The SIJ Transactions on Industrial, Financial & Business Management (IFBM), Vol. 1, No.

2, May-June 2013

ISSN: 2321 242X 2013 | Published by The Standard International Journals (The SIJ) 40



AbstractThe growth and performance of microfinance sector in global perspective during the recent years
has shown distinctive differences among regions. With a view to capture the direction of movement of the
sector among the regions, a comparative analysis of the performance of the sector in regions like Africa, East
Asia & Pacific, Eastern Europe, Central Asia, Latin America, Caribbean, Middle East & North Africa and
South Asia is attempted in this paper. It focuses on loan loss rate, Portfolio at risk, cost factor, yield on gross
portfolio, return on assets and equity among varied countries. Mix Market Data for the period 2003-2010 has
been the source for this analysis.
KeywordsLoan Loss, Microfinance, Operating Expenses, Portfolio at Risk; JEL: B26; G21; G23; G32; N20;
N25; N26; N27
AbbreviationsEast Asia & Pacific (EAP), Eastern Europe & Central Asia (EECA), Latin America & the
Caribbean (LAC), Micro Finance Institutions (MFI), Middle East & North Africa (MENA), Portfolio at Risk
(PaR), Return on Assets (RoA), Return of Equity (RoE), South Asia (SA)

I. INTRODUCTION
HE economist Intelligence Unit had brought an edition
of Global Microscope on the MFI sector for the year
2011. The study covered 55 countries. The countries
had been ranked on the basis of various revised parameters
which were like overall microfinance business environment,
Regulatory framework and practices, Supporting institutional
framework and stability. The study findings concluded that in
the aftermath of the global financial crisis, microfinance has
begun to enter a more mature and sustainable growth phase
[James Clark, 2011]. After years of rapid expansion, the
focus has turned to accelerating the improvements already
underway in corporate governance, regulatory capacity and
risk management. Further, risk management, which has
become a post-crisis priority for all financial institutions, has
improved considerably in the microfinance sector, which is
essential, given that it is offering an increasingly diversified
range of innovative financial services to the poor. Efforts to
strengthen the sector have been stabilized, beside new
opportunities; microfinance is well positioned to take further
advantage of technological and market innovations and to
build on improvements already underway. This progress
stands in contrast to the financial crisis period and its
aftermath, which had a dampening impact on the sector by
exposing structural weaknesses, leading to a deterioration in
the quality of some loan portfolios.
Troubling events over the past year highlight the
industrys need to respond to new challenges and changing
local conditions. While microfinance continues to shift from
a niche product to a globally recognized form of finance,
regulatory and market gaps continue to impede the industrys
ability to realize its potential. Data collection and
transparency have improved markedly from the early days of
microfinance, spurred by the notable efforts of microfinance
ratings agencies and organizations, such as the MIX Market
and Microfinance Transparency. But the varied product
offerings and market conditions globally imply a continuing
need for policymakers to adopt a more systematic and robust
way of evaluating the sectors development, while remaining
attuned to the nuances of local markets [Venugopalan
Puhazhendhi, 2012]. Similar to earlier performance, Peru was
ranked first as the country with highest score followed by
Bolivia and Pakistan. India and Ghana which were in top 10
lists had an exit (Table 1). On the other end Uganda, Mexico
& Panama have made an entry to the top list. Under the
overall business category, Bangladesh the land of
microfinance origin had been in 43
rd
rank and Vietnam finds
the last place.
This paper focuses on understanding the relative global
performance of Indian MFIs and intends to learn the varied
cost incurred by the MFIs, the Loan loss rate incurred by
them and also traces out the reasons for such losses.

T
*Director, Department of Management Studies, Sri Ramakrishna Engineering College, Coimbatore, Tamilnadu, INDIA.
E-Mail: profkchitra@gmail.com
**Corresponding Author, Assistant Professor, KCT Business School, Saravanampatti, Coimbatore, Tamilnadu, INDIA.
E-Mail: sangisubramanian@gmail.com
Dr. K. Chitra* & S. Sangeetha**
Drift in Global Microfinance Industry -
An Empirical Study
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ISSN: 2321 242X 2013 | Published by The Standard International Journals (The SIJ) 41
II. REVIEWS OF LITERATURE
Ayi Gavriel Ayayi (2012) in his paper credit risk assessment
in the microfinance industry with reference to Vietnamese
microfinance institutions has discussed about the assessing
risk through conventional and specialised evaluation metrics.
