The Hindu Business Line : Women score high in micro finance

WOMEN avail themselves of 95 per cent of micro finance (defined as provision of convenient financial services to the poor) in the country. Why the gender imbalance? Simple.

The loans given to men in the 70s and 80s when the micro finance movement was in the incipient stage just did not come back.

A recent study shows that the effective interest rate for loans accessed by the poor tend to range between 50 per cent and a whopping 500 per cent per annum, said Mr Ramesh Arunachalam, Director, MicroSave, an organisation engaged in the development of micro finance institutions. He was speaking here at a micro finance workshop for the media organised by the Centre for Micro Finance Research (CMFR). .

Mr Ramesh said that conservatively there were 300-400 million clients for micro finance in the country, who currently did not have proper financial access.

Sixty per cent of the micro finance is currently disbursed in the southern States, especially in Tamil Nadu and Andhra Pradesh. He attributed this to the thrust given by the Governments as well as strong financial systems prevalent in the two States. He said micro finance institutions (MFIs) enabled the poor to improve their cash flow management as well as focus on income generating activities.

Ms Annie Duflo, researcher at the CFMR, said that a recently emerging model was financial intermediation by MFIs. Under this model, banks would lend to the MFIs at about 9 per cent interest rate, which would in turn lend to individuals or groups with joint liability at rates close to 20 per cent per annum.

The transaction costs were high for the MFI because of the need for regular monitoring and intensive follow-up in remote areas.

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