ROOPAK GOSWAMI
The Northeast has witnessed phenomenal growth in the microfinance sector in the last fiscal, registering the fastest growth rate in the country, which prompted foreign companies into buying stakes in local companies.
This is, indeed, a rare phenomenon in a region that happens to be one of the most financially neglected areas in the country.
The success of the microfinance sector can be attributed to the fact that it fills the huge void left by banks, as only 32 per cent of the population here have deposit accounts.
Moreover, the microfinance institutions provide easy loans, albeit at slightly higher interest rates, to people who have no bank access, that is, around 68 per cent of the population, and that too, right on their doorstep.
Microfinance is a provision of thrift, credit and other financial services and products of very small amounts to the poor, enabling them to raise their income levels and improve living standards.
Though the concentration of microfinance activity in the Northeast is the lowest among all regions of the country, the region witnessed 163.62 per cent growth last year — the highest in the country as compared to other regions.
A number of national players are also entering the microfinance sector in the region after gauging the potential for business.
Interestingly, the sector has come up on its own without any major government intervention.
The Rs 3,800crore sector, however, is largely confined to Assam and some parts of Manipur and Tripura.
The figures were quoted in the report of the Y.H. Malegam committee, constituted by the RBI to review the sector. The RBI has also accepted the report, released this year.
Rupali Kalita, managing director of Rashtriya Gramin Vikas Nidhi (NE) Microfinance Limited, told The Telegraph that there was no dearth of companies willing to invest in the sector, and added that it was a large growing market offering a win-win scenario to all.
Opportunity International, an international non-profit microfinance organisation, has bought a Rs 3crore equity stake in Nidhi, a RBI-licensed non-banking financial company.
Before that, Incofin from Belgium had bought a Rs 8crore stake in Asomi Finance Private Limited, another Assam-based microfinance organisation.
Nidhi, which is receiving a lot of offers from investors, is planning to extend its services throughout the region. It is currently weighing an offer from the UK-based Agora Microfinance Company that has shown interest in buying a stake in Nidhi. “We have to look towards the interests of our clients as we are considering offers from foreign companies to buy equity,” Kalita said.
The demand for microcredit in the region is so high that it is a cinch that investors will reap good returns.
A report — Microfinance Vision 2015 Northeast Region - brought out by ACCESS Development Services, has estimated the total annual microcredit demand in the region between Rs 2,290 crore to Rs 3,800 crore, 70 per cent of which emanates from Assam.
The report also points to a substantial gap in the demand for microfinance — between 74 to 85 per cent — leaving room for many more players to enter the sector.
Oikocredit, a Netherlands-based organisation, has provided Rs 2crore as loan to Nightingale Charitable Society, a Guwahati-based urban microfinance company. “We had applied for assistance from banks but there was little response,” Mantu Sharma of the society said and added that none of the loans provided by the society had run into default in the last couple of years.
Abhijit Sharma, a faculty member at the Indian Institute of Bank Management, Guwahati, said microfinance had succeeded because banks had failed to reach people on time. “The loans, small in value, are given quickly and with less transaction cost,” he said, adding that people pay back on time as they know that they would get more loans at their doorstep.
EOM
The Northeast has witnessed phenomenal growth in the microfinance sector in the last fiscal, registering the fastest growth rate in the country, which prompted foreign companies into buying stakes in local companies.
This is, indeed, a rare phenomenon in a region that happens to be one of the most financially neglected areas in the country.
The success of the microfinance sector can be attributed to the fact that it fills the huge void left by banks, as only 32 per cent of the population here have deposit accounts.
Moreover, the microfinance institutions provide easy loans, albeit at slightly higher interest rates, to people who have no bank access, that is, around 68 per cent of the population, and that too, right on their doorstep.
Microfinance is a provision of thrift, credit and other financial services and products of very small amounts to the poor, enabling them to raise their income levels and improve living standards.
Though the concentration of microfinance activity in the Northeast is the lowest among all regions of the country, the region witnessed 163.62 per cent growth last year — the highest in the country as compared to other regions.
A number of national players are also entering the microfinance sector in the region after gauging the potential for business.
Interestingly, the sector has come up on its own without any major government intervention.
The Rs 3,800crore sector, however, is largely confined to Assam and some parts of Manipur and Tripura.
The figures were quoted in the report of the Y.H. Malegam committee, constituted by the RBI to review the sector. The RBI has also accepted the report, released this year.
Rupali Kalita, managing director of Rashtriya Gramin Vikas Nidhi (NE) Microfinance Limited, told The Telegraph that there was no dearth of companies willing to invest in the sector, and added that it was a large growing market offering a win-win scenario to all.
Opportunity International, an international non-profit microfinance organisation, has bought a Rs 3crore equity stake in Nidhi, a RBI-licensed non-banking financial company.
Before that, Incofin from Belgium had bought a Rs 8crore stake in Asomi Finance Private Limited, another Assam-based microfinance organisation.
Nidhi, which is receiving a lot of offers from investors, is planning to extend its services throughout the region. It is currently weighing an offer from the UK-based Agora Microfinance Company that has shown interest in buying a stake in Nidhi. “We have to look towards the interests of our clients as we are considering offers from foreign companies to buy equity,” Kalita said.
The demand for microcredit in the region is so high that it is a cinch that investors will reap good returns.
A report — Microfinance Vision 2015 Northeast Region - brought out by ACCESS Development Services, has estimated the total annual microcredit demand in the region between Rs 2,290 crore to Rs 3,800 crore, 70 per cent of which emanates from Assam.
The report also points to a substantial gap in the demand for microfinance — between 74 to 85 per cent — leaving room for many more players to enter the sector.
Oikocredit, a Netherlands-based organisation, has provided Rs 2crore as loan to Nightingale Charitable Society, a Guwahati-based urban microfinance company. “We had applied for assistance from banks but there was little response,” Mantu Sharma of the society said and added that none of the loans provided by the society had run into default in the last couple of years.
Abhijit Sharma, a faculty member at the Indian Institute of Bank Management, Guwahati, said microfinance had succeeded because banks had failed to reach people on time. “The loans, small in value, are given quickly and with less transaction cost,” he said, adding that people pay back on time as they know that they would get more loans at their doorstep.
EOM
