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Preface and
Acknowledgements
This report is an attempt to put together a one-stop document that will help a variety of readers catch
up on the latest developments, issues, and achievements of the microfinance sector in India. The sector
is growing rapidly, both in scale and diversity of actors, and is hopefully sitting on the cusp of
regulation. It is therefore in the midst of rapid flux. The report is in a sense a snapshot of the sector
taken when it was written, that is in second and third quarters of 2006. To the extent it succeeds in
being topical, parts of it can expect to become out of date pretty soon. But at the same time, it hopes
to function as a kind of evolving reference document, with something of permanent value retained in
each successive annual edition.
While a number of extremely useful periodic reports are already being prepared by some of the main
players, much of the information on the sector is scattered over a wide variety of sources, as one would
expect in a highly decentralized development and financial movement which has evolved as a result of
the combined actions of a large number of creative, dynamic and idealistic individuals in civil society,
who were supported initially by donors, and then increasingly, by NABARD and SIDBI, the banks, and
government. Fortunately, Indian microfinance is not as under-researched as it used to be, although we
are still touching the tip of the iceberg in terms of what needs to be known. One of the aims of the
report is to publicize and synthesize the findings of important recent studies each year. This is one
justification for the abundant use of footnotes, the other being to include as much important empirical
material as possible without losing the attention of readers with less specialized interests.
Due to constraints of time this year several important topics could not be covered, including
"empowerment", SHG federations, the cooperative MFI movement, the role of many of the public sector
banks including some prominent RRBs and DCCBs in supporting the SHG movement, and communitybased
microfinance generally, which after all constitutes the bulk of the sector. Hopefully this omission
will be rectified in future years. Other topics that could not be covered were urban microfinance and
impact assessment (which are themes of this year's Microfinance India conference) or the prospects of
new technology applications, or regulation. Of MFI financial services only two of the "younger" ones,
microinsurance and money transfers, could be covered briefly, and not innovations in credit or savings.
We are grateful to the Centre for Microfinance, Chennai for contributing a chapter on studies initiated
there, but there was not enough time to review on-going research in the country generally, which needs
to be covered more systematically in the future.
While I attempted to consult as many sector participants as possible, I am conscious that a number of
significant approaches, programmes, initiatives, institutions, studies and documents have escaped
mention because of the constraints of time and space and my own lack of familiarity with them. In
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