Chennai, 10 August: Microfinance institutions in India need capital to sustain their growth and to leverage their access to institutional borrowings, a report released here said.
As per the report (2007) of Sa-Dhan, an association of Community Development Finance Institutions in India, institutions of all sizes and legal forms show steadily declining co-relation between their net owned funds and their borrowings.This is explained by high growth in borrowings in comparison to low growth in net owned funds.
The annual operating costs of 129 MFIs had decreased from 15.05% in 2005 to 14.41 in 2006 and had substantially come down to 11.76 in 2007, the report said.
The MFIs had annual growth rate of 95% in 2006 and 60% in 2007, it said.
Sixty-five microfinance institutions had moved towards reducing operational costs over the three years period (2005-2007), the report said adding these institutions cover 5.01 million (61%) of the total client outreach of 8.23 million of the 129 institutions covered in the report.
The report covers 129 MFIs across 310 districts in the country. In terms of region, the coverage comprised 49 from south, 58 from East, 12 from North and ten in West, Brig Mohan, policy adviser of Sa-Dhan told reporters here.
While the client outreach of MFIs in the south was substantive, the growth rate in client outreach was being led by MFIs in the north and east regions, he said.
Sa-Dhan was working across the country through its 189 members, reaching out to 10.5 million clients, with gross outstanding of more than Rs 3,987 crore,he said.