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Microfinance Industry Picking up the Pieces after the Financial Year 2019 Liquidity Jolt

Journal: International Journal of Trend in Scientific Research and Development (Vol.4, No. 6)

Publication Date:

Authors : ;

Page : 370-375

Keywords : Business correspondent; Calibrate; Capital-raising; Co-lending; Jolt; Shake-out;

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Not many believed that the microfinance industry MFI would bounce back quickly after the FY 2019 liquidity jolt. It has sort of bounced back, but it will take another year or two for the bounce back to be complete. Fortunately for the MFI players, rather the larger players among them, the response of the capital market to their capital raising efforts has been encouraging. The smaller players however have not been that lucky. They need to look for alternatives like settling for the co lending model by partnering with large lenders. Or they could seriously explore the business correspondent channel to shape up to stay relevant. It is time they shaped up or shipped out. However, when things come to a head, the inevitable will happen, namely a shake out would materialise with the smaller MFIs being acquired by the larger NBFCs and even scheduled commercial banks. However, in the backdrop of the FY 2019 liquidity squeeze that shook the industry, measures to calibrate the risks involved in the operations of the MFIs are due and this led the researcher to take up this study. It concludes that since the smaller players cannot shape up financially given the market's reluctance to support them, they had better become partners of large MF lenders and co lend. Overall, it makes sense for the microfinance industry to welcome a shake out in the industry, since unviable players will be taken over by stable and viable players like large NBFCs and scheduled commercial banks to the benefit of all stakeholders associated with the industry. Such a development should not be viewed sceptically. Dr. Nandisha H D "Microfinance Industry: Picking up the Pieces after the Financial Year: 2019 Liquidity Jolt" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-6 , October 2020, URL: Paper Url:

Last modified: 2020-11-20 15:03:05