Drift in Global Microfinance Industry - An Empirical Study

Transcription

1 Drift in Global Microfinance Industry - An Empirical Study Dr. K. Chitra* & S. Sangeetha** *Director, Department of Management Studies, Sri Ramakrishna Engineering College, Coimbatore, Tamilnadu, INDIA. profkchitra@gmail.com **Corresponding Author, Assistant Professor, KCT Business School, Saravanampatti, Coimbatore, Tamilnadu, INDIA. sangisubramanian@gmail.com Abstract The growth and performance of microfinance sector in global perspective during the recent years has shown distinctive differences among regions. With a view to capture the direction of movement of the sector among the regions, a comparative analysis of the performance of the sector in regions like, East Asia & Pacific, Eastern Europe, Central Asia, Latin America, Caribbean, Middle East & North and is attempted in this paper. It focuses on loan loss rate, Portfolio at risk, cost factor, yield on gross portfolio, return on assets and equity among varied countries. Mix Market Data for the period has been the source for this analysis. Keywords Loan Loss, Microfinance, Operating Expenses, Portfolio at Risk; JEL: B26; G21; G23; G32; N20; N25; N26; N27 Abbreviations East Asia & Pacific (EAP), Eastern Europe & Central Asia (EECA), Latin America & the Caribbean (LAC), Micro Finance Institutions (MFI), Middle East & North (MENA), Portfolio at Risk (PaR), Return on Assets (RoA), Return of Equity (RoE), (SA) I. INTRODUCTION THE economist Intelligence Unit had brought an edition of Global Microscope on the MFI sector for the year The study covered 55 countries. The countries had been ranked on the basis of various revised parameters which were like overall microfinance business environment, Regulatory framework and practices, Supporting institutional framework and stability. The study findings concluded that in the aftermath of the global financial crisis, microfinance has begun to enter a more mature and sustainable growth phase [James Clark, 2011]. After years of rapid expansion, the focus has turned to accelerating the improvements already underway in corporate governance, regulatory capacity and risk management. Further, risk management, which has become a post-crisis priority for all financial institutions, has improved considerably in the microfinance sector, which is essential, given that it is offering an increasingly diversified range of innovative financial services to the poor. Efforts to strengthen the sector have been stabilized, beside new opportunities; microfinance is well positioned to take further advantage of technological and market innovations and to build on improvements already underway. This progress stands in contrast to the financial crisis period and its aftermath, which had a dampening impact on the sector by exposing structural weaknesses, leading to a deterioration in the quality of some loan portfolios. Troubling events over the past year highlight the industry s need to respond to new challenges and changing local conditions. While microfinance continues to shift from a niche product to a globally recognized form of finance, regulatory and market gaps continue to impede the industry s ability to realize its potential. Data collection and transparency have improved markedly from the early days of microfinance, spurred by the notable efforts of microfinance ratings agencies and organizations, such as the MIX Market and Microfinance Transparency. But the varied product offerings and market conditions globally imply a continuing need for policymakers to adopt a more systematic and robust way of evaluating the sector s development, while remaining attuned to the nuances of local markets [Venugopalan Puhazhendhi, 2012]. Similar to earlier performance, Peru was ranked first as the country with highest score followed by Bolivia and Pakistan. India and Ghana which were in top 10 lists had an exit (Table 1). On the other end Uganda, Mexico & Panama have made an entry to the top list. Under the overall business category, Bangladesh the land of microfinance origin had been in 43 rd rank and Vietnam finds the last place. This paper focuses on understanding the relative global performance of Indian MFIs and intends to learn the varied cost incurred by the MFIs, the Loan loss rate incurred by them and also traces out the reasons for such losses. ISSN: X 2013 Published by The Standard International Journals (The SIJ) 40