The study identified that microfinance institutions could
sustain financial sound and good corporate governance
through the execution of risk management tools. It also stated
that the microfinance institutions invariably adopt the same
risk management techniques [Ayi Gavriel Ayayi, 2011;
Padma et al., 2012]. The researcher has used econometric
analysis to assess the credit risk. This study helps to
understand the importance of assessing credit risk and
enhances on the tools to adopt for assessing the credit risk.
Milford Bateman & Dean Sinkovic (2009): This paper
focuses on the negative impact of the neo liberal policy on
Croatia. It also speaks about the Grameen bank model in
promoting the standard of living in poor countries. But this
model has proved good; today it is facing a threat, which
demands for revision in development policy. In Croatia, the
micro finance institutions have seen an extraordinary growth
from 1999 upto 2006 [Maitreyee Gaikwad, 2006]. The firm
and household loans had excessive demand during the study
period. But it also describes the repayment tactics followed
by the companies are very aggressive during the last few
years of the study period, which made the poor to be even
poor. The neoliberal capitalism was dead and the one of the
consequence was microfinance. Hence this paper helped in
understanding the change in policies and in its negative ill
effects on micro funding.
K.O. Osotimehin, et al., (2011) in their study focused on
identifying the determinants of the outreach capabilities and
trends of microfinance institutions in Microfinance in south
western Nigeria. The econometric analysis has been
performed to understand the trend of outreach of
microfinance institutions. The model specifies that the
depository microfinance institutions exhibit 2 stage
production process, first FOP for mobilising savings and
secondly for institutions production process. The results of
the has shown that there had been increase in the outreach of
microfinance institutions in South western Nigeria which has
been driven by factors like effective lending rates, cost of
loans disbursed, average loan size and staff salary. The
researcher has found there is an existence of negative
correlation between real effective lending rates and outreach,
because higher lending rates will discourage borrowings and
have led to lower outreach.
III. OBJECTIVES AND METHODOLOGY
The study aimed to explore on the following aspects:
To analyze the relative performance of Indian MFIs
in Global perspective.
To analyse the loan loss rate among varied
countries.
To analyze the yield on gross portfolio, the return on
assets and equity among varied countries.
To analyze the operating, administrative cost
incurred in managing the loan portfolio and average
borrower among varied countries.
The study will enlighten on the trends in the global MFI
industry. The study assumes to be descriptive which explores
the trends of Global MFI industry. Secondary data has been
collected and comparative and trend analysis has been carried
out for analyzing the performance among varied regions.
Data of microfinance belonging to varied countries for a span
of 9 years (ie. 2003-2011) had been used for analysis.
IV. DISCUSSIONS
Table 1 Ranking of Top 10 Countries in Microfinance in 2011
Rank Country Score
1. Peru 67.8
2. Bolivia 64.7
3. Pakistan 62.8
4. Kenya 60.3
5. El Salvador 58.8
6. Philippines 58.5
7. Colombia 56.0
8. Ecuador 55.1
9. Uganda 53.7
10. Mexico & Panama 53.6
The relative performance of Indian MFIs in the global
context has shown greater downfall during the last three years
which needs to be taken serious note while discussing the
issues on future perspectives.
Table 2 Relative Performance of Indian MFIs in Global
Perspective
Particulars
2009 2010 2011
Score Rank Score Rank Score Rank
Overall MF
business
Environment
62.1 4 59.1 8 43.1 27
Regulatory
frame work
and Practices
62.5 13 62.5 14 50.0 22
Institutional
Development /
Supporting
framework
66.7 3 58.3 7 40.0 20
Investment
Climate
51.9 14 53.9 14 - -
Stability - - - - 62.5 40
Source: Global microspore on the microfinance business
environment 2009-2011, Economic Intelligence unit Ltd
(www.eiu.com)
Pakistan, Philippines and Uganda shares first place in the
regulatory framework and practices. Trinidad and Tobago
had occupied the bottom of the list. Bolivia and Peru shares
first rank in Supporting Institutional framework followed by
Columbia and Armenia. Costa Rica has topped in the stability
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factor followed by Uruguay and Chile countries. As like in
the overall business category, in supporting Institutional
Framework, Vietnam has occupied the back seat.
