New Delhi, Apr 24 (KNN) The microfinance industry will require external capital of Rs 3,500-4,700 crore over the next three years, according to a report by rating agency ICRA.

The report said “While the growth prospects remain good, the industry likely to grow at 20-22 per cent in the current fiscal. There is a need for the MFIs to do a more involved and thorough credit analysis/ assessment of the actual debt repayment capacity of the borrower.”

It has projected Rs 3500-4700 crore of capital requirement for MFIs and small finance banks together over the next three years to maintain 25-30% annual growth.

The ICRA report added that investors have continued to support the industry with equity infusion of around Rs 4,350 crore in FY19, up from Rs 4,100 crore in FY18. However, more than 90% of the capital raised in FY2019 was by the MFIs with AUMs of greater than Rs 1,000 crore

"This implies that larger entities have been able to attract capital while the smaller less-diversified entities continue to struggle on this front," the rating agency said.