Performance and Transparency: A Survey of Microfinance in South Asia

This report examines South Asian MFIs to highlight the performance of the microfinance sector within the region as well as on the global stage. It also examines the state of transparency in South Asian microfinance, the challenges it faces, and the initiatives underway to overcome these obstacles.

South Asian MFIs offer models of efficiency and outreach that have revolutionized the microfinance industry. Significant challenges, however, shackle MFI growth potential. These include:

• Lack of profitability, outreach and transparency;
• Insufficient disclosure on revenues and expenses;
• Inability of non-specialized NGO MFIs to estimate efficiency, as they do not separate microfinance costs from those of other activities;
• Lack of consistent framework for looking at actors involved and clients served by India's self help groups.

A growing number of initiatives, however, are beginning to pierce the veil around MFI performance in South Asia. These include:

• Expert ratings that offer investors an accurate picture of performance and investment potential in microfinance;
• Improvement and standardization of financial statement disclosures in accordance with international norms;
• Public information centers on the performance of microfinance.