Reaching an Unreached Level The microfinance sector is poised to scale new heights. With exceptional growth figures in a period of economic slowdown, the sector has attracted the attention of a wider range of investors. Despite the widespread liquidity crisis, linkage patterns between SHGs and banks and group lending microfinance institutions (MFIs) have seen an impressive increase both in terms of the number of households reached and the volume of loans. During the year 2008-09, 6.9 million new members were added under the SHG model, taking the total number of members to 54 million. Meanwhile, during the same period, MFIs added 8.5 million new members, bringing the total customer base to 22.6 million. The total outstanding microfinance loans, including credit extended to SHGs by banks, stood at Rs 359.39 billion as of March 2009: a growth of 30% over last year. At the end of March 2009, these combined figures represented 1.29% of gross bank credit of scheduled commercial banks1. However, the regional bias still exists: northern and eastern India are still largely underserved, and many regions in the north and northeast remain completely untouched. Deeper penetration into new and existing areas has exposed many organizations to new and diverse risks. These risks take the form of multiple loans, large loan disbursements in poorer markets, migration of borrowers, etc. These risks are further exacerbated by the fact that, with the emphasis on hitting numbers, group poaching and multiple lending have become commonplace within Indian microfinance. Sporadic warning signs have been seen in the south, where concerted customer resistance to making repayments in the face of multiple loans is growing. Standardized lending systems, loan amounts and weekly meetings/repayments...... middle of paper ...... sophisticated transactions including various forms of securitization, non-convertible debentures (NCDs), commercial paper, purchase The loan portfolios and subordinated debt-based loans have already been finalized, and IPOs are expected from SKS and at least 3-4 others of the largest NBFCs. Clearly, IPOs are the preferred exit route for many private equity investors – and, if the SKS model is followed, also for MFI promoters3. Indeed, today, an IPO constitutes a source of inspiration and ambition for a growing number of MFIs and their promoters. Valuations appear likely to follow a telecommunications-based model and therefore based on the number of clients on an MFI's books – leading to huge incentives to roll out and hard sell standardized products without reference to need ( or other debts) of customers. . No wonder there is concern about the future and direction of microfinance in India..