SIDBI has been actively engaged in extending micro finance services to the poor for meeting their various livelihood requirements and income generation activities, with a view to improving their overall living standards and quality of life.

    Development and Promotion of Micro Finance, being a corporate goal of the Bank, and envisioning it as a primary tool for economic growth and development, SIDBI had initiated a large-scale intervention in the form of an impact assessment study of its micro finance programme in collaboration with independent external agencies. The seven-year longitudinal impact assessment study, which focused on key qualitative and quantitative parameters, was conducted recently through EDA Rural Systems Pvt Ltd., Gurgaon and Agricultural Finance Corporation Ltd., Mumbai.

    The study was a two stage socio-economic research to assess on a national scale, the development impact of MFI programmes in relation to different product designs and delivery systems in various parts of the country, specifically to view what is most suited for the poor and under privileged classes in the Indian scenario and also to assess the extent to which these programmes have benefited the target group. This study also aimed at improving the industry practices and enhancing the understanding of the processes of MFIs' interventions to the beneficiaries.

    The primary objective was to find out whether the targeted goal of the National Micro Finance Support Project (NMFSP) of SIDBI i.e. "Substantial poverty alleviation and reduction in the vulnerability in India amongst the poor using micro finance services" was achieved. These key findings, along with the cardinal observations, have been compiled together in the form of a Document, which has been recently released.

     Stage I of the study was conducted by EDA Rural Systems Pvt Ltd., Gurgaon, India. The study involved the baseline survey covering a sample of 20 partner Micro Finance Institutions (MFIs) of SIDBI during April 2001 - April 2004. The study covered a sample size of 5500 households (including clients, non-clients, dropouts etc.). The data presented in the baseline report was being used as a panel data for comparison through an endline survey (Stage II).

     Stage II of the study, being the endline phase, was envisaged to build upon the baseline constructed in Stage I, taking into account the methodology used during Stage I, with minor variations wherever necessary. Stage II, was undertaken by Agricultural Finance Corporation Ltd., Mumbai, India. The second stage of the study covered 25 MFIs covering a sample of 4510 households, comprising 3253 clients households and 1257 non-client households during the period 2004 to 2007.

    As brought out in the study, the overall hypothesis of Micro finance as an effective instrument for extending financial services to the poor and other under privileged groups by formal sector finance stands supported. Presumptions that MFI services reach those who have not yet accessed formal sector finance; MFIs' outreach is generally focused on poorer areas; MFIs serve all castes and communities, majority of clients are women and micro finance has supported increased non-farm employment, have also been corroborated by the study. The study has highlighted the benefits received by the client households from their association with micro finance, in terms of livelihood activities, growth in employment opportunities, income generation, access to various loan and savings avenues.

    We hope that the findings of the study would be of interest to the practitioners, researchers, policy makers, donors and funding institutions, besides all those who are closely associated with the Microfinance Sector.