India

The Indian micro-finance system is a complex financial system with an increasing number of stakeholders involved in it - from NGOs, NGO-MFIs, Cooperatives, Micro Finance Iinstitutions, Non-bank financial institutions, Commercial Banks (Public and Private Sector), RRBs, Cooperative Banks, Development Financial Institutions and others. Explicit legitimacy to the sector is still lacking and as of today, micro-finance is delivered through a complex array of institutions governed by multiple laws. Regulation of micro-finance is also complex, from very passive (for some types of entities) to very active (for others). In fact, some of these laws and hence regulatory/supervisory mechanisms, even have the potential to work at cross-purposes and the potential for conflict of interest also exists.

Within institutions, financial and social intermediation is typically done by different types of groups - Self Help Groups, Joint Liability Groups, Solidarity Groups and/or Neighborhood Groups. However, some of the institutional models also focus on individuals. Target clients tend to be primarily women, although programs are beginning to serve men as well. Likewise, urban areas are still very much underserved in comparison to rural areas. The state of Andhra Pradesh and Tamilnadu have the maximum coverage under various models. Despite a few setbacks which the sector experienced, the outlook continues to be very positive and the investments continue to flow, both in terms of finances as well as new and innovative products.

A World Bank study assessing access to financial institutions found that amongst rural households in Andhra Pradesh and Uttar Pradesh, 59% lack access to deposit accounts and 78% lack access to credit. Considering that the majority of the 360 million poor households (urban and rural) lack access to formal financial services, the numbers of customers to be reached, and the variety and quantum of services to be provided are really large. India collectively needs approximately US$30 billion credit annually. This is about 5% of India's GDP. Currently there are about 800 MFIs and about 2.2 million government backed Self Help Groups that are operating in this sector. And they cumulatively serve about 41 million women across ten states in India.

The MicroNed members active in India in 2009 are Cordaid (29 projects), Hivos (13 projects) and Rabobank Foundation (20 projects). Hivos is the general MicroNed country coordinator for India.

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MicroNed Country Scan India (2007 - Eng)
MicroNed Country Scan India Annexes (2007 - Eng)