Micro-finance institutions (MFIs) have posted a healthy growth in disbursements for financial year 2009,

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despite the credit crunch, as banks eased credit to meet their priority sector target towards the end of the year.

Tiruchi-based Grama Vidiyal Microfinance (GVMFL) disbursements grew 81.2 per cent to

Rs 375 crores from Rs 207 crores in the comparable period last year. Chennai-based Madura Micro Finance saw its disbursements grow 33 per cent to Rs 127 crores for the period April-March 2009 from Rs 95 crores in the same period of the previous year.

There were concerns about growth of micro MFIs in fincial year 2009 because the credit crunch made banks to tighten their lending norms for these lenders. The micro-finance sector accounts for close to Rs 100,000 crores disbursements per year.

“We faced a credit crunch during the start of the second half of fiscal 2009 because banks tightened their lending. But towards the end of the year, banks eased credit in order to meet their priority sector targets and now things are normal,” Arjun Muralidharan, chief executive officer, GVMFL, said.

Madura Micro Finance’s chief executive officer M Narayanan agreed. “The banks eased credit to the segment in the last two months of the financial year to meet their priority sector lending targets,” he said.

Meanwhile, MFIs diversified their fund base through securitisation of their loans in fiscal year 2009, in a bid to sustain high growth rates with their existing capital and bring down operating costs.

Securitisation is the process through which these institutions pool the receivables from loans and sell the same to third parties such as banks, mutual funds and insurance companies.

“Last year, we initiated the process of securitisation and have securitised loans to the tune of Rs 40-50 crores with Development Credit Bank and ICICI Bank. We are also in negotiations with other private banks for further securitisation,” said Muralidharan.