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11 See Table 10 of SBS, which shows that the average operational sustainability figure of 110 is made up,
on an average, of 83 percent for new MFIs (less than 5 years old), 102 percent for those aged 5 to 10
years, and 172 percent for those older than 10 years.
12 However, this needs to be examined further, since using approximately the same size classification of
small (GLP below US$ 1 million), medium ( US$ 1-5 million) and large (above US$ 5 million) but
based on a smaller sample the MIX report discussed below finds the opposite in respect of productivity,
i.e. that medium sized MFIs are the most productive, with the highest number of borrowers per staff
member, because large MFIs have a larger proportion of individual clients who require more staff time
to serve. Since individual loans tend to be larger however, they still have the lowest unit operational
costs.
13 Or as "working capital".
14 Most medium and small MFIs are registered as societies and trusts which are not allowed by the RBI to
mobilize savings, while the larger MFIs registered as NBFC have yet to qualify for approval to raise
public deposits.
15 In the Phillipines for instance compulsory deductions at the time of loan disbursement are referred to
as "CBU" ( capital build up). Both these uses of compulsory contributions should be distinguished
from a third common use, that is to build up a "risk fund", to make temporary repayments on behalf
of members with genuine problems, or even to cover permanent default.
16 The MIX report does not include compulsory savings in the category of deposits, since they are lacking
in liquidity, judged to be an essential feature of savings if they are to be used in emergencies. Leverage
is defined as lending funded not only by debt and capital, but importantly in the case of Bangladesh,
also compulsory savings
17 Pushtikar, a cooperative in Jodhpur, is reported to fund 70 percent of its loans through deposits.
Another possible explanation for the higher deposits to loan ratio reported for India (compared to
Bangladesh) is that it includes the security deposits deducted by many MFIs at the time of loan
disbursement. However, while these are refundable on full repayment of the loan, they are not liquid.
Such deposits (see Chapter 4) are not regarded as savings by the RBI, but are regarded as being akin
to the deposits taken by the banks as cash collateral. They add up to a significant amount, and are
used to fund loans.
18 According to Figure 5, page 8 of the MIX report, 7 out of 10 of South Asia's MFIs with the smallest loan
balances are Indian (with balances per borrower as a proportion of GNI ranging from 1.7 to 5
percent).
19 SBS reports a higher proportion of woman borrowers, 95 percent.
20 According to the report, average salary levels for qualified personnel in South Asia are about three
times per capita income as against as much as 13 times in regions such as Africa.
21 The slightly different sample presumably explains why this is different from the 110 percent found by
SBS.
22 Figure 11, page 11 of the MIX report..
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