The Maturing of Indian Microfinance: Findings and Policy Implications from a National Study

This study aims to document impact of microfinance services at the end user level and improve practice by understanding the processes of MFIs' intervention and their relevance. The study covers a sample of 20 MFIs supported by the Small Industries Development Bank of India (SIDBI). It explores issues of outreach, use of microfinance services, and their contribution to different dimensions of poverty reduction.

The 20 MFIs sampled for the study reflect the main models of microfinance delivery and their relative presence in different regions of India. Findings include:

• Provision of financial services by MFIs is beginning to fill the gap between the formal banking sector and the informal sector;
• Microfinance needs support to expand its outreach to under-served and poorer areas;
• MFIs need to expand their range of products so as that they can cater to the different needs of their clients, including the poor;
• It is unrealistic to expect microfinance to make a difference to the multiple dimensions of poverty and to womens empowerment, given the complexity of both;
• Policy makers should recognize the continuing need for other development interventions, such as in infrastructure, cost-effective health care, education, and employment.