A peculiarity of Indian Microfinance is at play here. The regulating body for MFI’s, the Reserve Bank of
The RBI, like all central banks, has strict caps on the amount of such debt a MFI can take relative to its capital base. If they want to take on additional debt (to expand operations) they must take additional equity. Given the incredibly ambitious expansion goals most Indian MFI’s have, these equity rounds will be having with increasing frequency. Doing some quick math SKS will probably require additional equity toward the end of 2008.
So what are MFI’s doing with all this money? There is no shortage of ideas, expansion into