Dipstick Report on Strategies of Microfinance Institutions in India 2010

This report explores strategic issues shaping the future of the MFI sector in India.

The study approached CEOs of select MFIs with a set of issues ranging from concerns to competition and sought their opinions about future strategies. The report draws from their responses, and states that:

• Future strategy is about being strong on processes and being overtly client-centric;
• Success is a prudential combination of three factors, namely, culture, beliefs and aspirations;
• Culture is about the degree of trust rather than the rate of interest;
• Risk management systems of economically weaker families are built on their beliefs about dependability and access;
• Microcredit stories have revealed ingenious ways that clients have used their loans for purposes that satisfied their aspirations.

Finally, the sector, at about INR 14,000 crore (approximately USD 3 billion) looks large, but is small by any business scale. Competition and unhealthy practices are overshadowing the good work and reputation earned over many years. MFIs in India need to overcome these challenges in the future.