The year 2016 has been a mix of good news and bad news for the microfinance sector in India with impressive Ujjivan and Equitas IPOs and acquisitions but clouded in disarray over the demonetisation impact that triggered massive non-repayment of loans in uttar Pradesh and Maharashtra.
Here is a chronology of all events in Microfinance sector in 2016:
Jan 6, 2016: Amsterdam-based multi-country microfinance operator CreditAccess Asia raises $30 million from Hong Kong-based private equity firm Olympus Capital Asia, heralding the first fundraising in 2016. CreditAccess is the parent company of Bangalore-based MFI Grameen Koota.
Jan 7, 2016: Microfinance major Bandhan turned into a bank formally kickstarted its banking operations.
Jan 11, 2016: New private sector IDFC Bank buys 9.99% stake worth Rs.8.5 Crore in ASA International India Microfinance, which is a division of Dhaka-based ASA that operates in over 12 countries.
Feb 2, 2016: Symbiotics, a Switzerland-based PE firm issued bonds worth $22 million to meet fund requirements of Annapurna Microfinance based in Odisha, ESAF Microfinance and Investment (EMFIL) in Kerala and Tamil Nadu and Satin Creditcare Network Limited, a MFI based in Delhi state.
Feb 7, 2016: Muhammad Yunus, Nobel Laureate and pioneer of microfinance, said a separate microfinance regulatory authority similar to Bangladesh Microfinance Regulatory Authority would help Indian microfinance sector. Currently, RBI regulates the NBFC-MFI units in India.
Feb 10, 2016: Small finance bank (SFB) licensee Disha Microfin said it would raise about Rs.300 crore to restructure its ownership in order to comply with the RBI norms for foreign shareholding. The central bank’s norms allow foreign shareholders own up to 49% of SFBs.
Feb 12, 2016: Telangana government has decided to revive microfinance lending in the state on SEWA (Self Employed Women’s Association) model and provide Rs.25 crore for distribution in the districts of Hyderabad and Medak in 2016-17 Financial Year.
Feb. 15, 2016: Buddy, an online micro-lending startup that supports students with loans for e-shopping, riases Rs.3.4 crore in pre-Series A funding from Blume Ventures with participation from Tracxn Labs. Buddy is owned by GaragePreneurs Internet Pvt Ltd.
Feb 19, 2016: Bangalore-based MFI Ujjivan Financial Services raises Rs.300 crore from a group of investors, in a pre-IPO placement to reduce its foreign shareholding to turn into a Small Finance Bank (SFB) as per RBI approval conditions.
March 1, 2016: Budget 2016-17 allows NBFCs to claim tax deductions on the provisions for Non-Performing Assets (NPAs) up to 5% of total income. Banks currently enjoy 7.5% tax breaks on NPAs. Also tax norms on securitisation of portfolio were changed to give tax benefit, which may encourage more securitisation deals going forward.
March 2, 2016: Government of India clarified that NBFC microfinance companies will continue under the regulation of RBI and not MUDRA as said a day before. In a statement on March 1, 2015, a day after the Budget, the finance ministry had said that the MUDRA Bank will regulate all MFIs creating confusion in the MFI sector.
March 2, 2016: DCB Bank, earlier known as Development Credit Bank, acquires a 5.81% stake in Odisha-based Annapurna Microfinance for Rs 9.99 crore (about $1.5 million).
April 11, 2016: SBI FMO Emerging Asia Financial Services Funds acquires 10% stake in Delhi-based MFI Satin Creditcare Network. The private equity firm is a collaboration between SBI Holdings, Japan, and Netherland Development Finance Company.
April 22, 2016: SKS Microfinance raises Rs.2,800 crore by selling its receivables to investors in the 4th quarter, which is 80% more than it did in the same quarter last year.
April 26, 2016: Chennai-based MFI Equitas Holdings raised Rs.720 crore in its IP, in addition to Rs.650 crore it received from anchor investors ahead of the IPO. The IPO, second in India after SKS in 2010, was oversubscribed 57 times in the high net worth individual category, 15 times in the institutional investor segment, and 1.3 times in the retail investors.
April 27, 2016: Shares of SKS Microfinance reach the highest in 52-weeks at Rs.607 on BSE in intra-day trade on expectation of strong quarterly performance for the quarter ended March 2016 (Q4).
April 27, 2016: Janalakshmi raises $150 million in a fund-raising eent led by US-based private equity firm TPG.
April 29, 2016: Equitas Holdings, which made a debut on the stock market in April, said it has got the formal licence from RBI to operate a small finance bank. It was given an “in-principle” nod by RBI to start an SFB in 2015.
May 5, 2016: Hyderabad-based MFIs SHARE Microfin Ltd and Asmitha Microfin Ltd decide to swap certain businesses, pending approval from Competition Commission of India (CCI). Both operate in several states, including Andhra Pradesh and Telangana.
May 10, 2016: Ujjivan Financial Services raises Rs.885-crore IPO, oversubscribed nearly 41 times, listed in exchanges at 10% higher than the IPO price at Rs.231.90 per share.
