CA Grameen: A Resilient Ecosystem

Business efficiency and prudent lending practices have kept the Dutch-owned micro lender on top of the MFI pyramid.

- V. Keshavdev

IN 2002, PROFESSORS C.K. Prahalad and Stuart Hart, from the University of Michigan and North Carolina, in an article made a strong case for businesses to look at the world’s most impoverished individuals as potential consumers. Later, in 2004, the duo expounded upon the insight in their best-selling book, The Fortune at the Bottom of the Pyramid. Interestingly, much before the professors’ idea of a new paradigm in consumer segmentation, it was Professor Muhammad Yunus, who had recognised the power of the have-nots by establishing the Grameen Bank in Bangladesh in 1983, driven by the belief that credit is a fundamental human right.

Traditionally, credit in the hinterland was dominated by money lenders, followed by banks. But over the past decade, non-bank microfinance institutions (NBFC- MFIs) have carved a niche for themselves. Of the ₹3 lakh crore microfinance portfolio, banks account for 37.7% share, while NBFC-MFIs make up for 36.7%. In fact, for the first time, NBFC-MFIs have cornered a 38.68% market share of the incremental microfinance disbursement of ₹75,655 crore in Q2 FY23, pushing down banks to No. 2 position with 36% share.

Alok Misra, CEO & director at Microfinance Institutions Network, the self-regulator for non-bank MFIs, says “Though the trend is couple of quarters old, it is, nonetheless, an encouraging sign. There is a lot to watch out for in the sector with homogenisation of regulations coming in.”