CA Grameen: A Resilient Ecosystem

Business efficiency and prudent lending practices have kept the Dutch-owned micro lender on top of the MFI pyramid.

- V. Keshavdev

IN 2002, PROFESSORS C.K. Prahalad and Stuart Hart, from the University of Michigan and North Carolina, in an article made a strong case for businesses to look at the world’s most impoverished individuals as potential consumers. Later, in 2004, the duo expounded upon the insight in their best-selling book, The Fortune at the Bottom of the Pyramid. Interestingly, much before the professors’ idea of a new paradigm in consumer segmentation, it was Professor Muhammad Yunus, who had recognised the power of the have-nots by establishing the Grameen Bank in Bangladesh in 1983, driven by the belief that credit is a fundamental human right.

Traditionally, credit in the hinterland was dominated by money lenders, followed by banks. But over the past decade, non-bank microfinance institutions (NBFC- MFIs) have carved a niche for themselves. Of the ₹3 lakh crore microfinance portfolio, banks account for 37.7% share, while NBFC-MFIs make up for 36.7%. In fact, for the first time, NBFC-MFIs have cornered a 38.68% market share of the incremental microfinance disbursement of ₹75,655 crore in Q2 FY23, pushing down banks to No. 2 position with 36% share.

Alok Misra, CEO & director at Microfinance Institutions Network, the self-regulator for non-bank MFIs, says “Though the trend is couple of quarters old, it is, nonetheless, an encouraging sign. There is a lot to watch out for in the sector with homogenisation of regulations coming in.”

Leading the onslaught is CreditAccess Grameen (CA Grameen), whose present was envisaged in 1999 by Vinatha M. Reddy, motivated by the book