|
Microfinance in India started to pick up in the 1990s, though it has been in place for many centuries. Nobel Laureate Professor Mohammed Yunus made microfinance famous with his Grameen bank concept. His concept of lending to poor without any collateral, hitherto considered as impossible by many, was in fact a great success. Yunus started off with his own funds, but the demand was too huge for his funds to sustain. Yunus had to convince the Central Bank of Bangladesh to fund his project. The demand for microfinance is too huge to be financed by donor funds alone. The large unmet demand of microfinance is a matter of concern to the Government of India. According to CRISIL (2009), 1.2 tn is demanded by 120 million households in India. Microfinance Institutions (MFIs) in India have been able to cover 27 million borrowers by the end of March 2010 (MCRIL, 2010). After having learned lessons from Grameen bank experience, the government, researchers and microfinance industry are mulling on improving the depth and width of the outreach of microfinance. By depth we mean how poor people are served, and by width we mean how many regions and people across geographies are benefitting from microfinance. As per the poverty audit commissioned by Small Industries Development Bank of India (SIDBI), 5 MFIs out of 8 give loans to non-poor (Srinivasan, 2009, pp. 2-3). This is because of higher cost of smaller loans and hence the tendency of skipping poor from lending mechanism. Thus, achieving depth remains a challenge to all the practitioners of microfinance. It is easier to spread the limited donor funds across non-poor than having a high cost lending on smaller loans.
|