May 12, 2016: MUDRA invested Rs.50 crore in A-rated senior tranche of a securitized portfolio of microloans issued by Janalakshmi Financial Services (JFS), a Bangalore-based microfinance institution (MFI), which is on its way to become an SFB soon.
June 5, 2016: SKS Microfinance changes its name as Bharat Financial Inclusion Ltd., leaving behind its microfinance baggage inherited from the AP crisis in 2010.
June 14, 2016: SKS Microfinance, Spandana Sphoorty Financial Ltd and Sambandh Financial — all RBI-regulated NBFC-MFIs forced to shut down in few districts of Jharkhand saying they were not licensed. They were allowed to re-open when the RBI gave clarification that they were allowed to do micro-credit business anywhere in India, including Jharkhand.
June 15, 2016: CIBIL, the Credit Information Bureau launched a Microfinance Institutions bureau that would add 55 million rural accounts to it, which means an addition of 60% of the data would cover rural borrowers.
June 23, 2016: Odisha-based Annapurna MFI raises Rs.35 crore from Netherlands-based Oikocredit.
June 28, 2016: India’s third largest private sector bank Axis Bank enters Urban Microfinance segment to provide collateral free credit to low-income women groups called ‘Axis Sahyog’. Launched in Pune, it plans to commence urban microfinance operations in 85 branches across Bengaluru, Chennai, Kolkata and Mumbai.
July 10, 2016: IFC (International Finance Corporation) a World Bank investment arm announced investment of Rs.140 crore in Grameen Koota and Rs.340 crore in Janalakshmi Financial Services (JFS), both Bangalore-based microfinance institutions (MFIs).
July 12, 2016: Aavishkaar Goodwell Funds have exited their stake in Suryoday Microfinance.
July 13, 2016: New private bank IDFC Bank acquires Chennai-based MFI Grama Vidiyal Microfinance for an undisclosed amount, in a first-of-its-kind transaction, where a bank has taken over a microfinance institution (MFI) and made it a subsidiary. Grama Vidiyal is the fifth-largest MFI in India and has a customer base of 1.2 million, operating from 319 locations across 65 districts of Tamil Nadu, Kerala Karnataka, Puducherry, Maharashtra, Gujarat, and Madhya Pradesh.
July 22, 2016: Indian mututal funds ICICI Prudential Mutual Fund, HDFC Mutual Fund, Kotak Mutual Fund, Reliance Mutual Fund and SBI Mutual Fund invested about Rs.1,000 crore in secured debentures issued by MFIs — Equitas Microfinance (Equitas), Janalakshmi Financial Services (JFS); SKS Microfinance (SKS) and Ujjivan Financial Services (Ujjivan).
August 30, 2016: Ratan Tata, chairman emeritus of Tata Sons, Vijay Kelkar, former finance secretary and Nandan Nilekani, co-founder of Infosys and the architect of Aadhaar, come together to start a microfinance institution (MFI) called Avanti Finance. In 2013, Kumar Mangalam Birla’s daughter too started an MFI named Swatantra.
Sept 23, 2016: A Special Judge and Inquiry Commissioner in Kerala ordered a probe against SNDP Yogam general secretary Vellappalli Natesan over alleged irregularities in the utilisation of funds secured from Kerala State Backward Classes Commission for micro-finance operations based on a petition by Leader of the Opposition V.S. Achuthanandan.
October 1, 2016: Kotak Mahindra Bank buys 99.49% stake in Bengaluru-headquartered BSS Microfinance Pvt Ltd for ₹139.20 crore, second deal after IDFC Bank bought out Tamil Nadu-based Grama Vidiyal Micro Finance Ltd in July.
October 24, 2016: India’s RBL Bank acquires a 9.99% stake in Uttar Pradesh-based Utkarsh Microfinance, that has been given SFB license by RBI.
Nov. 8, 2016: PM Narendra Modi announces demonetisation bringing microfinance industry to cash crunch and chronic delinquencies running into hundreds of crores for each Big MFI and numerous losses for smaller MFIs.
Nov 14, 2016: Microfinance institution Ujjivan Financial Services receives the final approval from the Reserve Bank of India (RBI) to start small finance bank operations.
Nov. 18, 2016: India Infoline Finance Ltd (IIFL Finance), an NBFC, said it will acquire Bengaluru-based microlender Samasta Microfinance Ltd. for an undisclosed amount.
Nov. 21, 2016: RBI provides 60-day relief to MFIs struggling to collect repayments on their loan dues due to a shortage of cash.
Nov 28, 2016: Varanasi-based Utkarsh Micro Finance, an MFI, has received final licence from The Reserve Bank of India (RBI) to start operations as Small Finance Bank (SFB) named as ‘Utkarsh Small Finance Bank Ltd’ and is likely to start banking operations in early 2017.
Dec. 19, 2016: The Maharashtra government constitutes a special investigation team (SIT) to inquire into the operations of microfinance companies in the state.