Net income of poor in WB rises by 14%: IIM-A study on Bandhan MFI

In its impact evaluation study on microfinance major Bandhan, the Indian Institute of Management, Ahmedabad (IIM-A) has stated that the average annual net income of West Bengal households under Bandhan's purview saw an increase of Rs 13,231 or 13.81 per cent from all sources.

"The average annual household net income from all sources increased by Rs 13,231, representing a 13.81 per cent increase. This increased income did not come at the cost of increased risk exposure for client households, as measured by fluctuation of monthly income over the past 3 years. Client households increased their ownership of non-farm business assets by Rs 15,588 on average," IIM-A stated in its study findings, adding that client households could also generate on average 35.82 man-days per month of full-time employment for family members.

The study was done with an objective to assess the impact of microcredit and other development interventions being made in lives of the underprivileged in a sample of 1,050 households across five clusters in West Bengal. Bandhan caters to more than 4 million poor women through its network of 1,752 branches spread across 18 states of the country with a loan book of more than Rs 3800 crore, basically focused on the Eastern and North-Eastern part of the country. "When interviewed, around 88 per cent of the drop-out clients said that they would recommend others to join Bandhan, reflecting the former borrower’s good opinion of the organization. Positive women empowerment effects were found concerning the woman member’s influence over children-related decisions, e.g., educational expenses, family planning, girl education, daughter’s marriage etc.," the findings further stated.

"The findings of the study report have given immense confidence not just to our entire team but also to various stakeholders. It feels nice to know that our work is making a difference in the lives of the poor. Our efforts are bringing about an impact and this fact serves as a motivation for us to walk ahead to achieve our endeavors," commented Chandra Shekhar Ghosh, chairman and managing director, Bandhan on the study.

"Against the backdrop of controversies over application of the right methodology for microfinance impact study and hence only scanty amount of statistically valid and rather unimpressive result currently available in the literature, this fairly large study of Bandhan in its home state of West Bengal has found statistically significant and reasonable improvements in income, employment business assets and shock-absorption capacity of its clients, besides empowering the women-members on their decision-making power on child-related matters. The Bandhan study seems to have added micro-credit as yet another potential entry point for achieving development of the country, and especially of the state of West Bengal," said Samar K Datta, IIM-A Professor in the Centre for Management in Agriculture, who led the study.