Banking on a new era for micro lending

CHANDRA Shekhar Ghosh, the founder-chairman of Bandhan Financial Services, is waging a lone battle against the entry of private equity funds in the country’s microfinance sector. He has so far managed to keep the nineyear-old Bandhan, now the country’s fourth-largest microfinance institution by assets, free from the grips of private equity players despite the pressure of having to mobilise resources to fund its growth. Foreign private equities come in droves to encash the prospect of the booming local MFI sector. Many feel it becomes difficult for MFIs to keep the all-inclusive interest rates below 24% a year, once private money spinners fund them for returns as high as 25-30%. Even RBI is uncomfortable with private equities ruling the roost, but then for most large MFIs, it was rather easier to get private money from abroad than arranging funds from government agencies like SIDBI.