India’s NABARD (National Bank of Rural Development) plans to take a group of 20 individuals that represent India’s largest financial institutions to Sri Lanka to observe microfinance methods employed by the country’s financial institutions. The trip will be hosted by NABARD’s Regional Training College, with the purpose of acquainting Indian bankers with the microfinance concept. Individuals were chosen from a wide range of India’s financial institutions, including commercial banks, regional rural banks, cooperative banks and NABARD itself. Names of specific financial institutions represented were not available. In addition to NABARD’s support, the trip was facilitated by Sri Lankan microfinance institution Sanasa Development Bank.
It is not clear why NABARD chose Sri Lanka as the suitable environment to familiarize Indian bankers with microfinance. Sri Lanka’s microfinance sector consists primarily of lending through cooperatives, while NGOs and commercial banks have a smaller presence. Generally, Sri Lankan MFIs do not perform well by international standards, due to inadequate qualifications of MFI staff, the lack of a national-level policy for a sustainable microfinance sector, and the lack of a cohesive regulatory structure which encompasses all types of MFIs. For more information on Sri Lanka’s microfinance sector, please click here.
India’s NABARD (National Bank for Agriculture and Rural Development) was founded in 1982 as part of a government mandate to facilitate credit flow for promotion and development of agriculture, small-scale industries and rural crafts. Among other programs, NABARD manages the Self Help Group Bank Linkage Programme, which connects Indian commercial banks and their lending activities with small groups of impoverished individuals seeking access to microcredit. As of March 2006, 33 million individuals have been linked to microcredit through this program. NABARD reported total assets of RUP 812.5 billion (USD 19.2 billion) and return on assets of 5.86 percent, as calculated from its 2007 financial statements (p.3).
Founded in 1997, Sanasa Development Bank is a cooperative financial institution focused on uplifting the standards of living for low income Sri Lankans with its range of microfinance activities. As reported by MicroCapital, Forbes Magazine included Sanasa Development Bank in its list of the world’s top 50 microfinance institutions for 2007. Sanasa held total assets of USD 79.3 million, a gross loan portfolio of USD 59.3 million, a debt-equity ratio of 925.82 percent, and return on assets of 1.24 percent as of December 2007. Rating data on Sanasa is not available.
By Ryan Benson, Research Assistant
Additional Resources:
NABARD: Consolidated Balance Sheet 2006-2007
Mangalorean: Mangalore: NABARD to take bankers to Sri Lanka, July 24, 2008.
MicroCapital Story: India’s National Bank for Agriculture and Rural Development (NABARD) Creates New Initiative to Target Microfinance, by Chryssa Rask, July 6, 2007.
MicroCapital Story: Forbes’ Special Feature on Private Investment in Microfinance Includes Top 50 Microfinance Institutions, by Sophie Kim, January 21, 2008.
NABARD: Home
Microfinance Gateway: Sri Lanka Country Profile
Sanasa Development Bank: Home
MIX Market: Sanasa Development Bank Profile
Yahoo: Currency Converter
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