MFIs present in 117 poorest districts

A study shows that micro finance institutions (MFIs) are doing extremely well and that their operations are concentrated in some of the poorest districts identified by the Indian government.

The study by NGO Sa-adhan has found that 129 MFIs are present in 117 (58.50 per cent) of the 200 poorest districts in the country. The study also shows 33 per cent of MFIs' clients belong to scheduled castes and scheduled tribes.

The lending bodies have often come under fire for high interest rates and stringent recovery measures. The high operational costs oblige them to charge anything between 18 per cent and 20 per cent interest to be sustainable.

"We have mapped the operational districts of the institutions to identify their geographic outreach to poorest districts that are classified by the government," the report states.

The report covers 129 MFIs across the country. In terms of regions, the coverage comprises 49 institutions from South; 58 institutions from East; 12 institutions from North and 10 institutions from West.

The data show that the 129 MFIs cover 310 districts (51 per cent) out of 604 districts in the country. In terms of regions, the MFIs cover 109 districts in the East, 94 districts in the South, 73 districts in the North, and 34 districts in the West.

By regions, the MFIs in south have a presence in 24 (92 per cent) of 26 poorest districts in the region; MFIs in West have a presence in 17 (71 per cent) of 24 poorest districts in the region; in East MFIs have a presence in 62 (63 per cent) of 99 poorest districts in the region and MFIs in North have a presence in 16 (31 per cent) of 51 poorest districts in the region.

MFIs have therefore achieved substantive geographic spread across the country. More importantly, the institutions are operating in many of the poorest districts across the country especially in the South, West and the East, the study says.

The study also measures the outreach of MFIs to clients belonging to scheduled castes and scheduled tribes and terms it as "considerably high".

Information on the kind of client outreach of MFIs is important to understand the challenges and work of the sector. Such information would create public awareness around the goals and objectives of MFIs.

In order to build up suitable information, we requested institutions to provide their data on outreach to underprivileged classes. Many institutions do not yet systematically store their outreach data by segregating their clients that fall under the categories of below poverty line (BPL), Scheduled Castes/Tribes or backward classes.