Chennai: While MSMEs are given adequate mileage in recent times with various loan schemes promised by the governments of both Centre and State, the rural microfinance segment has been left to struggle a bit.
Having witnessed the huge potential the segment has to offer, Asirvad Microfinance has been successfully raking up numbers in the field. Its managing director, S V Raja Vaidyanathan spoke to News Today about the industry prospects.
Chief operating officer S Ramachandran and chief financial officer Mayank Shyam Thatte were also present on the occasion.
Excerpts from his interview:
Q: Give us a brief outlook about the market operations of Asirvad Microfinance
A: We are more than a decade old firm, currently acquired by Manappuram Finance Ltd. As of now, our area of operation is microfinance alone and that too only for women. Our focus is only on tier two and three towns / villages with a maximum loan cap of Rs 50,000. We have a fixed rate of interest at 21.9 per cent.
Q: How do you think defaulters affect that industry? How do you tackle them?
A: While bad loans do happen at times, they are well contained by us. Our repayment is at 99.8 per cent. Secondly, to prevent bad loans, we thoroughly check the Credit Bureau Score of our loan seekers. Everything is done offline to make sure our customers are genuine and have the capability to repay our loans. Unlike banks, we offer insurance options and don’t even demand surety from our customers which is our greatest strength.
Q: You mentioned ‘offline’. Isn’t there a way to apply for a loan online?
A: As of now, there are no options to get a loan online from us. The first reason is when we go online we have to compete with many other online finance firms. Secondly, our focus is rural areas where there is no use setting up and maintaining an online platform. We operate with the help of agents and we are currently employing over 5,000 people. These agents individually visit villages, promote our loans and sanction them. They set a date every month for repayment collections as well as start of new loans.
Q: A word about your interest rates and the market size of this segment
A: Our operating expense is up to seven per cent and, our loans are quite affordable to repay. In fact our 21.9 per cent rate of interest is based on RBI guidelines. The current market size of microfinance segment is Rs 1.1 lakh crore. In the last 11 years, our lending stood at Rs 2,800 crore. We are operating in 23 States.
Q: What does the future hold for Asirvad Microfinance?
A: As microfinance and MSME segments, we have given loans of about Rs 4 crore for MSMEs, are growing fast, we are expecting double digit growth by 2020. We are planning to up our lending to Rs 5,000 crore by 2020.
|On demon and GST|
|“While demonestiation was disastrous for us, GST proved to be advantageous. In our 11 year stint, we posted negative EBITDA during demonetisation alone. But GST helped our business grow by streamlining the taxation. It has helped organise the sector,” said S V Raja Vaidyanathan.|
|A relief at last|
|Tamilnadu’s non-performing asset (NPA) situation in the microfinance sector continues to improve, dropping to below one per cent as of September, according to data from credit bureau CRIF High Mark Credit Information Services. The State leads in terms of the microfinance sector, with a gross loan portfolio of Rs 23,900 crore, as of September, accounting for 15 per cent of total loans at the national level.|