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Endnotes 1 Sa-Dhan's 162 members, of which 140 have active credit programmes, had loans outstanding of about 1,600 crore in March 2006. In March 2005 Sa-Dhan had a total of 139 members, with portfolio outstanding of about Rs 1,095 crore. If it is assumed that about Rs 50 crore of growth is attributable to new members, the portfolio outstanding in March 2006 represented a growth of 42 percent, as against an increase of 50 percent in loans disbursed under the SHG model (see Table 2.1). Unfortunately, as noted in Chapter 2, the SBLP does not track loans outstanding, but if it is assumed that the relationship between loans outstanding and loans disbursed remains constant each year, the SBLP grew faster than the MFI model in terms of portfolio outstanding. Adjusting for the estimate that Sa-Dhan membership accounts for about 95 percent of the total portfolio outstanding under the MFI model, the MFI model is still about one-fifth the size of outstanding under the SBLP model on the basis of the assumption that outstandings under the SBLP are about 70 percent of cumulative disbursements (see footnote 1, Chapter 2). Regarding growth of outreach Sa-Dhan's members' outreach grew from 6.2 in March 2005 to 7.3 million in March 2006, or by about 16 percent. This is very similar to the 15 percent growth reported during 2005-06 by the SBLP of new groups (and hence borrowers) linked. In 2004-06 both models seemed to have expanded outreach much faster. Thus the the sample of 68 MFIs in Table 3.3 grew by 63 percent, while the SBLP expanded coverage by 49 percent last year (Table 2.1). As noted in Chapter 2, the SBLP is focusing increasingly on repeat loans to existing groups, which is raising average loan size per borrower closer to that under the MFI model. Intellecap 2005 estimates that the CAGR of Sa-Dhan members' portfolio outstanding was 76 percent over the five years from 2001 (Intellicap 2005). At this rate of growth it estimates that by 2010 the MFI model should account for almost half of total loans outstanding of about Rs 28,000 under both models. 2 For a description of these and other institutional forms see Sa-Dhan (2006). Federations in a sense straddle both models - they provide services to their members enabling them to link up directly with the banks, while supplementing their funds from bulk borrowing they access as MFIs. But they do not represent "convergence" as is sometimes claimed. 3 A recent estimate is 400-500 MFIs registered as societies and trusts, 300-400 as cooperatives, mostly under the state MACS acts, and the remaining as S 25 companies and NBFCs (Sa-Dhan (2006)). It would be useful to get a firmer estimate of the universe of MFIs now operating in India since this is the seed-bed out of which future saplings will emerge, some of them to grow into trees. The question is of more than academic interest since it has implications for training and financing requirements, whether by the banks or apex financing institutions catering to small, nascent MFIs, such as FWWB, RMK, and RGVN, and it could lead to a study of the problems of start-up MFIs. 56
Progress Under the MFI Model 4 However the share of the top four is lower in India. According to the MIX report discussed below (MIX 2006), 3 MFIs (Grameen Bank, BRAC and ASA) with 8.5 million borrowers served over 80 percent of the total borrowers in the MIX sample of Bangladesh of 48 MFIs representing 90 percent of the market. (Proshika, the fourth largest, was not included in the sample). In India the share of the top three in March 2005 was 55 percent (Table 10.1 of Sa-Dhan 2005). The largest Indian MFI, SHARE, with about 1 million members in September 2006, is less than half the size of any Bangladesh's top 3. However Bangladesh may have a longer "tail" defined as all MFIs smaller than the top 20, reported to constitute 13 percent of all active borrowers in 2000 (ADB 2002). If this is indeed the case, the reason has to do with the PKSF, an apex financing institution which has received funding from the World Bank and is in a position to make concessional loans to partners. Data in the same source indicate that concentration in Bangladesh seems to have increased since 2000 when the share of the top three NGO- MFIs (BRAC, ASA and Proshika) was 51 percent of the total number of active borrowers (excluding members of government programmes) and that of Grameen Bank another 21 percent. The remaining 15 percent was accounted for by medium sized NGOs (defined as the rest of the top 20).To sum up, India may have a larger middle, but smaller head and tail than Bangladesh. 5 As MIX 2006 points out, both sub-Saharan Africa and East Asia focus on voluntary savings services. A single institution, Bank Rakyat Indonesia and its Unit Desa system manage more deposit accounts than the total number of microloans offered by all South Asian MFIs. 6 These are Societies (34), Cooperatives (18),Trusts (7), Section 25 Companies (7), NBFCs (7) and one LAB. 7 The use of the term JLG is slightly misleading because all three types of groups bear joint liability, although in the case of SHGs it is more moral and implicit, unlike in Grameen groups, in whose case it is legally explicit, because all 5 members sign the loan document, although hardly enforceable in the courts. The term JLG is used in India usually to refer to groups larger than Grameen groups of five (sometimes as many as 15, which is larger than the average-sized SHG of 14 members). However the only real distinction in group lending is between lending to SHGs in which the lender is not concerned with the identity of the individuals to whom the loan is distributed by the group, and lending to other groups (whether Grameen or "JLG" groups) groups where loans are recorded in the names of individual borrowers. The lowering of transactions costs in the former case allows MFIs to lend at lower rates to SHGs. EDA (2005) estimated that the SAG model predominates even for MFIs, accounting for 65 percent of all members in their sample of 20 MFIs. 8 The share of individual lending is however very low, according to the latest M-CRIL Review for 2005 (M-CRIL 2006), which unfortunately was not available in time to be discussed in this chapter. 