The report provided SIDBI and its associates with an Area Attractiveness Index so that they can design policies to incentivize responsible microfinance outreach in the neediest parts of these states.
- A high degree of compliance with the Code of Conduct (CoC) guidelines set out by the MALEGAM committee (RBI microfinance guidelines) was observed across these states, barring a few hotspots, such as Indore.
- Better portfolio quality than the national average (except Andhra Pradesh)
- Overheating in some urban pockets (i.e. district centers)
- YOY increase in average loan ticket size reflecting increasing confidence amongst lenders.
Commenting on the study, Ragini B. Chowdhary of DFID said “DFID through its PSIG project implemented by SIDBI is committed to responsible expansion of financial services in the underserved states of UP, MP, Bihar and Odisha. The expansion of microfinance in these States has been impressive in the last year. While this expansion is a positive development, we have been concerned about reckless growth which could harm both clients and institutions. We commissioned CRIF High Mark to analyze outreach and growth trends in each of these States to assure ourselves of compliance of MFIs to RBI guidelines, portfolio quality and also to help us identify the areas which still remain unserved. The study has helped us shape our next round of capacity building strategy.”
In a statement, Kalpana Pandey, MD & CEO of CRIF High Mark, said “Our analysis by and large indicates optimal lending practices by MFIs. As the leading credit bureau in microfinance, we continue to see positive trends even today, which should also boost confidence for lenders to MFIs in these States. In general, we already provide such geo-insight and portfolio reports to many MFIs and lenders to MFIs to help identify key areas for action. We encourage more use of rich bureau data for such strategic decisions especially in order to avoid unhealthy overheating in a few locations”.
