Microfinance India: State of the Sector Report 2008

This State of the Sector report presents major trends in the Indian microfinance sector in 2008. Microfinance has made great strides during the fiscal year 2008. Highlights include:

• SHG-bank linkage program has continued to make progress;
• MFIs recorded an increase of almost four million clients;
• Outstanding portfolio of loans grew by nearly Rs. 25 billion;
• North, east and north-east of the country have room to grow;
• Outreach has not yet reached the poorest of the poor;
• NGOs are set to transform into lending institutions;
• Reserve Bank of India has made changes to existing norms and announced new policies;
• Beginnings of new funding instruments are being seen in the markets;
• Use of hand held devices, variety of smart cards and mobile phone-based collection and payment processes have been experimented with;
• Government of India has introduced new insurance schemes in the health and life sectors.

Finally, the paper states that microfinance has to develop a greater sensitivity to the needs of poor clients. Small loans should give way to larger loans for longer duration.