A conference call by the stock market brokerage, Motilal Oswal Financial Services, on 27 December 2010, provided some fascinating views. The 'expert' who participated in the investors' conference call was Alok Prasad, CEO, MFIN, the self regulating organisation of the 37 MFIs. He seems to have indicated (based on the views released by the company in the report), that the microfinance business would be back to normal by the middle of 2011 (the exact phrase that they use is: "New normalcy phase by 1QFY12") and they it is likely that the Central government would pass a law to regulate the MFI sector in the next 4-5 months.
Either the market players are privy to information that the others are not or they have not read the submission of the AP government to the Y.H.Malegam sub-committee, where it has made some forceful arguments as the MFIs are no better than private-moneylenders and hence a constitutional right of a State Government to regulate such activity. The Motilal Oswal Report has provided detailed break of each bank lending to MFIs (which is given in the table below).
Estimates of Total Banks Exposure to MFIs| Name of Bank | Exposure in Rupees Million | Exposure in Rupees Crores | As % of Loan Book |
| ICICI Bank | 24,000 | 2,400 | 1.2 |
| Yes Bank | 3,000 | 300 | 1 |
| IndusInd Bank | 3,800 | 380 | 1.6 |
| Andhra Bank | 3,000 | 300 | 0.5 |
| ING | 2,500 | 250 | 1.2 |
| Bank of Baroda | 1,500 | 150 | 0.1 |
| Axis Bank | 13,000 | 1,300 | 1.2 |
| Bank of India | 4,000 | 400 | 0.2 |
| Punjab National Bank | 9,000 | 900 | 0.4 |
| State Bank of India | 8,000 | 800 | 0.1 |
| Syndicate Bank | 5,000 | 500 | 0.5 |
| Dena Bank | 800 | 80 | 0.2 |
| Central Bank of India | 10,000 | 1,000 | 0.9 |
The above figures need to be looked in conjunction with various other estimates cited in the newspapers which point out that 11 percent of the households in AP have borrowed from MFIs, while the aggregate loan outstanding per person in AP is around Rs.22,000 and the total outstanding loans of the MFI industry in the State by the end of November 2010 was Rs.7,257 crores. The Indian Banks Association has requested that the RBI allow one-time rule waiver that would enable the banks to restructure loans to MFIs. This would enable them to avoid classifying loans to MFIs as non-performing assets ("IBA may seek one-time waiver on MFI loan restructuring", The Financial Express, 29 December 2010, p.18).
While the MFIs seems to exude confidence that the RBI and court's would take a sympathetic view, the banks seems to think otherwise.
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