The Indian microfinance sector is starting to attract private equity groups and hedge funds after a series of high-profile deals cast the sector in a different light from its charitable origins.

Leading Indian microfinance groups, such as SKS Microfinance, Share, Spandana and Basix, make small loans of typically less than $100 to the poor and, until a few years ago, were largely viewed as a destination for charitable donations rather than serious investment.