MFIs can tap global capital pools for growth, says the CEO of Grameen Capital

The MFI sector’s total loan book fell by ₹4.3 lakh crore to ₹3.3 lakh crore after lenders implemented the MFIN’s new guideline | Photo credit:

“If banks have contracted their lending to MFIs, how can you expect MFIs to grow? [previous credit cycle]. Very good news is coming in. Cycle after cycle over the past quarter, we have seen improved credit quality. We have imposed new guidelines that prohibit lending to borrowers with more than three loans; we have self-regulated ourselves as an industry…,” he said.

“MFIs and NBFCs are struggling to raise money from banks. But there could be global capital pools that will be very interested because of the impact that these entities are creating on the ground. So, by bringing in those impact investors globally [will aid growth]. We talked earlier about the lack of depth in the capital and bond markets. Why don’t we look at impact bonds or other ways to raise those funds,” he added.

portfolio loans

The MFI sector’s total loan book fell by ₹4.3 lakh crore to ₹3.3 lakh crore after lenders implemented the MFIN’s new guideline. MFIN is the self-regulatory organization of the MFI sector and introduced additional guardrails earlier this year after MFIs saw a sharp increase in bad loans due to customer over-indebtedness.

However, Braganza said this sector is at a fairly young stage and all asset classes need to undergo credit cycles. He said previous crises in the MFI sector were driven by macroeconomic events, but the latest cycle was led by exuberant lending by MFIs. He said that after the implementation of the new SRO guidelines, the MFI sector is much more cautious and disciplined in lending.

Growth of housing construction

Additionally, Sachinder Bhinder, MD and CEO, Aavas Financiers, said that India’s mortgage-to-GDP ratio is still around 13-14 percent, and if you exclude Tier-1 and Tier-2 cities, the ratio is in the single digits. Accordingly, with higher penetration of highways and road construction, there is a huge scope for home loan growth in the country, he said.

“We have 16 percent [of borrowers] new to lending and 92 percent are new to mortgage lenders. These are starters on the housing market, or people who use their home as a mortgage.

Published on November 17, 2025