As long as they remain as “NBFC-MFI”, there could be political interference. But with active RBI these days and with passage of MFI bill, these risks would come down. Also, MFI industry does a lot of good for its customers who otherwise have to fall prey to loan sharks. RBI as well as government knows this very well after the AP fiasco. Recent call money scam in AP must also do a lot of good to MFI industry as people would get to know about MFIs who lend with proper regulations in place.
Once these NBFC-MFIs get converted to small bank finance companies and later into universal banks, the political risks will die down. But, for me personally, the moolah is in MFI lending as long as you can keep the NPAs in check and follow proper risk management principles.
Any investment is fraught with inherent risks, we need to take a call weighing the risks vs. reward, according to one’s own risk taking ability and knowledge of that particular sector.
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