Thursday, August 05, 2010

Power of Micro Finance

If some one says Villages are there in India ! I disagree , But I strongly believe INDIA is in villages . SKS Micro finance successfully completed its IPO process subscribed 14 times . Micro finance will be a new investment theme in India in the days to come . Since 70% of Indians are from rural India and don't know read and write and these guys can be charged with high interest rate left right and center. The key reason is low penetration of rural finance and access to credit market. Micro finance business have taken advantage from bureaucracy and political backup as the concept of financial inclusion.Till date there is no proper regulatory frame work to control and monitor the activities of these institutions unlike banks. With easy credit available in the overseas market at low rates these, institutions can lend money to under privileged folks at a stupendous interest rate around 28% to 30 % to increase their net interest margins.
Father of Micro finance and noble prize winner Mohammed Yunus said recently the concept of Micro finance is not a business for profit making but it is for a Social Cause ! I hope these institutions should not be a organised pawn brokers in villages with money and muscle power.
SKS Micro finance recently moved their corporate office to Satyam's old corporate office building satyam city center in the heart of Hyderabad .With listing of SKS Micro finance, the chieftain of SKS will be a part of Forbes list from Hyderabad. The prevailing problem with primary market is every one want to sell their IPO allotment immediately after listing which creates over supply of stock and eventually disastrous issue, if the company fundamentals are strong that will be the time for serious investors to use this as potential opportunity to create wealth as value investor .For every sector there will be different stages, nascent stage , growth stage and bubble stage ,as investor we should learn the art when to pluck the fruit from the tree. Organised Micro finance is at a very nascent stage in India , one should take the advantage before it becomes one more sub prime bubble in India. For risk taking Investors this is a place you can make some handsome money in the medium term.

2 comments:

  1. I share ur views. Investing in it is like getting on to a running train. You never know when it starts to slow down.
    India is notorious for its shoddy attitude to repayment. Defaults are natural.
    And community lending is NOT scaleable.

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  2. Hey Great post. Really a very nice piece of information. IPO Process

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