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L.N. Revathy

Coimbatore , May 31

FOR ABN Amro, micro-finance has proved to be a viable and sustainable business opportunity. The bank has, within a year of launching micro-finance operations in India, managed to break even.

The finance support to needy groups is routed through micro-finance institutions (MFIs). The bank has identified 12 MFIs in the last year-and-a-half. "Six more are in the pipeline," its Vice-President and Head (Micro-Finance), India, Ms Moumita Sen Sharma, told Business Line.

Even while stating that micro-finance partners were not difficult to find, Ms Sharma said the evaluation norms were rather stringent. "We have narrowed down on six MFIs. The process of due diligence is now on." Reverting to the existing partners, she said most were from the South. Almost 40 per cent of the borrowers invested in livestock.

The total micro-finance advances up to March 2005 stood at Rs 32 crore. ABN Amro is targeting Rs 60 crore by December.

Ms Sharma said the trend was fine in the credit lines that the bank had started. When the UN designated 2005 as the International Year of Microcredit, ABN Amro announced its partnership with PlaNet India, a pilot NGO and member of the UN Advisory Committee for instituting the Micro Finance Process Excellence Award (MPEA).

"These awards are aimed to generate enthusiasm and instil confidence amongst MFIs. We received 94 nominations. Twenty-one organisations were short-listed for the final round, and finally, six were identified for the MPEA 2005 awards," Ms Sharma said, and added that the partners were planning to make MPEA an annual event.

Stating that the microfinance intervention could go a long way in reducing poverty and in offering finance opportunities to people who would otherwise be out of bank ambit, she shared the bank's survey of 200 clients, which showed that 58 per cent of microfinance beneficiaries (for at least four years) experienced reduction in poverty levels, while 41 per cent came out of it. "The ticket size is low, but credit recoveries are remarkable," she said.

Through the 12 MFIs, the bank has reached 86,000 households across six States. The bank is targeting to cover one lakh households by 2007.

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