENCE AND PERFORMANCE
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5.2
%
5.0
%
4.8
%
2.0
%
1.9
%
1.8
%
1.8
%
1.7
%
1.6
%
Total(all MFIs)
Total(all MFIs)
Total(all MFIs)
PAR 30 (%) PAR 90 (%) PAR 180 (%)
Q3 FY 12-13 Q2 FY 13-14 Q3 FY 13-14
4.7
4
1.7
9
3.8
5
5.1
5
5.3
9
2.1
6
4.6
5
5.8
2
5.6
5
2.5
8
4.8
4
6.0
7
Total(all MFIs)
MFIs(GLP < Rs 1 bn)
MFIs(GLP > Rs 1-5
bn)
MFIs(GLP > Rs 5 bn)
glp per loan officer (Rs mn)
Q3 FY 12-13 Q2 FY 13-14 Q3 FY 13-14
58
2
30
5
52
9
61
4
60
8
27
5
52
9
65
3
62
3
30
8
54
6
66
5
Total(all MFIs)
Other MFIs(GLP < Rs 1 bn)
Other MFIs(GLP > Rs 1-5 bn)
Other MFIs(GLP > Rs 5 bn)
clients per loan officer
Q2 FY 12-13 Q1 FY 13-14 Q2 FY 13-14
SELF REGULATION
YH Malegam Committee Report – Four Pillars of MFI regulation
“The second pillar is an association. Ifone third of MFIs become members ofan association, they (RBI) will recognizeit. The association will have its own codeof conduct. If discipline is not observed,the association, which will be somethinglike an SRO (self-regulatoryorganization), can remove that member,”
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MFIN
SROPolicy Advocay & Development
Funtions
Compliance
– Corporate
Governance
– RBI Delegated
Role
– International Best
Practices
– Industry Code of
Conduct
Enforcement
– Monitoring
– Reporting
– Auditing
– Enforcement
– RBIndex
– Action
Policy
Advocacy
– RBI / Central Govt
engagement
– Policy Papers
– Industry
Representations
– Banker Meetings
– Communications
& stakeholder
management
Member Services
– Industry
Partnerships
Research, Training
& Knowledge
Worshops
– Credit Bureau
– Data Analytics
EXPECTATIONS FROM SRO
1. Exercise surveillance over the industry to ensure compliance with RBI’s regulatory prescriptions and industry code of conduct – with a dedicated Compliance Officer who will also have a direct reporting relationship with RBI
2. Have an Enforcement Committee
3. Have a Grievance Redressal mechanism primarily from the standpoint of clients – with a dedicated Grievance Redressal Nodal Officer
4. Have a dispute resolution mechanism
5. Conduct investigations into areas of concern as the RBI may require
6. Provide information / data to the RBI periodically or as request
7. Perform developmental functions through training and awareness programmes as also conduct research etc for the microfinance sector
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THE LATEST : NACHIKET MOR COMMITTEE (2014)
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Earlier Committees and Committees…..1. Narasimham Committee on Banking Sector Reforms,
1998
2. The Task Force on Supportive Policy and RegulatoryFramework for Microfinance (NABARD) 1999
3. Committee on Financial Inclusion (Dr. C. Rangarajan),2008
4. Report of the Committee on Financial Sector Reforms,2008 (Raghuram Rajan)
5. Report of the Committee on Customer Service in Banks,2010 (Damodaran)
6. RBI Sub-Committee of its Central Board of Directors tostudy Issues and concerns in the MFI sector, 2011 (Y.HMalegam)
7. Report of the Committee to re-examine the existingclassification and suggest revised guidelines with regardto Priority Sector Lending Classification and relatedissues, 2012 (M.V Nair)
Nachiket Mor Committee (2014)
Vision Statements (6 Goals)
1. Universal Electronic Bank Account (UEBA)
2. Ubiquitous Access to Payment Services andDeposit Products at Reasonable Charges withina fifteen minute walking distance of a paymentaccess point.
3. Sufficient Access to Affordable Formal Credit
4. Universal Access to a Range of Deposit andInvestment Products at Reasonable Charges
5. Universal Access to a Range of Insurance andRisk M.Products & Reasonable Charges
6. Right to Suitability
SMALL FINANCE BANKS – THE NEW THINKING
Three or Four large Indian banks with domestic and international presence
Several mid-sized banking institutions including niche banks with economy-wide presence
Old private sector banks, Regional Rural Banks, and multi state Urban Cooperative Banks
Small privately owned local banks and cooperative bank
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Three Distinct School Of
Thoughts
Existing Institutions are enough,
they need to be overhauled
We need many, small, small
finance banks
We need many, large, 'small
finance' banks
INDIA NEEDS….THE 3 S
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Scale
Specialization
Sustainability
MFIN VISION
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“Help provide inclusive financial services to 100 million low income households by the year 2020, in
a responsible & transparent manner.”
THANK [email protected]