Problem that 30df is trying to solve
Profit oriented MFIs: Microfinance institutions in India have historically been heavily dependent on donor funding for financing both their portfolios and their operations. However, this is gradually changing and MFIs are relying more on stable source of income from commercial and nationalized banks. Since most MFIs in India do not see themselves as commercial entities their preference is to obtain resources from development loan funds on ‘soft’ terms. Therefore, it is not surprising that perhaps 90% of the funds raised by MFIs for their activities are accounted for by soft loans from organizations like National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), HUDCO, the Rashtriya Mahila Kosh and dedicated microfinance wholesalers such as Friends of Women’s World Banking, India.
For various reasons including sustainability and satisfying the funding entities, MFIs, especially medium (more than 5000 clients) to large (more than 25000 clients) focuses on
- 100% repayment rate
- Medium poor
- Ignore ultra poor and their social well being
- Digress from objectives of alleviating poverty to making profit
in order to sustain and receive constant funding.
30DF plans to bring donor/individual investor’s money to address this problem and produce impact at the bottom of the pyramid.
