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Keya Sarkar, a columnist with Business Standard, has made a very interesting point in her article. When Indian banks are now looking at lending (refinancing) to micro finance institutions (MFIs) in India, there are no borrowers at all. Apparently, there are just 15 "good" MFIs in the country.

Until recently mainstream banks were uninterested in micro finance or lending to the poor in amounts of less than Rs 20,000 ($450). But with the competition for upper end and middle end personal finance business worsening among the banks, many of them turned their attention to the rural and urban poor as a new and emerging asset class.

Since many of the banks did not have the administrative capacity to deal with such small loans, most adopted the route of refinancing micro finance companies. In their efforts to do so, many realised that there were only a handful of micro finance institutions (MFIs) that could be refinanced. Although different practitioners in the sector gave different figures as to how many bankable MFIs there are, it would be safe to say that the number of good MFIs is around 15.

In this article, she says the need of the hour is to set up micro finance companies. Global funds like Unitus is already here. But we need more. Read the article if you are interested in microfinance.

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