I had the opportunity to visit microfinance superstar Bandhan in Kolkata (formerly Calcutta), India last month and then had the opportunity to catch up with C.S. Ghosh, Bandhan’s CEO last week in the Philippines. Mr. Ghosh handed me a pamphlet highlighting some of their latest progress.
Bandhan one of the world’s largest AND fastest growing microfinance institutions. This is usually an oxymoron as most the larger microfinance organizations are growing very slowly. Here are a few of their stats: over 750,000 clients, over 400 branches, over $120M disbursed, over 2000 staff. And they are growing at something like 30,000+ clients per month!! Five years ago they didn’t even exist and now they’re serving 750K families or about 3,750,000 people!
But, what I found the most interesting was a study of the impact of microfinance services on their clients by Mr. Ranesh Buswas and Mr. Soumik Ghanta of the Indian Institute of Forest Management, Bhopal, India, April-June 2007.
Here is a chart of the impact on their clients through 3 loan cycles (each 1 year)
Here are a few of my observations:
- By the third loan almost all of the women (90%) have access to a savings facility (critical to help with unforeseen or special expenses)
- 100% have reduced their dependency on moneylenders by the 3rd loan (moneylenders charge at minimum 100% and often 300-500% interest with daily repayment required)
- 90% have increased their income by the 3rd loan (meaning that they’ve pretty much all figured out how to run a business which provides enough income for them to repay their loan plus interest and have surplus)
- Many (60%) of them have started to grow their liquid assets by the 3rd loan (owning productive animals are one of the key methods for doing this)
- Some (30%) are starting to be able to acquire (or buyback) more land by the 3rd loan, but it will take longer for the majority.
What do you observe? [post a comment]
Oh, and a bonus… a short video I made while visiting a group of Bandhan borrowers in September. Look at their beautiful saris!
Defeat Poverty 
Some questions: Did the researchers have any ties to the MFI? or were they independent?Did they collect data from non-clients to see if the trend was happening in the community as a whole?How many of their clients make it to the third year or third cycle? What makes people drop out?
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Good questions. I don’t have answers to them as I simply took this info off of their pamphlet.What is interesting to me is that they have ANY published data on impact. Most of the fastest-growing MFIs are focusing on market research rather than impact … that is, how I can better serve new and existing customers vs. simply “how much better is your life because you’re my customer.” While I know that this is probably viewed by the traditional aid community as “inadequate”, I’m not convinced that market research is not a better long-term investment in actually serving customers better.
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You’re exactly right on having any impact study and also the power of market research upfront leading to better interventions.I will say I think the “traditional aid community” is just as poor (if not more so) in historically measuring impact. The simple market mechanisms in microcredit act as a kind of impact or feedback loop that give it an advantage from the beginning.
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Hi,I’ve edited an introduction movie about Bandhan. Have a look: http://www.youtube.com/watch?v=rbm-A9v_97c
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Hi, Its really good to see the Global Ranking of Bandhan…1. Two in the list of the 50 Top Microfinance Institutions by Forbes 2. Sixth in the list of Mix Market’s World 1oo top MFIs This result is very obvious as we had seen the very impressive results during our Study on Bandhan.Best of Luck to C.S.Ghosh Sir and His efficient Team members.Soumik GhantaIndian Institute of Forest Management
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