Peru has been rated number one for the consecutive three
years. It had an excellent record of legal framework,
sophisticated regulators and government commitment which
purely focused on making unbanked bankable. Bolivia in
second place had better price transparency and disclosure
rules. Pakistan in the third place had separate legal
framework for microfinance banks and good networking. The
Kyrgyz Republic has stepped down from 12
th
position to 21
st

rank globally. This is due to change in political regime which
halted regulatory overhaul. Latin America and the Caribbean
have the largest number of top performing countries in the
Global Microscope. The regions have eight of the countries in
the top global 12 countries. In addition the first two places are
occupied by its countries Peru and Bolivia respectively. This
had been possible as they very strong supporting institutional
framework category. But Latin American countries are not
very strong in regulatory framework and practices inspite of
eight countries are in the top list.
Arab countries had faced political unrest earlier this year
which seriously handicapped the functioning of the
Microfinance industry. Yemen is one of the most affected
countries which moved from best to worst category. It
stepped down from 27
th
rank to 44
th
place. This instability has
caused many MFIs to reduce their scale of operations. This
landed up in closure of banks too. Kenya is one of the
strongest and most stable countries in this region. Kenya is
placed in the fourth place and Uganda in the ninth place in
the global list. But Uganda places itself in the first place
globally in the regulatory framework and practices category.
Clients are benefitted with the active microfinance markets.
India has been pushed to 27
th
rank with a score of 43.1 in
the overall microfinance business environment. It possesses
22
nd
rank in regulatory framework and practices, 20
th
place in
supporting institutional framework and 40
th
rank in terms of
stability. The Government of India had strongly promoted the
Self-Help Group model through the National Rural
Livelihood Mission by offering cheap funding and also to
restrict market-based lending. A perception prevails that the
rapid growth had slow down by the local politicians ability
to use rural credit more.
In a study carried out by Microrate MIV survey 2011
[Luis A. Viada, 2011], Latin America and the Caribbean
(LAC) and Europe and Central Asia continue to account for
the majority of microfinance investments receiving a
combined total of 73% of all microfinance investment in
2010. JP Morgans CGAP Global Equity Valuation Survey
2012 has reported that LAC has more than half the
investment followed by Asia [Global Microfinance Equity
Valuation Survey, 2012]. India is the major contributor with
more than 92% of Asians investment levels.
The Gross Loan Portfolio
The gross loan portfolio is very high in Latin America &
Caribbean (28,66,309). MENA ranks second with loan
portfolio of 23,02,788. Africa had less gross loan Portfolio
comparatively with other 5 regions, during 2003. But this
trend had found to be changing in the next year, where it
(Africa-9,01,087) could perform better than South Asia
(8,16,720).
Table 3 Gross Loan Portfolio
Year
Gross Loan Portfolio
LAC MENA Market Leadership Position
2003 2866309 2302788 LAC
2004 3290834 3319529
MENA
2005 3325504 4257163
2006 4076073 3958660
LAC
2007 4730981 4201610
2008 4717270 3523469
2009 6109115 4234538
2010 8094382 5489360
2011 128007902 16294574
The growth of Gross loan portfolio of LAC had
increased by 12,51,41,593 between the years 2003-11. The
gross loan portfolio to total assets had been 84.58% than the
previous year (2010).
Table 4 Gross Loan Portfolio / Total Assets (%)
Year
Gross Loan Portfolio / Total Assets (%)
Africa
East Asia &
Pacific (EAP)
Eastern Europe &
Central Asia (EECA)
Latin America & the
Caribbean (LAC)
Middle East & North
Africa (MENA)
South Asia
(SA)
2003 64.65 71.97 82.61 78.28 71.69 74.41
2004 67.17 72.25 85.00 79.90 67.06 77.32
2005 64.07 72.19 84.01 79.77 74.98 76.22
2006 63.78 74.58 86.82 80.15 79.05 78.62
2007 62.05 73.53 87.30 80.97 76.85 78.03
2008 65.73 75.93 87.56 80.45 75.21 77.23
2009 63.97 72.88 81.70 79.39 76.75 77.34
2010 65.22 74.60 84.24 81.13 79.29 82.01
2011 72.08 102.76 76.14 84.58 80.57 -

Though the industry seems to have growth in Gross Loan
Portfolio/ Total Assets invariably for all the countries during
2011, the trend from 2003-11 is fluctuating. Except Eastern
Europe & Central Asia, Latin America and the Caribbean all
other countries had a dip during 2007. But Latin America and
the Caribbean had experienced a light fall in the subsequent
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year 2008 while regions like Africa, East Asia & pacific and
Eastern Europe & Central Asia were incrementally growing.
