Side-by-Side - A Slice of Microfinance Operations in India 2004

How efficient have the microfinance organizations been in India?
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This paper presents a report of the financial and operational data of microfinance institutions (MFIs) in India for the financial year 2003-2004. The report studied the dominant microfinance models and legal forms and was based on the core six financial performance indicators.

The paper presents the following details of the report:

  • Analyzed 53 MFIs;
  • Classified MFIs by:
    • Microfinance models,
    • Legal form,
    • Number of years of microfinance operations,
    • Working methodology;
  • Assessed outreach by region and by operational model;
  • Studied active clients - clients of savings are more than clients of other services;
  • Analyzed creation of poor's access to credit, insurance, savings and other services.

The paper also discuses Sa-Dhan's endeavor in setting financial performance standards. Using the categories of sustainability, portfolio quality and efficiency, Sa-Dhan arrived at:

  • A common set of reliable indicators to be measured;
  • A common methodology for calculating these indicators;
  • An agreed benchmark for each indicator.The paper then presents a snap-shot of the performance indicators of 42 MFIs.

The paper concludes that the report shows:

  • The MFIs in India show readiness to be transparent in their operational and financial dealings;
  • The outreach figures are encouraging;
  • More progress has been made in the southern region;
  • The presence of companies and self-help-groups has emerged as a prominent feature of providing finance to the poor on their own terms.

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