Side by Side - A Slice of Microfinance Operations in India 2006

Publication Date: 2007
Published by: Sa-Dhan
Document Type: Paper (PDF)

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A look at India’s “Community Development Financial Institutions”

This report analyzes the performance and progress of “Community Development Financial Institutions (CDFIs)” in India.

The report looks at:

• CDFIs in the aggregate and in the three peer groups of age, outreach and gross loan portfolio;
• A core sample of twenty-five CDFIs;
• The top twenty CDFIs in terms of their gross loan portfolio and CDFIs that have the highest growth rate in the financial year (FY) 2006.

The report presents the following findings:

• CDFIs are maturing on a year-to-year basis and their Operational Self Sufficiency (OSS) is above 100 percent;
• The core sample of twenty-five CDFIs across legal forms shows that the assets quality and efficiency has improved over years;
• The analysis of CDFIs by their peer group based on their gross loan portfolio (GLP) shows that larger GLP signifies enhanced financial efficiency;
• CDFIs have to strive to achieve scale by clients outreach in order to become operationally sustainable;
• Operating costs across CDFIs have stabilized;
• Total cost among CDFIs has gone up;
• Growth needs tighter management. High growth is resulting in lower costs partially driven by credit officers handing larger number of clients.

• Focus on OSS as the key driver to plan and operate;
• Expand through systemic investments and long term planning that would involve operational as well as client service issues.