MFIs rule out any cut in lending rate
Posted by
KANNAN
on Wednesday, April 21, 2010
Labels:
PRASAD T.P. FN-105
Inspite of the pressure from RBI, MFIs are not reducing the lending rate due to their higher operational cost of funds. MFIs are having the high lending rate of 24% but customers are paying up to 30% because lenders take security \money, processing fee and insurance premium. RBI governor D Subbarao is happy with the ability of the MFIs to provide door step credit policy but high rates are not acceptable to him. Small Industries Development Bank of India (SIDBI) also asked MFIs to reduce loan but MFIs like Bandhan,Basix are not accepting it . 2/3 of the operational cost is going in to paying back interest. 1/3 goes in to account of loan delivery, salary payments and all other operations to turn an operation. Bank and SIDBI charges12-14%. In the case of MFI 20-21% loan is the operating cost and 2-4% is the margin used as a buffer stock for adjusting the interest rate fluctuations. MFIs are refusing to reduce the lending rate because they think that interest rate can be increased in the future. MFIs are small financial institutions so the transportation costs are also high. Private equity players are coming to invest in MFIs because of the handful profit they are getting and RBI is not happy with it.
0 comments:
Post a Comment