Microfinance lenders to pool then securitise their loans

A common loan pool created by 30-35 microfinance lenders (MFIs) will be securitised and sold to banks so as to raise funds at a time when the sector is facing a credit squeeze. Sale of the loans on their books will help free up capital for the participating microfinance institutions (MFIs) and help them grow business without raising fresh resources. Business growth has taken a hit due to the credit crisis following the IL&FS default.

MFIN (an association of Indian MFIs) is driving the idea to help small MFIs with a little knowledge of complex treasury operation such as this to raise resources when borrowing cost has risen amid the credit squeeze. Source Economic Times