Case Study
Attaining Outreach with Sustainability: A Case Study of a Private Microfinance Institution in Indonesia
A private rural bank with mixed methods of individual and group lending
16 pages
This paper analyzes the performance of Bank Shinta Daya, a private rural bank in Java, in terms of:
- Outreach to the poor and non-poor;
- Financial viability and sustainability;
- Resource mobilization;
- Sound (best) microfinance practices.
It concludes:
- The group-lending method covers its costs and greatly increase the bank's outreach to the poor as a new market segment, but initially adds little to the bank's overall profitability;
- Privately owned village banks can have a considerable outreach at the local level without being subsidized;
- Financial services to the poor by private banks can be profitable and self-sustaining;
- The main emphasis of any further attempt at poverty alleviation must concentrate on institution building by the poor;
- Only financially viable institutions can sustainably reach the poor in significant numbers.
The paper presents recommended policies for the government and donors.
[Based on author's abstract]
About this Publication
Published