Impact Assessment of SIDBI's Micro Credit Operations

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Impact Assessment of SIDBI's Micro Credit Operations

Impact Assessment of SIDBI's Micro Credit Operations SIDBI has been providing resource support to Microfinance Institutions by way of term loan for on-lending to Microfinance borrowers. A study was commissioned by SIDBI to assess the impact of its support on the microfinance clients. Following were the specific evaluation objectives.
1.Improvement in income and asset holding
2.Resilience of the households to risks and shocks
3.Improvement in business formalisation
4.Improvement in education and health profile of the households
5.Improvement in social status and confidence of women 6.Access to formal financial services, other than those provided by the MFIs. M2i was involved in the following aspects of the study:

1.Study design including research tools, questionnaires and sample selection
2.Survey of 3000 microfinance beneficiaries who received support from SIDBI .during the financial year 2016-17.
3.Data analysis and report writing

Impact Assessment in Microfinance

Impact Assessment in Microfinance Institutions (MFIs) have a twin responsibility – to be financially viable while providing access to finance for the poor. As such, it is critical to be able to demonstrate the impact of their work on clients’ economic well-being. Impact assessment is one way of doing this.

However, measuring the impacts of MFIs is not easy. A major challenge is the lack of standardization in methodologies. Further, establishing a baseline and assessing the effects of MFIs over time is complicated by contextual factors.

To overcome these challenges, the authors propose a new paradigm for impact assessment in microfinance. The approach espoused in this article is a practitioner-focused process with clients and staff involved from the outset to learn and improve. This involves the use of qualitative enquiry involving semi-structured interviews and personal visits to clients’ business sites. This is in contrast to the typical one-off, cross-sectional studies of impact conducted mainly for donor funding by external consultants. The typical study would be a quantitative survey designed to prove impact to justify the donor’s investment and support advocacy objectives.

The authors conclude by arguing that MFIs should engage their stakeholders in the impact assessment process and monitor and evaluate continuously. This will help them identify areas for improvement and guide their strategic decisions. Additionally, they should consider leveraging emerging technologies for data collection and analysis. These technological advancements can increase the accuracy and timeliness of data collection, enabling MFIs to conduct more frequent and more accurate impact assessments and thereby maximize the impact of their loans on borrowers’ lives.