Published on Saturday, August 4, 2018 by Dilip Davda
CreditAccess Grameen Ltd. (erstwhile known as Grameen Koota Financial Services Pvt. Ltd.) is the third largest Micro Finance Institute (MFI) based on September 2017 Asset Under Management (AUM) data. With the growth in business it is currently the second largest MFI after Bharat Financial Inclusion Ltd. (erstwhile known as SKS Microfinance Ltd.) As Bharat Financial is getting merged with IndusInd Bank shorly, CreditAccess with become the largest players in MFI with major thrust on financing to rural women who are generating livelihoods for their family.
CreditAccess has major footprints in Southern region where KMF (Karnataka Milk Federation) has wide spread milk collection centers in rural areas and sericulture business is also growing year on year. CreditAccess goes to the door of rural women, understands their financial needs and accordingly working out the loan distribution scheme on need base aspect which is distributed on personal guarantee of such Self Help Woman groups formed for the said purpose and gets the same on Joint Liability Group (JLG) basis. This model has worked successfully over the years and is becoming most popular across the nation, as claimed by the management. While AUM has seen growth of CAGR of 11% a year, and there are scope for more growth going forward, management is confident of maintaining the achieved growth of 11% and do not envisage any issues thereon. Company is also using the model of weekly collections as it suits one and all and thus giving them liquidity advantage for growth of business. Although it suffered a setback post demonetization and reported gross NPA of 1.97% as at 31.03.18, it is currently having no NPAs.
While RBI is permitting them to have the maximum cap of 24.17% interest rates on loans distributed, CreditAccess is having an average rate of 20% for its loan portfolio and is the lowest among all players in MFI segment. It has expanded its business in 132 districts of 8 states with 516 branches and work force of 6306 full time employees so far and in eyeing to spread across other states in coming years. Currently 98.9% equity of the company is held by CreditAccess Asia that will stand reduced to around 80%.
With its focus on under penetrated areas, customer centricity, prudent risk management with controlled framework, CreditAccess is confident of continued growth going forward. While other MFI like Bharat Financial, Equitas, Ujjivan, Au Small Finance have opted to become small banks, CreditAccess has no such plans. It will continue to operate as rural women centric MFI.
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(SEBI registered Research Analyst-Mumbai).
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
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