MFIs lap up Narendra Modi's financial inclusion drive, plan major expansion 21/08/2014

MFIs lap up Narendra Modi's financial inclusion drive, plan major expansion
21/08/2014 00:17
Enthused by the Centre's plan to open 7.5 crore bank accounts over the next few years, MFIs and other such financial institutions that are working in rural areas have charted out massive expansion plans, reported PTI. The comprehensive financial inclusion plan was announced by Prime Minister Narendra Modi in his Independence Day speech. The Microfinance Institutions Network (MFIN) with 2.5 crore rural customers in its fold is ready to support the comprehensive financial inclusion programme. "The microfinance sector is keen to support the comprehensive financial inclusion programme of the Modi government," MFIN president Samit Ghosh told PTI on the sidelines of a financial services summit, organised by newsportal VCCircle. MFIs can help the programme by opening 2.5 crore bank account for the programme, he added. Capital First, which is into providing small loans to entrepreneurs, has charted out a five-year plan as per which it has plans to compound its business by 22-25 per cent per year. "Since ticket size is small, here the book builds slowly so we should not be in a hurry we can grow by about 22-25 per cent per year over the next five years. But gradually even at this pace, the loan book could grow to Rs 25,000 crore," said Capital First chairman V Vaidyanathan, who was earlier an executive director with ICICI Bank. "We want to expand our reach to micro segment as credit performance is distributed over millions of customers in the MSME sector. The gross NPA is only 0.5 per cent and net NPA is under 0.2 per cent in the past four years," he said in response to a concern that NPA may be high for this segment. "NPA could level up with rest of the industry over time, but still we are confident about our cash flow analysis and scoring methods," Vaidyanathan added. The company provides loans in the range of Rs 20,000- Rs 1 crore at an interest rate of 13-16 per cent. Vistaar Financial Services with 100 branches located in six states has also got ambitious growth plan. "We have plans to increase the number of branches to 250 from 100 now over the next three-four years. The idea is to increase the size of our loanbook to Rs 2,500 crore during this period. Moreover, we plan to increase the number of customers to three lakh from currently existing 40,000 during the period," Vistaar Financial Services managing director Brahmanand Hegde said. "To me financial inclusion means access to all kinds of services a person requires," he added. "As of now, we have got 80,000 accounts which comprises both credit and deposit accounts as well. We do see a growth of 40-50 percent in our balance sheet per year," Satin Creditcare Network chairman HP Singh said.