Information Bureau for Microfinance in India
This paper defines microfinance by using an exclusion concept, expanding the diversity, scope and size of the market. The paper argues that:
- A vast majority of non-poor do not have access to formal financial services;
- Various target groups need specialized approaches for getting included into the formal system and require a deeper understanding of the market size and needs.
The paper builds a case for creating an information base on potential and actual clients. Lack of information and consequent heightened perception of risk are one of the major causes of less inclusive finance. The information bureau takes care of such requirements to a large extent. The analysis shows that wide based data/information bureau will serve a multiplicity of functions like:
- Risk management;
- Multilevel client profiles, which may act as collateral substitute;
- Help to Institutions to cater to specialized needs;
- Policy evolution;
- Institutional synergy and sharing of best practices;
- Improvement in quality.
The paper also discusses some cross country experiences, mostly from Latin America, to elicit the usefulness of information bureau.It explores the institutional framework for the bureau and proposes that the bureau be set up as a public sector institution with financial support from financial institutions, donors, government etc.
