Officials from Sa-Dhan, an Indian microfinance industry association, announced that some of its 223 member microfinance institutions (MFIs) have agreed to lower interest rates by 2 percent to 3 percent.
“We are worried that some MFIs are over-charging poor borrowers. Interest rates will move southwards for sure. We have also directed members to cut down salaries of their top executives,” said Matthew Titus, executive director of Sa-Dhan. According to the Financial Chronicle [1], an Indian Business Newspaper, the lowering of interest rates would be offset by unspecified measures to improve operational efficiencies.
According to the Microfinance Information Exchange (MIX), the microfinance clearinghouse, as of 2009, the aggregated loan portfolio of all MFIs in India reporting to the MIX totaled the equivalent of USD 1.7 billion, with 16.7 million active borrowers and assets of USD 2.6 billion.
About Sa-Dhan:
Founded in 1999, Sa-Dhan is an association of finance institutions that aims to build the field of community development finance in India. It aims to help its 223 member institutions serve low-income households in both rural and urban India. Sa-Dhan’s member institutions report a total outstanding loan portfolio of INR 117 billion (the equivalent of USD 2.6 billion) and a client base of 23 million customers.
By Trevor Kwong, Research Assistant
Sources and Additional Resources:
[1] Financial Chronicle: Micro lenders to cut Interest Rates by 2-3%:
http://www.mydigitalfc.com/personal-finance/micro-lenders-cut-interest-rates-2-3-443
[2] MicroCapital Universe: Sa-Dhan:
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sa-Dhan
[3] Microfinance Information Exchange (MIX): India:
http://www.mixmarket.org/mfi/country/India/profile/flatstore_mfi_mfdb_data.mix_diamonds__c,balance_sheet_usd.gross_loan_portfolio,products_and_clients.total_borrowers/2009/
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