Improvement of the microfinance market, the regulator reserves and obligatory membership in SRO (self-regulatory organization) can stop work a total of 2-3 thousand microfinance institutions (MFIs), follows from the review “the Market for microfinance in the first half of 2016: the change leader”, prepared by the rating Agency RAEX (Expert RA) (have). In the end, after a year and a half on the Russian microfinance market may remain less than 50% of the current number of MFIs.
The Central Bank aims to leave in the registry only honest participants, say in the controller. As of 11 October 2016 in the register of MFIs includes 3125 organizations. “Until the end of 2016 it is planned to almost completely clear the registry of the [MFIs] that do not meet the regulator’s requirements, not complying with the requirements of the legislation that are not engaged in microfinance activities, the so-called unfair and unsustainable companies,” — said the representative of the press service of the Central Bank. As such, the controller now recognizes nearly 500 organizations in the registry.
According to analysts RAEX, MFIs market is now in the process of consolidation. This was facilitated by including the requirements of the Bank of Russia: according to the law “On SRO in the financial market”, until September 6 microfinance organizations in the registry that had to join one of the three SROs. Membership in SRO is a condition of presence in the registry of the Central Bank.
In RAEX believe that due to the collapse of the business of the MFI, not entering in SRO, the market will increase the share of large players. “According to our estimates, the market in the next 18 months for various reasons, can take up to 2-3 thousand players, including some large ones. The number listed in the register of MFO of the companies by January 1, 2018, in our view, will be less than 1.5 thousand small players waiting for absorption or withdrawal from the market,” the study says RAEX.
Consolidation of the microfinance market will start to show itself fully only starting in 2017, according to the Agency. In 2014-2015 from the registry were excluded mainly MFIs which were not core activities or systematically not provided the regulator with statements. In 2016, the “cleansing” of the market continued, but to a much greater extent due to increased competition, says the survey RAEX.
According to the Agency, in January—September, the regulator made in the register of approximately 550 organizations (for the full year 2015 is about 900). The decline in the number of new players and the loss of old ones best the first hundred largest MFIs: by July 1, 2016, they accounted for almost three quarters of total loan portfolio.
The reason for the withdrawal from the market of many small MFIs may become and the division of its members on microfinance and microcredit organizations (this act entered into force on 29 March). The first is the right to draw money from any individuals or legal entities, but the size of their own funds must exceed the level of 70 mln. Microfinance organizations may grant loans up to RUB 1 million If the company’s own funds not exceeding 70 million rubles, it gets the status of microcredit, which deprives it of the right to attract funds from the population. Micro-credit company has the right to lend no more than 500 thousand RUB
“To afford the own funds of 70 million rubles can only large companies, but others will lose access to additional source of financing”, — says managing Director of online service lending “E loan” the League of dead.
Another 10% of companies can leave the market because of the Bank of Russia’s requirements for reserves for possible losses on loans, puts the Corpse. “By the end of 2016, all MFIs should be able to double the amount of reserves, and by the end of 2017 — to be ready to obey the regulations of the Central Bank in full (to charge 100% of the reserves),” she notes. In her view, such a rule would be a test for a small MFI, especially leading risky policy.
A significant reduction in the number of MFIs and expect the market participants themselves. “Consolidation will continue as long as the market will remain 1,200 companies, of which 150-200 are large players,” — says CEO of the company “House money” Andrew Bakhvalov. According to the General Director of the online lending MoneyMan Boris Batin, this figure will be achieved in late 2018.
Market participants do not expect changes in rates for borrowers of the MFI after the part of companies. Moreover, they expect to increase the quality of services. According to Batina, also should not expect that clients of MFIs will be to give preference to lending at banks. “Microloans and Bank loans — are different in nature and purpose loans, microfinance does not replace traditional Bank lending,” he says.