The overwhelming success of SKS Microfinance’s $342 million initial public offering marks a turning point not just for India’s largest micro lender but for the most dynamic sector of the country’s financial services industry. Although micro-credit organisations aren’t strictly banks in India, for-profit microfinance institutions or MFIs are barred from accepting retail deposits, they operate like banks in that they borrow money and lend it at a significant spread to the poor.
According to Intellecap, a Hyderabad-based consulting firm specialising in low-income markets, between 2004 and 2009 Indian MFIs recorded spectacular growth rates. Every year, on average, they have increased their client base by 91% and their...
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