The document discusses the potential for information and communication technologies (ICTs) to enable microfinance in India. It notes that while microfinance has grown significantly, reaching over 33 million households, traditional providers of financial services to low-income groups are declining. Case studies show how ICTs like mobile phones can reduce costs and improve data quality for microfinance organizations by streamlining processes like customer profiling and account management. However, the value of ICTs depends on factors like delivery models, operational efficiency, and balancing technology and labor costs. Hybrid approaches that accurately match technologies to functions are most promising.

1. On microfinance (and technology) Aishwarya Ratan, MSR India, March 2007 “ Dhobis (washermen), tailors and barbers contribute more to the GDP of Andhra Pradesh than the IT sector.” (Vikram Akula, SKS; Source CSO, 2004-05)

2. Our reference segment Urban Rural >$2000 /year $1-2000 /year <$1000 /year 29 8 17 Low income households Both rural and urban areas © 2007 Microsoft Corporation Source: Indian National Survey Sample Organization 2001-2002 HH survey Aishwarya Ratan, MSR India, March 2007 Photo source: CCD Mahakalasam & Ekgaon Data source: NCAER

10. Current models of microfinance delivery 5 members 12-20 members 24-36% APR NGO facilitator Cooperative RS. @ 9-12% APR The group is the MFI Interest accrues to member-borrowers ~33 mn outreach in India Less profitable More welfare focused – flexible payments Most common model in India Commercial RS. RS. @ 9-12% APR @ 24-36% APR External provider is the MFI Interest accrues to 3 rd party intermediary ~8 mn outreach in India More profitable More commercially focused – EMI payments Most common model worldwide MFI Aishwarya Ratan, MSR India, March 2007

16. Others involved: Ujjivan and Pradan staff & members, Shabnam Aggarwal, Mahesh Gogineni, Sean Blagsvedt, Kentaro Toyama, Vibhore Goyal, Jonathan Donner, Indrani Medhi, Rajesh Veeraraghavan ? aratan@microsoft.com Thanks!