During the year 2011 a significant data of Eastern Asia &
Pacific makes the world to observe them, as it had 102.76%
from 74.6% comparatively with other regions.
The borrowings have reduced by 5.48% from
3,35,59,161 to 3,17,21,406 in Bhutan during 2009 & 2010.
The number of MFIs count decreased from 100 to 94 in India
and found to be common scenario in all other countries
except Pakistan.
Portfolio at Risk (90 days)
For the country like India PaR has reduced considerably
to 0.13% during 2007. Thereafter it seems to be inconsistent;
it is hiking year after year. During 2010 the PaR had been
0.64% from 0.16% the previous year. This sort of hike in PaR
has not been experienced by this industry earlier. It is also
evident that Bhutan being the leader the depositors, the loans
outstanding will be naturally high and the PaR seems to be
very high comparatively with other nations ie 11.7%. But the
land of microfinance origin is under promising side where
their PaR has come down to 4.47 % (2010) from 5.34%
previous year. It is also noticeable that Nepal has the lowest
PaR with 0.63% (2010). The PaR weighted average 30 days
of India had been very alarming with 24.86% amounting to
Rs.3, 42, 76,696 loans outstanding out of gross loan portfolio
of Rs. 5,25,11,14,052.
The active borrowers in India (2010) is 3,17,09,335,
while in Bhutan it is just 24, 476. The deposit sum during the
year 2010 for India had been Rs. 30,07,60,871, whereas in
Bangladesh it is Rs. 2,17,12,20,435 which tops among all the
7 nations. The deposit sum is just Rs. 3,26,45,020 for Bhutan
whereas Srilanka has considerable deposits of Rs.
49,41,30,770 which is higher than India, inspite Srilanka
comparatively having less active borrowers (13,34,744).
The gross loan portfolio of India is considerably
increasing from the year 2006-10. ie. (46,15,10,391 to
5,25,11,14,052). Though Bhutans entry was from 2008, it
also has tasted the growth in its gross loan portfolio
((5,14,66,128 to 7,93,89,045 (2010)). The number of
depositors in India has increased in a large way. But it has
experienced an exponential increase during the 2010
(65,01,658) while considering the previous year (20,36,591).
Table 5 Loan Loss Rate
Year
Loan Loss Rate
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 0.34 0.45 0.27 0.85 0.04 0.0
2004 0.54 0.13 0.07 0.65 0.06 0.0
2005 1.11 0.07 0.00 0.62 0.06 0.0
2006 0.50 0.00 0.04 0.56 0.07 0.0
2007 0.40 0.04 0.00 0.58 0.21 0.0
2008 0.31 0.07 0.00 0.95 0.02 0.0
2009 0.23 0.06 0.06 1.05 0.03 0.0
2010 0.26 0.33 0.19 1.19 0.02 0.0
2011 0.31 0.41 - 1.83 6.38 0.0
The loan loss rate is found to be very high in MENA than other regions which accounts to 6.38% of the loan portfolio during
the year 2011. Inspite of having large loan portfolio LAC has only 1.83 % extent of loan loss rate which promotes additional
portfolio growth.
