Indian Microfinance Review 2007

The Microfinance Information Exchange (MIX) and Microcredit Ratings International Limited (M-CRIL) recently released the “Indian Microfinance Review,” 2007.  The trends described in the report are based on M-CRIL’s sample of 58 rated and MIX’s 37 reporting MFIs.  An analysis from Microcapital.org follows:

This review reports that the majority of MFI’s are located in Southern India. This is largely due to the stronger, more developed economies found in the southern states compared to less developed areas in the north and east…[The] overall outreach of MFIs in India is 15-20 million clients, however only 35 percent of the 60-70 million poor families are being served…

The Indian MFI sector is among the fastest growing and most efficient in the world. The sample institutions had an average of 326 staff members with a ratio of 231 borrowers being served per staff member. This is two thirds more than other surveyed South Asian countries. Grameen and SHG MFIs reported average servicing costs at ten dollars US per borrower, as compared to USD 30 spent by the average Asian MFI.

Financial performance of the Indian MFI sector, [however] continues to decrease due to poor portfolio quality and low portfolio yields, with a weighted return on assets of zero, down from an already low rate of 2.1 percent in 2005. Average MFI returns are at -9.8 percent, much lower than other South Asian countries.

Despite the overall decline in financial performance, 38 percent of the sample MFIs are turning a profit, though only 15 percent earn more than 3 percent. Fifty percent of borrowers are being served by institutions that have operational self sufficiency above 90 percent. India’s MFI sector has the potential to be financially viable in the near future.

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One Response

  1. We Indians though, majority of us still do live in villages and the transformation / of rural life has under gone a massive change with the invade if ITes. The corporate like ITC, Reliance,Hindustan Lever, Amul had created major break through and ignited the awareness level. The villages are mostly covered adequately with the transportation, education and communication systems.

    The growth of IT Industry had led the way in migrating the younger generation from their rural life to a globe trotter. Excepting a notable meager percentage, are addicted to the Westernization forget the development of their own soil.

    A small spark of thought infused / injected in their mind set shall bring forth a radical change in the economy of the rural mass and the Rural Indians woud certainly be Wealthier than the neighbor hood urbanite.

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