HDFC Securities has published a report on Microfinance Industry where they have initiated coverage on Bandhan Bank, Ujjivan Financial Services & Small Finance Bank and CreditAccess Grameen.
PFA
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good data points -nice analysis
Is it possible for you to add pre provisioning profit growth % for last 5/3 /1 year and analyse -this gives you an indication of the sustainable profitability over longer period and then see credit cost /GNPA (underwriting skills )along with the matrix i asked for (along with these we need to see ROE and ROA which you have done) ,thanks
Hi Debashish,
I do not track growth metrics for financials and thus don’t have the data. I prefer to focus more on asset quality rather than growth.
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This is an long pending action in bringing banks and SFBs portfolio under similar framework of MFIs, but pricing cap cannot be put on banks and SFBs, since this will do more harm to MFIs rather than banks
Yeah, and many of the SFBs (top 3) at least will be moving to universal bank license in the next 3 years.
I have seen arman finance as 15cr company share price was 17 . Now it becomes 1000cr company almost.
I can see similar story happening with QGO FINANCE but this time story was some what different.
But i was prettymuch optimistic about rachna singis vision and his ability to execute.
I request members to have look and input to the relevant thread.
Thanks
Disc. Invested.
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Why NBFC’s which do Mircrofinance are specifically categorised as NBFC-MFI. We do not see much another classifications in other areas like vehicle finance, personal loans. One other case is Housing finance, where if you got classified as NBFC-HFC. In this case, they can access funding from NHB which is a low-cost funding. Once the size of NBFC reaches certain size, seems this low cost funding also stops. Recently IndiaBulls Housing mentioned that they are asking RBI to classify themselves as NBFC instead of NBFC-HFC, since there is no advantage is getting classified as NBFC-HFC.
On similar lines, what is the benefit companies are getting if they are getting classified as NBFC-MFI?
Havent gone into the details, but NBFC-MFI “MAY” have benefits of,
- being classified under PSL, enabling them to sell the loans to banks to fulfill their PSL requirements. Though not sure if one require to be NBFC-MFI to sell PSL certificates related to MF.
- SRO participation, standardized regulatory window, protection from local politics. (NBFCs must have this as well for the last one).
- Pricing of loans, collections teams as per regulations (before the current deregulation of loan pricing)
- RBI regulations may say that anyone having MF portfolio of more than 500 cr needs to be classified as such.
- Raising funds from impact investors, NABARD and other MF targeting schemes. This can help reduce funding costs.
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