Table 6 Operating Expenses / Loan Portfolio
Year
Operating Expenses / Loan Portfolio (%)
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 26.85 29.44 20.67 22.85 21.41 15.60
2004 27.73 21.76 18.11 22.88 23.80 15.44
2005 30.39 23.90 16.73 22.14 22.26 13.99
2006 30.81 23.28 17.19 20.48 20.93 13.30
2007 31.32 19.96 14.89 19.02 19.42 13.88
2008 31.45 20.35 14.30 22.23 20.40 13.84
2009 29.99 20.04 14.89 19.76 20.33 14.19
2010 31.42 18.97 16.10 21.42 20.27 14.06
2011 59.40 22.71 01.34 14.09 19.67 -



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Table 7 Operating Expenses / Total Assets (%)
Year
Operating Expenses / Total Assets (%)
Africa East Asia & Pacific
Portfolio
Operating Expenses
/ Loan Portfolio (%)
Gross Loan Portfolio /
Total Assets
Portfolio
Operating Expenses /
Loan Portfolio (%)
Gross Loan Portfolio
/ Total Assets
2003 646614 26.85 15.31 965457 29.44 20.69
2004 901087 27.73 16.12 1124755 21.76 15.63
2005 869392 30.39 17.79 1325123 23.90 16.74
2006 937462 30.81 16.60 1520924 23.28 16.16
2007 1578846 31.32 17.23 1767032 19.96 13.99
2008 1955964 31.45 18.77 1948487 20.35 14.51
2009 2463203 29.99 18.33 3673460 20.04 14.40
2010 2929689 31.42 18.68 4418928 18.97 14.63
2011 1754993 59.40 28.03 36128828 22.71 23.99
The operational expenses / portfolio had been comparatively very high for EAP (19.64%), though it has slightly decreased
from the previous year. East Asia & pacific had very high gross loan portfolio/ total assets during the year 2010. But the
operational expense/ portfolio was surprisingly low during 2010 for that region. But the very next year the operational expenses /
portfolio & operational expenses had been very high, as the portfolio size had a larger hike by 8.18 times.
The African region is facing upside down situations where the portfolio size has declined (2011), but the operating expenses
have nearly the double the times with reference to the previous years. The EECA had an effective control over its operating
expenses. It could manage its portfolio with just 1.34%, though the portfolio has expanded by 13.8 times.
Table 8 Yield on Gross Portfolio (Real)
Year
Yield on Gross Portfolio (Real) (%)
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 20.96 36.71 30.90 26.07 31.55 20.60
2004 25.18 28.12 26.48 27.42 31.54 15.49
2005 19.76 28.50 22.09 25.75 25.98 13.83
2006 19.61 23.35 21.22 25.11 23.54 15.04
2007 21.73 24.57 17.92 25.30 21.62 13.89
2008 16.41 19.13 15.20 21.80 15.29 10.46
2009 22.10 26.19 21.23 25.21 27.40 14.73
2010 22.56 24.05 22.67 24.83 22.28 13.34
2011 - - 18.55 - - -
It is notable that all the regions have experienced a downfall during the year 2009, largely due to the impact of economic
slowdown. Thereafter the scenario has improved the very next year (2010) to a large extent. LAC tops in the yield on gross loan
portfolio comparatively with 24.83% (2010). It is closely followed by regions like EECA, Africa & MENA. But EECA had
experienced a dip in yield during the year 2011.
Table 9 Return on Assets (Median) (%)
Year
Return on Assets (Median) (%)
Africa
East Asia &
Pacific
Eastern Europe &
Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 -0.53 3.31 3.60 3.70 2.06 0.68
2004 0.76 3.03 3.50 3.61 3.49 0.83
2005 0.44 2.59 3.19 3.20 2.96 1.25
2006 0.55 3.12 3.29 3.22 3.65 0.87
2007 0.74 2.76 3.20 2.92 4.22 0.77
2008 1.06 2.85 2.83 2.24 3.13 1.00
2009 0.35 2.19 1.34 1.46 4.09 1.11
2010 0.81 2.83 2.34 1.60 4.69 1.47
2011 7.08 8.93 4.60 1.87 6.44 -
The Return on Assets (RoA) of African region have shown as tremendous improvement from -0.53% (2003) to 7.08%
(2011), inspite of large fluctuation during the course of time. Similarly East Asia and Pacific have improved and tops in RoA
with 8.93% during the year 2011. Though LAC has higher gross loan portfolio, it has picked a very low RoA comparatively to
an extent of 1.87% (2011) though it has improved from the previous year. The RoA of LAC had not been attractive with respect
to the portfolio size it holds.

