New Delhi, Oct 15 (KNN) Financial Institution for Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector, Small Industries Development Bank of India (SIDBI) is keen to increase exposure in the microfinance industry (MFI).

SIDBI has posted an annual growth of about 25%.

Chief managing director of SIDBI, Mohammed Mustafa said, “SIDBI has been a pioneer in the micro-finance space by providing financial assistance in the form of equity/quasi-equity, term loans and grant support to MFIs, while also advocating and implementing various ‘responsible’ lending practices.”

As an industry leader, SIDBI has been working towards enhancing corporate governance and operational efficiency of MFIs and enabling smooth flow of adequate credit to the microfinance sector through various interventions, he added.

SIDBI had augmented the capacity of 100 microfinance institutions (MFI) in the country and provided cumulative loans worth Rs 175 billion, thus reaching 38 million beneficiaries, till June 30^th, 2018.

Besides, demonetization had also exposed ‘structural’ issues in the sector. Mustafa said geographic concentration had built up in microfinance lending with the top 10 states accounting for 84% of the gross loan portfolio.

He said that while alternate forms of lending in the formal sector like pay-day loans, offered by fintech companies, were gaining momentum, fintech companies were exploring mobile-based lending solutions in local languages to attract customers.

By the end of first quarter (Apr-June 2018), the microfinance industry had a loan portfolio of Rs 1.48 trillion with banks having the largest share of 39%, followed by small finance banks (SFB) 21%, non-banking financial companies (NBFC)-MFIs (pure-play) 32% and NBFCs 7%.