New Delhi, Apr 1 (KNN) The UK's development finance institution, British International Investment (BII), is looking to significantly increase its exposure in India's affordable housing finance and micro, small and medium enterprises (MSME) sectors.

These two sectors have been receiving continuous support from the Indian government and have witnessed notable improvements in asset quality metrics, reported ET.

Gaurav Malhotra, BII's Director and Head of Financial Services Business in South Asia, stated that the organisation has a robust pipeline for both debt and equity investments in these two key areas. "We are currently pushing funding into two big areas - affordable housing and MSME finance," he stated.

Malhotra emphasised that BII is actively seeking innovative ideas and business models that require patient, long-term funding.

"We keep looking for innovations that need funding, that need patient long-term funding. I would say we have a reasonably strong pipeline both on the equity and debt side to keep supporting some of these business models," he added, noting that there is ample availability of funds for the right business ideas.

In the affordable housing segment, BII has debt exposure to Aavas Financiers and equity investment in Shubham Housing Development Finance Company. For the MSME sector, BII has equity investments in four companies and is actively exploring innovative debt structures to support the growth of their loan books further.

Microfinance is the third area where BII focuses its efforts within the financial services space. However, the institution is keen on investing in companies that offer larger micro-loans to individual borrowers rather than providing loans to members of joint liability groups (JLGs).

"We are trying to see if we work with companies that are innovating on that business model, who are trying to do credit at a slightly more nuanced level by valuing individuals rather than just relying on groups," Malhotra explained.

The JLG model has faced criticism for not adequately assessing individual customer needs and failing to provide the required funding for borrowers to become productive.

(KNN Bureau)