First the good news. In the fiscal year gone by, more than 54 million clients were reached by the microfinance sector forms. The microfinance institutions have recorded an increase of almost four million clients in the fiscal year gone by, a growth accompanied by an increase in the outstanding portfolio of loans by almost Rs 25 billion.
Now the not-so-good news. The benefits of microfinance are still tilted towards economically powerful strata of society, and some select geographical regions. Hardcore poor remain excluded, so are poor areas, points out Microfinance India: State of the Sector Report 2008, brought out by Access Development Services, and published by Sage Publications.
Now in its third year, the report has become a much sought-after document among the policy makers, financial institutions and NGOs. The report is released annually at the Annual Microfinance India Summit. Citing that North, East and North East still lag in penetration and the Southern states get a larger slice of the microfinance pie, the report points at the anomaly at the design of microfinance products. "The very poor with no resources may not be fitting clients of the financial system till their capacities are built… Banks and MFIs tend to cherry-pick their clients. The products and processes by design or default exclude the more vulnerable of the poor."
This year's report has been authored by N Srinivasan, who took voluntary retirement from NABARD. Among the new elements included in this year's report are interviews of policy makers from RBI, NABARD and SIDBI; policy environment; competition; business correspondents and facilitators. What enriches the report further is case studies of successful models: how SKS Microfinance, which is expanding rapidly, is building up its human resource base; how Andhra Pradesh is taking the benefits of microfinance to each and every nook and corner through self-help groups and use of technology; how Jodhpur-based Pushtikar makes use of hand-held devices to ensure periodic payments; and how, in Eko's case, the customer's mobile number becomes his bank account number, and how, in tie-up with local grocer etc, Eko serves these customers.
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