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Table 10 Return on Equity (Median)
Year
Return on Equity (Median) (%)
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 0.23 10.06 9.82 12.62 2.38 4.90
2004 2.95 15.64 10.43 12.62 4.87 6.63
2005 2.12 12.82 18.65 11.61 10.00 7.45
2006 1.76 16.07 20.77 12.36 18.01 6.25
2007 3.50 14.27 16.51 11.66 19.56 7.32
2008 6.68 13.42 14.64 8.82 6.27 8.84
2009 3.86 11.22 3.80 6.26 10.62 10.36
2010 4.55 11.98 7.85 6.94 8.23 9.61
2011 -10.6 42.55 22.97 12.14 9.40 -
Profit Margin
2010 4.46 15.48 13.54 8.59 23.61 -
2011 26.85 27.66 25.26 12.83 17.83 -
Though the return on assets (RoA) was very promising for African region RoE had found to be negative. But EAP, EECA
regions had good ROE of 42.55% & 22.97% which has exponentially grown from 11.98% & 7.85% respectively for the years
2010 & 11. LAC has also enjoyed increase in RoE from 6.94% to 12.14% for the years 2010 & 11.
Profit Margin
The profit margin had improved in a larger way to all regions except MENA which had steeply declined from 23.61% to 17.83%
during the years 2010 & 11.
Table 11 Number of Loans Outstanding
Year
Number of Loans Outstanding
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America &
the Caribbean
Middle East &
North Africa
South Asia
2003 924394 752436 275513 1825806 410301 6727748
2004 1751191 1056165 367794 4306171 593236 9614728
2005 2575013 1544024 1160416 6539412 885741 20834249
2006 4080546 7026395 1748260 10088166 1586393 27011352
2007 5548788 8757888 2487778 13121763 2292119 35561112
2008 7114175 11174803 3170175 14362030 2521780 44002404
2009 6291261 14123042 2815314 15886925 2504037 54604003
2010 5035715 16257342 2868191 16989423 2245047 61040324
2011 33867 632317 290892 30525592 28450 -
The loans outstanding had been found to be very high for South Asia which had been consistently growing over the years.
Africa & MENA regions have tactically reduced their loans outstanding. The noticeable fact is that MENA have reduced
outstanding loans with less operating expenses.
Table 12 Number of MFIs
Year
Number of MFIs
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 183 95 157 166 31 132
2004 183 119 189 218 38 197
2005 241 131 237 280 42 214
2006 255 159 256 304 49 207
2007 284 183 323 370 59 196
2008 280 182 314 392 68 222
2009 266 149 255 386 70 219
2010 196 123 213 369 64 208
2011 6 3 4 40 2 -
The number of MFIs has gone up for LAC, MENA & SA regions, while in other regions, it is observed to have larger
winding up of MFIs from 2007 onwards. This is crucial to understand, as the globe was experiencing recession during the same
session. But even the LAC, MENA & SA regions had tasted the bitter of closing down MFIs 2009 onwards.


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ISSN: 2321 242X 2013 | Published by The Standard International Journals (The SIJ) 46
Table 13 Average Loan / Borrower
Year
Average Loan / Borrower
Africa
East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 205 200 1091 514 270 72
2004 170 156 1315 609 267 76
2005 174 204 1083 641 248 92
2006 216 245 1693 659 259 107
2007 249 288 2222 746 321 138
2008 302 317 2002 838 388 124
2009 378 312 1788 917 463 141
2010 363 305 1691 1050 611 142
2011 269 123 1571 2629 1151 -
The average loan/ borrower had been reduced from 2009 onwards in Africa, EAP and EECA regions. Inversely LAC,
MENA & SA have increased the average loan / borrower in their regions during the same period. LAC has doubled the average
loan/ borrower between 2010 & 11; whereas the EAP has reduced by half during the same period.
Table 14 Administrative Expenses / Total Assets
Year
Administrative Expenses / Total Assets
Africa
East Asia &
Pacific
Eastern Europe &
Central Asia
Latin America & the
Caribbean
Middle East &
North Africa
South Asia
2003 6.29 8.82 8.23 7.14 5.55 5.12
2004 7.73 7.37 7.10 7.59 5.97 5.32
2005 8.10 8.72 6.01 7.00 6.42 3.79
2006 8.42 8.34 5.84 7.48 5.30 4.23
2007 9.67 6.39 5.21 7.14 4.98 4.12
2008 10.67 6.74 4.99 7.42 4.88 3.99
2009 10.60 6.30 4.91 6.79 5.01 3.97
2010 9.53 6.20 4.94 7.20 5.30 3.85
2011 13.40 8.51 0.88 4.71 5.91 -
It is understood that EECA and LAC has taken measures to curtail the administrative expenses significantly inspite of
increase in portfolio size. The administrative expenses have drastically increased in African, EAP regions and have incrementally
increased in MENA during 2011.
