Coming full circle

The MFI sector is bouncing back, but slowly

Soumik Kar

Are the testing times for microfinance institutions (MFIs) really over? This quarter, the posterboy-turned-villain of MFIs in India is back in the spotlight after a turnaround. SKS Microfinance recorded a net profit of ₹1.2 crore in the December quarter compared with whopping losses of ₹262 crore in the September 2012 quarter and ₹428 crore in the year-ago quarter. Interestingly, its growth has been driven by states other than Andhra Pradesh, which was the most lucrative catchment area for MFIs before political conspiracy killed it. SKS’s Andhra Pradesh portfolio has been reduced to zero from a high of ₹1,491 crore in October 2010 when the microfinance crisis really hit the state. But loans disbursements rose by 14% to ₹784 crore during the quarter while interest income in those states, too, grew by 16% to ₹79 crore.