Indian microfin cos follow lower-cost model than B'desh: study

Microfinance companies in India adopt a comparatively low-cost model of operation than their counterparts in markets like Bangladesh and Mexico, a study on the sector said today.

"Analysis reveals that Indian MFIs have considerably lower operating costs even at smaller loan sizes, as compared to other mature microfinance markets such as Bangladesh, Mexico, Cambodia, Philippines and Bolivia," said the study titled as 'Transparent Pricing Initiative in India'.

The study, sponsored by industry body Micro Finance Institutions Network (MFIN), takes into account pricing of microfinance loans from 82 MFIs. It analyses pricing data for microfinance products globally, between April and September 2010.

"Pricing transparency has been a key component of the MFIN agenda. We are very pleased that pricing data on our members is now completely in the public domain and all stakeholders now have the opportunity to get a complete and accurate picture of interest rates in the industry," said MFIN CEO Alok Prasad.

MFIN further said that the easy availability of interest rate data would promote greater competition and consumer protection in the industry, besides bringing down interest rates over time.