Intellecap Publishes Inverting the Pyramid: The Changing Face of Indian Microfinance

October 1, 2007

Inverting the Pyramid: The Changing Face of Indian Microfinance is a comprehensive research report on the Indian microfinance sector, authored by Intellecap and sponsored by IFC. This report analyzes the market dynamics of Indian microfinance including demand and supply side factors, key players, and the past performance and future potential of microfinance providers. It is expected to assist investors, entrepreneurs, donors, policy makers, and academics in making informed decisions on their involvement in the Indian microfinance industry.

The present financing landscape in India can be imagined as a twin pyramid structure with the peaks touching each other – the upper pyramid with a very few small investors at the peak and several large investors at the base and the lower pyramid with a few large MFIs at the peak and several small-sized MFIs at the base. Money flows from a few risk-taking investors to a few large MFIs through a tiny aperture that connects both sides. A clear challenge for Indian microfinance is to widen this aperture and invert the two pyramids to ensure a smooth flow of financial resources from a larger number of investors to a larger number of MFIs at the base. MFIs should develop sound governance structures, transparent practices, and efficient systems to attract commercial capital and “invert the pyramids.”

Inverting the Pyramid: The Changing Face of Indian Microfinance is the first of its kind to identify trends, demand-supply statistics, growth and financial performance of top 60 MFIs in India, to estimate debt and equity capital requirement of the industry for the next five years, and to highlight opportunities in the financing and business environment.