Muthoot Fincorp partners WWB for microfinance play

BANGALORE: THE buzz about microfinance is getting louder. South India���s leading NBFC, Muthoot Fincorp, is re-orienting itself as a microfinance entity in a strategic partnership with Women���s World Banking (WWB) .

Muthoot is foraying into unsecured lending through the microfinance channel. The impending alliance with WWB ��� operating in the global microfinance space through a network of over 50 entities covering 23 million clients and outstanding portfolio of $840 million ��� is expected to shape up Muthoot���s microfinance identity.

WWB will help Muthoot in product development, organisational architecture and raising funds at cheaper rates. Muthoot���s new microfinance service is expected to offer micro credit, micro insurance and micro franchising.

The move comes at a time when a long list of NGOs and MFIs are seeking NBFC status in a potentially big, but under served microfinance sector.

The industry estimates suggest that microfinance market could be as big as Rs 2,00,000 crore, with current advances pegged at around Rs 7,000 crore. WWB, which already works with ICICI Bank, Seva Bank, Share Microfin and Friends of WWB, is seeking a variety of players to develop the microfinance space that has been dominated by self help groups (SHGs) and MFIs.

The entry of NBFCs like Muthoot is expected to help the microfinance retail play going forward. ���In many ways, we are ideally placed to tap the microfinance space with over 450 branches, local knowledge, low delivery cost and a customer base with credit history,��� Thomas Muthoot, Director, Special Initiatives, Muthoot Fincorp, told ET.