2 The traditional microfinance-joint liability group (MFI-JLG) model has been one of the very few banking, financial services and insurance (BFSI) business models which has delivered a high return (20% plus return on equity—RoE) despite regulatory, political, and other impediments. The MFI segment was worth less than Rs10,000 crore in 2011 and, today, has matured to Rs2.40 lakh crore in terms of portfolio outstanding.
But the microfinance institutions (MFIs), might not be able to replicate their growth rates due to structural issues, as per a research report by Edelweiss Securities Ltd.
The MFI business is susceptible to brief tough periods with potential to wash out returns generated earlier.