The micro-finance sector is growing fast in the country therefore leading private and foreign banks are ready to make big investments to increase their MFI operations in the country.
The banks besides offering funds to the famished microfinance institutions (MFIs), they are also launching schemes and providing training in management skills to support the growth of tiny units.
Foreign lender Royal Bank of Scotland (RBS) has made a plan to increase its microfinance portfolio. At present it amounts to Rs 300 crore and it is has planned to increase it to Rs 450 crore by the end of this fiscal.
At present the UK-based lender is giving direct funds to around 30 MFIs across the country and has tied-up with another 41 MFI units in order to provide them training to build up the administrative skills and strong business model.
RBS Vice-President Moumita Sen Sarma informed, "Despite the financial crisis, MFIs have been the least affected as they have managed to maintain the quality of the business. RBS will continue to expand its MFI portfolio and expects to grow the size to Rs 450 crore by the fiscal-end".
She stated that the lender did not expect any deterioration in the asset quality of MFI units in 2009-10.
ICICI Bank, India's largest private-sector lender, is also planning to considerably increase its operations in the sector in the current fiscal. According to the data available over the last one year, ICICI Bank has almost doubled its MFI portfolio to Rs 2,600 crore and is expecting the growth by at least 20 per cent in 2009-10.
ICICI Bank General Manager (Agri, Rural and Micro Banking) Kumar Ashish pointed out, "We could nearly double our MFI portfolio over the last year. We have been working closely with 30 top MFIs to finance their projects and look forward for more such tie-ups in the future."
Ashish added the bank is also providing training to various other MFIs through its sister organization ICICI Foundation.
He further added bank will take precaution while lending in view of the downturn and related risks in the economy but it has no plans to cut down on its MFI portfolio.
HSBC another foreign banking major also has plans to increase its MFI portfolio. The lender is currently having tie-ups with 21 MFIs across the country.
HSBC Group General Manager and CEO Naina Lal Kidwai informed, "We are shortly launching a project in rural Maharashtra with a leading MFI... HSBC assists the MFIs to build up a strong business model in a number ways".