Experts seek transparency in microfinance

Aug 2006
Bangalore, India , August, 08 2006 - With the demand for microfinance (MF) in the country expected to touch Rs 50,000 crore, experts have recommended financial standards, ethical norms, transparency and accountability mechanisms to help the MF sector become a part of the formal financial sector in reaching out to the needy.

The recommendations were made at a conference on ‘Fuelling Systemic Growth through Standards’ focussed on the emerging issues of governance, cooperation, competition and developing client perspectives in MF institutions at the Indian Institute of Management, Bangalore. The meet was organised by Sa-Dhan, the association of community development financial institutions.


“The need of the hour is to develop a new framework of discourse for practitioners in the MF sector. The MF sector in India is entering a crucial phase of evolution, very distinct from the experience of other countries. However, looking at the international experience and using that in our context will assist in understanding problems and help identify the interventions required to expand the provision of financial services to the poor in India,” pointed out Sa-Dhan’s executive director Mathew Titus.


According to a study by Sa-Dhan, the MF institutions may achieve a total outstanding portfolio of over Rs 12,800 crore by March 2010. This will imply an addition of Rs 11,709 crore over the outstanding portfolio estimate of Rs 1,095 crore as on March 2005.


Sa-Dhan chairperson Ela Bhatt, well known for her work in bringing financial services to poor women empowerment, stated, "MFIs need to expand outreach and increase capacity to cope with the demands of the people in need of this service."


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