Table 15 Number of Depositors (Sum)
Year
Number of Depositors (Sum)
Africa

East Asia &
Pacific
Eastern Europe
& Central Asia
Latin America &
the Caribbean
Middle East &
North Africa
South Asia
2003 44,48,059 13,04,673 8,90,716 9,43,675 6,886 1,34,03,380
2004 57,05,409 15,42,817 11,86,099 32,10,057 5,539 1,59,41,327
2005 75,54,102 20,97,382 15,87,235 63,50,983 13,589 1,91,36,200
2006 91,91,585 65,93,152 27,14,996 76,40,896 87,664 2,64,38,711
2007 1,16,96,536 32,55,613 39,11,986 97,10,388 81,397 3,01,71,105
2008 1,71,37,730 46,14,980 52,44,592 1,35,64,741 97,489 3,20,18,765
2009 2,05,72,668 48,99,512 27,99,959 1,71,68,351 63,748 3,23,06,744
2010 1,70,60,833 58,30,700 28,32,014 1,54,49,440 89,552 2,67,69,982
2011 57,975 6,34,999 10,114 41,19,481 0 0
The number of depositors (sum) statistics shows an alarming picture throughout the world invariably. There had been huge
decline in the number of Depositors (sum).
Table 16 Deposit (Sum)
Year
Deposit (Sum)
Africa
East Asia and
the Pacific
Eastern Europe
and Central Asia
Latin America and
The Caribbean
Middle East and
North Africa
South Asia
2003 26,06,07,065 3,30,75,49,344 13,10,88,591 75,74,81,525 69,147 17,35,93,793
2004 52,05,64,877 10,57,19,602 3,53,98,226 2,21,84,87,228 1,72,475 22,38,44,342
2005 85,97,01,224 3,96,67,65,831 1,24,80,03,627 5,04,44,25,869 2,48,514 65,95,07,361
2006 1,34,28,72,904 5,34,71,92,014 2,24,06,02,281 6,79,95,66,116 12,51,398 89,78,61,876
2007 3,25,76,11,106 6,01,01,40,130 5,04,03,90,748 8,71,83,52,564 6,29,38,252 1,18,93,12,415
2008 4,00,24,07,301 6,15,99,25,668 6,16,45,05,179 10,00,99,71,646 7,50,47,789 1,99,85,11,287
2009 5,28,21,32,767 8,44,20,68,436 5,23,56,99,452 13,35,25,83,689 11,88,54,318 2,54,50,11,110
2010 4,88,27,93,790 11,77,51,31,989 6,42,28,31,882 15,26,39,26,637 12,19,64,001 3,29,98,39,062
2011 94,20,885 3,64,35,971 2,80,64,933 7,25,14,12,544 0 0
As like the number of depositors, the Deposit sum also has declined unusually during 2011 than ever from 2003 onwards.
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Table 17 Number of Deposit Accounts (Sum)
Year
Number of Deposit Accounts (Sum)
Africa
East Asia and
the Pacific
Eastern Europe and
Central Asia
Latin America & The
Caribbean
Middle East and
North Africa
South Asia
2003 17,26,637 6,95,896 91,284 7,11,282 6,886 73,41,485
2004 23,22,956 10,60,147 68,487 32,17,151 754 85,63,272
2005 51,06,264 16,77,336 16,71,455 66,61,154 12,752 1,86,66,384
2006 72,73,651 63,56,632 26,64,091 83,05,769 59,940 2,55,56,618
2007 1,13,26,263 33,14,652 39,25,301 1,02,16,212 81,973 2,24,92,769
2008 1,73,55,114 47,10,330 53,61,769 1,53,18,807 1,03,735 3,37,75,156
2009 1,94,56,799 52,68,279 54,65,615 1,92,76,038 75,749 3,47,82,370
2010 1,84,71,894 67,48,727 59,62,453 1,89,50,966 89,552 3,11,31,807
2011 62,017 7,55,281 11,307 45,04,558 0 0
Large number of deposit accounts has been closed during the year 2011 in all the economies. But it has started earlier during
the year 2010 itself for economies like Africa, LAC and SA.
