Impact Assessment of Microfinance: Interim Findings from a National Study of MFIs in India

The study tries to explore questions related to:

• Coverage of the poor by microfinance interventions and their impact on poverty reduction;
• The most effective and cost effective products and services for reaching out to poor;
• The impact of microfinance on women's empowerment issues;
• The impact of microfinance on other formal and informal sources of finance.

The study states the following findings:

• Membership was mainly rural (78%) and predominantly (95%) women;
• 72% finance was used for investment, 28% to meet household needs;
• The share of micro credit through microfinance was on par with that through moneylenders;
• There was a marginal reduction in client dependency on high cost sources;
• 53% of the clients had used productive activities or assets;
• An increase in income was reported for 70% of micro credit supported enterprises.

Some of the emerging issues that the study highlights are:

• Existing regional imbalance: 90% of clients are in South India;
• Targeting the poor more systematically, with microfinance helping to manage their vulnerability;
• Widening social capital by diversifying leadership;
• Providing business development services and taking up other developmental issues such as child labor and environmental concerns.