9 However of the 3 MFIs in the North the bulk of growth came from one in eastern UP, CASHPOR. 10 Thus the relationship is discontinuous, with a break in the middle, and according to the report a disproportionate share of total growth came from large institutions (in terms of gross loan portfolio) which were young. Intellecap (2005) which makes projections on the likely growth of the sector over the next 5 years, assumes a steady inverse relationship with start up and Tier 3 institutions (defined as MFIs with a GLP of below Rs 2 crore) growing the fastest, followed by Tier 2 institutions (GLP between Rs 2 and Rs 30 crores), followed by mature institutions (Tier 3, GLP above Rs 30 crores). 57
Page 3:
Microfinance in India A State of th
Page 6 and 7:
List of Tables Page No Table 2.1 Gr
Page 8 and 9: Preface and Acknowledgements This r
Page 10 and 11: Abbreviations ABC ADB BC BF CAR CAG
Page 13 and 14: CHAPTER 1 Overview and Summary of M
Page 15 and 16: Overview and Summary of Main Recomm
Page 27: Overview and Summary of Main Recomm
Page 30 and 31: 1 1a 1b 2 2a 2b 2c 3 3a 3b 3c 4 4a
Page 32 and 33: The Light and Shades Study A major
Page 34 and 35: highest proportion of weak records
Page 36 and 37: their profitability after accountin
Page 38 and 39: allow the programme to grow organic
Page 40 and 41: 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
Page 42 and 43: Endnotes 1 It is very hard to compa
Page 44 and 45: as cash with the groups, the true r
Page 46 and 47: linkages", 11 percent 3rd, and 5 pe
Page 48 and 49: References APMAS (AP Mahila Abhivru
Page 51 and 52: CHAPTER 3 Progress Under the MFI Mo
Page 53 and 54: Progress Under the MFI Model is fun
Page 55 and 56: Table 3.4 Comparative performance i
Page 57: Progress Under the MFI Model on lit
Page 61: Progress Under the MFI Model Refere
Page 64 and 65: MFIs, and the need for MFIs to plou
Page 66 and 67: size had actually come down during
Page 68 and 69: The point at which peer group press
Page 70 and 71: The lack of contact and communicati
Page 72 and 73: Box 4.1 Continued 4. MFIs will coll
Page 74 and 75: Endnotes 1 There will be many disag
Page 76 and 77: 19 The base suicide rate in AP is 1
Page 78 and 79: References APMAS, 2005, "A Report o
Page 80 and 81: (such as cattle and houses), and co
Page 82 and 83: The advantage of the provider model
Page 84 and 85: Some lessons learnt from experience
Page 86 and 87: Box 5.2 VimoSEWA: Synergies between
Page 88 and 89: 86 Table 5.1 Main Feature of Health
Page 90 and 91: Endnotes 1 While the microinsurance
Page 92 and 93: 16 A little less than a fifth of th
Page 94 and 95: 29 The rationale for transfer progr
Page 96 and 97: Roth, James and Vijay Athreye, 2005
Page 98 and 99: Issues and priorities for action re
Page 100 and 101: Endnotes 1 See for instance CGAP (2
Page 102 and 103: 100
Page 104 and 105: such as Chaitanya who soon became s
Page 106 and 107: money to support operational expens
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finance, and the microfinancial ski
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Box 6.1 Continued in experts and to
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Endnotes 1 In a sense it always was
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16 Examples are Margdarshak in Luck
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114
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Table 7:1 Commercial bank exposure
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The main constraints to the expansi
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further review, RBI has modified th
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9 Thus ICICI has sold some of its b
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B. Equity Investments by the Ventur
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Figure : The Bellwether triangle Lo
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Despite the weaknesses the public s
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Box 7.1 Continued foreign sources o
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Endnotes 1 At this point they will
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References ACCION, 2003, "The Servi
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SIDBI Foundation for Micro Credit (
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categories, depending on the amount
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The distribution of total disbursem
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Endnotes 1 It should be noted that
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B. Donor Participation in Indian Mi
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this has dropped to 8% on the curre
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and poor populations. More directly
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and expansion of available retailer
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11 SDC through various programs for
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154
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1.1 Impact evaluation of Spandana's
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in the loan tenure of 24 months. Th
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There are two main motivations of a
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compensation structures used by Ind
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Endnotes 1 By Annie Duflo, Anvesha
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29 The main components of direct tr
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