MFIs working on Rs 5-bn loan pool for sale to banks to ease liquidity

In order to overcome a liquidity problem in the sector, micro-finance institutions (MFIs) are coming together to sell a bundled securitisation portfolio of about Rs 5 billion to banks.

Loans in the books of MFIs will be consolidated in one pool and offered for sale to banks, which will buy MFI portfolios. In general, banks buy such pools through bilateral or one-on-one deals, to meet their priority sector lending targets.

According to a senior official in the MicroFinance Institutions Network (MFIN), about 70 per cent of the proposed pool will comprise the loan books of small and medium-sized entities. Participation from bigger