Table 18 Number of Active Borrowers
Year
Number of Active Borrowers
Africa
East Asia and the
Pacific
Eastern Europe
and Central Asia
Latin America and
The Caribbean
Middle East and
North Africa
South Asia
2003 24,96,988 44,93,322 6,90,076 34,64,294 5,07,120 1,35,12,280
2004 33,24,066 54,08,477 9,72,016 47,42,094 8,03,425 1,78,82,185
2005 42,81,183 94,68,511 12,89,100 78,05,509 12,41,019 2,43,83,439
2006 52,79,867 1,07,25,120 18,45,936 94,43,992 17,36,626 2,99,60,927
2007 61,87,181 87,83,244 24,47,050 1,20,53,183 22,55,182 3,63,93,712
2008 70,99,295 1,54,56,165 30,62,732 1,30,58,610 24,84,605 4,24,61,106
2009 82,08,512 1,39,11,940 27,87,687 1,43,05,288 25,00,362 4,99,96,298
2010 51,22,529 1,57,94,001 27,73,436 1,57,24,890 22,15,603 5,85,94,977
2011 33,867 6,29,458 2,87,611 40,29,773 28,450 0
The decline in active borrowers has reflected in reduction in deposit too. Though LAC (2011) is comparatively good than
other regions, when compared with the yester years it had experienced a steep fall in its accounts.
Table 19 Cost per Borrower
Year
Cost per Borrower
Africa
East Asia and
the Pacific
Eastern Europe
and Central Asia
Latin America and
The Caribbean
Middle East and
North Africa
South Asia
2003 65 43 204 124 58 11
2004 71 36 214 120 68 12
2005 68 42 209 144 63 11
2006 77 51 229 146 68 12
2007 96 58 286 146 62 16
2008 129 66 320 177 69 17
2009 145 63 259 175 86 18
2010 148 61 268 199 128 19
2011 87 26 - 357 141 0
Table 20 Cost per Loan
Year
Cost per Loan (Median)
Africa
East Asia and
the Pacific
Eastern Europe
and Central Asia
Latin America and
The Caribbean
Middle East and
North Africa
South Asia
2004 71 32 177 137 67 20
2005 77 37 177 126 62 18
2006 87 57 226 132 60 12
2007 100 65 285 140 63 15
2008 127 68 288 164 69 16
2009 132 61 240 169 84 18
2010 132 61 257 189 99 18
2011 0 26 0 339 144 0
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The cost per borrower and cost per loan has inflated
twice for LAC during 2011, thrice while comparing it from
2003. MENA also has experienced the inflation in
maintaining a borrower. But African and AEP regions have
felt a dip due to large decline in their active borrowers. The
cost per loan has multiplied 1.5 times for MENA regions. The
EAP has declined during 2011 more than half the cost.
V. CONCLUSION
The global scenario is not promising for the MFI industry as
such. Though some economies had booked portfolio, it is
found that they are struggling hard to manage their expenses.
State of the Microcredit Summit Campaign Report 2012 had
said that number of initiatives like values of responsibility,
corporate ethics and social performance management have
emerged to address the field challenges. MFIs have to adopt
new strategies to bring back their customers and as well
reduce their operating and administrative expenses.
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Dr. K. Chitra is the Director of Department
of Management Studies, Sri Ramakrishna
Engineering College, Coimbatore. Her
research domain is marketing. She has
published 25 articles and 3 books. She is a
Reviewer for 4 International J ournal,
Member in Board of studies, Chairperson for
Conferences conducted in India and abroad,
Interacted with academicians in Singapore,
Malaysia and Newyork. She is a Member in All India Management
Association; Member in education & Industry Institution
Interaction, Panel of (CIII); Executive Committee member
Coimbatore Management Association (CMA); National Institution
of Personnel Management (NIPM); Management Teachers
Consortium(MTC).

S. Sangeetha has 10 years of experience to
her credit and specializes in Finance.
Currently she is pursuing her doctoral degree
in Management at Anna University, Chennai.
Her research domain is microfinance. She
received Excellent grade in the field study
viva voce. She is an alumnus of Indian
institute of Management, Kozhikode. She has
presented more than 19 empirical papers in
International and National Level Conferences in reputed institutes
like IIMA, IIMB and also has published papers in journals.