MFIs in India- A comparative study

With a combined client base of 1,40,68645 & total outstanding of Rs 61,241,156,410 (Upto 31st March 2008) MFIs in India have really entered into a transition phase, wherein they are running their shoulders with the best in industry round the globe. This has been proved in MIX and Forbes study of "Best MFIs" ranking which were based on different parameters ranging from transparency to operational efficiency. This transition however needs a focused study to fully acknowledge the form,outreach and the very impact it has on the microfinance sector and the possibilities that lies ahead. Starting with the form of these institutes which is of interest not only to the promoters or the incubators of such microfinance institutes but also to the funders and the regulators alike. The study provides a deeper insight on as to how the transition for MFIs from a nascent pahse to their existing forms has shaped their agenda and resources. According to a market study NBFCs accounts for 59.7% ,Society 18.8%, Sec. 25 companies 11.6%, Trust 6.8% and others 3.1% of the total microfinance market based on total loan portfolio.
(Source: Microfinance Sector Report 2008)

The growth story of MFIs in India not only contradicts the so called BPL sticked image of microfinance but also questions the very viability of the very principle, as to whether it reaches those who needs it the most. The growth of microfinance industry states a story of success in the southern region, which is often referred to as the "Cradle of Microfinance industry in India" while it sings a contrary tune when it comes to the BIMARU states of our country having high BPL population and a poor growth rate. Southern region lies way ahead with 66% of the total MFIs client base and 75% of the total loan portfolio followed by Eastern region with 21% & 15%,Western region 9% & 4% and Northern region with a meagre share of 4% & 6% of the total pie (Source: Microfinance Sector Report 2008)

A detailed state wise study will throw a better light on the true picture of the cracks hidden behind the stupendous growth of MFIs in India and asks questions which needs answers as early as possible. So that those who have been a part of this transition could relish the fruits of their effort and wherein all the tantrums being backed by sound logic and a true feeling of accomplishment round across the country gives this transition a push to transform into a much needed revolution for our country.

Important points-

- 80% of the MFIs clients were women.
->75% of the MFIs clients have received less than Rs 10000.
-10% of the total no. of MFIs (Which were the largest) accounted for 76% of all clients.

- 82% of the MFIs clients and the total outstanding is accounted by six states only i.e AP, Karnatka,Tamil Nadu, Orissa, Maharashtra & W. Bengal(SA -DHAN study of 223 MFIs).

- Out of 47 MFIs present in more than 1 state
6 MFIs- Presence in more than 5 states
19 MFIs- Presence in 3-5 states
22 MFIs- Presence in 2 states