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Indian Microfinance
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Indian Microfinance
The Challenges of Rapid Growth

  • Prabhu Ghate - Independent researcher, journalist and consultant, New Delhi

February 2009 | 228 pages | SAGE Publications Pvt. Ltd
Indian Microfinance: The Challenges of Rapid Growth is a comprehensive account of various components of the Indian microfinance sector, the largest in the world. After reviewing the main challenges facing the sector, it analyzes the progress of the two main delivery models, issues relating to the emerging microfinance services of micro-insurance and money transfers, ongoing efforts in training and capacity building, opportunities facing commercial financers such as bankers and social venture capitalists, the remaining need for development financing, and ongoing research in the sector. Apart from containing extensive original material, the book draws extensively on the findings of other recent studies and reports. It also identifies various requirements for policy and regulatory changes by the central and state governments and the central bank, a contribution which is particularly timely in view of the new microfinance bill under active consideration of the central government.

The main challenge facing the sector is identified as the need to enhance borrower, public, and regulatory support and understanding, by increasing transparency in dealings with borrowers, and by 'educating' the public on why microfinance interest rates have to higher than bank lending rates if microfinance institutions are to recover costs and attain viability. Failures in both these areas led to a highly publicized attack in 2006 on the sector by the state government of Andhra Pradesh. While the sector weathered the storm, it needs to take serious note of the lessons, which are analyzed in a separate chapter. The book will be of interest to various players in the sector including practitioners, bankers, insurance companies, venture capitalists, regulators, donors and academics. Given heightened interest in the sector with the Nobel prize awarded to Muhammad Yunus and the Grameen Bank, it will be of even greater interest than before to the intelligent layman and the development community generally.
 
Overview and Summary of Main Recommendations
 
Progress Under the SHG Bank Linkage Programme
 
Progress under the Microfinance Institution (MFI) Model
 
MFIs: Learning from the Andhra Pradesh Crisis
 
Diversifying Microfinance Services
Microinsurance  
Money Transfer Services  
 
Training and Capacity Building
 
Financing
Commercial  
Lending to MFIs by the Commercial Banks  
Equity Investments by the Venture Capital Funds  
 
Financing
Developmental  
Apex Financial Institutions: Growing the Seeds and Saplings  
Donor Participation in Indian Microfinance Rewa Misra
Annie Duflo and Colleagues
Some Ongoing Research on Indian Microfinance

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