In the coming decade the potential micro-finance client base in India is likely to be at 300 to 400 million, according to a survey done by Sa-Dhan, the apex body of micro-finance institutions in the country.
The estimates of rising micro-credit demand, however, differ in assumed client-numbers (respective households) and time horizons.
By 2012, an annual demand of at least Rs 250,000 million can be expected, the survey said, and added that based on the current growth trends, micro-finance institutions may be able to meet funding needs along with lenders, investors, and savers, through a four-pronged strategy.
Defining the strategies, Sa-Dhan said that it should provide for transparency and sound governance, materialise significant material gains, demonstrate relevant social performance, and identify and apply technologies that leverage towards better performance.
The survey said that India has demonstrated to the world an impressive success story about the growth and profitability of micro-finance institutions and by providing over 100 million people with access to micro-credit, many to thrift, some to insurance, and a few so far to remittance transfers.
“Sa-Dhan members are stressing on 200 of the poorest districts in the country identified for implementation of the National Rural Employment Guarantee Scheme,” said Sa-Dhan’s executive director, Mathew Titus.
Analysing the audited reports of 83 micro-finance institutions, the survey said that in the financial year 2006-07, Sa-Dhan members served over 15 million clients, mostly women. One out of three clients, was from the scheduled caste or tribe.
Sa-Dhan members’ services have reached two out of three of the poorest districts. The micro-finance institutions have strengthened their asset and liability structures with institutional debt, the prime source of funding for expansion of gross loan portfolios. The interest income from these portfolios account for Rs 4 out of Rs 5 of revenue earned.