Microfinance Gateway>Indian MFIs Want Banks to Lend at Lower Rates to Aid Cheaper Microloans

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Home » News & Opinion » Indian MFIs Want Banks to Lend at Lower Rates to Aid Cheaper Microloans

Indian MFIs Want Banks to Lend at Lower Rates to Aid Cheaper Microloans
Jha, U.

Major MFIs are negotiating with banks to get lending rates reduced by 2-3 percent as increasing operating cost environment has made it tough for them. At present, borrowing cost accounts for about 60% of operational cost for these players. MFIs such as SKS Microfinance, BSFL, Share and Asmitha said they have reduced lending rates at regular intervals and there is no scope to reduce the rates further.

Reacting to a statement by Sa-Dhan, the MFIs said it is not viable to make any more cuts in interest rates at present. The four major MFIs together have an outstanding loan of about INR100 billion (US$2.1 billion) and a total client base of 14 million. Most MFIs charge 18% to 30% interest rates.

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Posted: 03 Sep 2010
Source: Financial Chronicle
Originally Published: 01 Sep 2010