2 II. REVIEWS OF LITERATURE Ayi Gavriel Ayayi (2012) in his paper credit risk assessment in the microfinance industry with reference to Vietnamese microfinance institutions has discussed about the assessing risk through conventional and specialised evaluation metrics. The study identified that microfinance institutions could sustain financial sound and good corporate governance through the execution of risk management tools. It also stated that the microfinance institutions invariably adopt the same risk management techniques [Ayi Gavriel Ayayi, 2011; Padma et al., 2012]. The researcher has used econometric analysis to assess the credit risk. This study helps to understand the importance of assessing credit risk and enhances on the tools to adopt for assessing the credit risk. Milford Bateman & Dean Sinkovic (2009): This paper focuses on the negative impact of the neo liberal policy on Croatia. It also speaks about the Grameen bank model in promoting the standard of living in poor countries. But this model has proved good; today it is facing a threat, which demands for revision in development policy. In Croatia, the micro finance institutions have seen an extraordinary growth from 1999 upto 2006 [Maitreyee Gaikwad, 2006]. The firm and household loans had excessive demand during the study period. But it also describes the repayment tactics followed by the companies are very aggressive during the last few years of the study period, which made the poor to be even poor. The neoliberal capitalism was dead and the one of the consequence was microfinance. Hence this paper helped in understanding the change in policies and in its negative ill effects on micro funding. K.O. Osotimehin, et al., (2011) in their study focused on identifying the determinants of the outreach capabilities and trends of microfinance institutions in Microfinance in south western Nigeria. The econometric analysis has been performed to understand the trend of outreach of microfinance institutions. The model specifies that the depository microfinance institutions exhibit 2 stage production process, first FOP for mobilising savings and secondly for institutions production process. The results of the has shown that there had been increase in the outreach of microfinance institutions in South western Nigeria which has been driven by factors like effective lending rates, cost of loans disbursed, average loan size and staff salary. The researcher has found there is an existence of negative correlation between real effective lending rates and outreach, because higher lending rates will discourage borrowings and have led to lower outreach. III. OBJECTIVES AND METHODOLOGY The study aimed to explore on the following aspects: To analyze the relative performance of Indian MFIs in Global perspective. To analyse the loan loss rate among varied countries. To analyze the yield on gross portfolio, the return on assets and equity among varied countries. To analyze the operating, administrative cost incurred in managing the loan portfolio and average borrower among varied countries. The study will enlighten on the trends in the global MFI industry. The study assumes to be descriptive which explores the trends of Global MFI industry. Secondary data has been collected and comparative and trend analysis has been carried out for analyzing the performance among varied regions. Data of microfinance belonging to varied countries for a span of 9 years (ie ) had been used for analysis. IV. DISCUSSIONS Table 1 Ranking of Top 10 Countries in Microfinance in 2011 Rank Country Score 1. Peru Bolivia Pakistan Kenya El Salvador Philippines Colombia Ecuador Uganda Mexico & Panama 53.6 The relative performance of Indian MFIs in the global context has shown greater downfall during the last three years which needs to be taken serious note while discussing the issues on future perspectives. Table 2 Relative Performance of Indian MFIs in Global Perspective Particulars Score Rank Score Rank Score Rank Overall MF business Environment Regulatory frame work and Practices Institutional Development / Supporting framework Investment Climate Stability Source: Global microspore on the microfinance business environment , Economic Intelligence unit Ltd ( Pakistan, Philippines and Uganda shares first place in the regulatory framework and practices. Trinidad and Tobago had occupied the bottom of the list. Bolivia and Peru shares first rank in Supporting Institutional framework followed by Columbia and Armenia. Costa Rica has topped in the stability ISSN: X 2013 Published by The Standard International Journals (The SIJ) 41

3 factor followed by Uruguay and Chile countries. As like in the overall business category, in supporting Institutional Framework, Vietnam has occupied the back seat. Peru has been rated number one for the consecutive three years. It had an excellent record of legal framework, sophisticated regulators and government commitment which purely focused on making unbanked bankable. Bolivia in second place had better price transparency and disclosure rules. Pakistan in the third place had separate legal framework for microfinance banks and good networking. The Kyrgyz Republic has stepped down from 12 th position to 21 st rank globally. This is due to change in political regime which halted regulatory overhaul. Latin America and the Caribbean have the largest number of top performing countries in the Global Microscope. The regions have eight of the countries in the top global 12 countries. In addition the first two places are occupied by its countries Peru and Bolivia respectively. This had been possible as they very strong supporting institutional framework category. But Latin American countries are not very strong in regulatory framework and practices inspite of eight countries are in the top list. Arab countries had faced political unrest earlier this year which seriously handicapped the functioning of the Microfinance industry. Yemen is one of the most affected countries which moved from best to worst category. It stepped down from 27 th rank to 44 th place. This instability has caused many MFIs to reduce their scale of operations. This landed up in closure of banks too. Kenya is one of the strongest and most stable countries in this region. Kenya is placed in the fourth place and Uganda in the ninth place in the global list. But Uganda places itself in the first place globally in the regulatory framework and practices category. Clients are benefitted with the active microfinance markets. India has been pushed to 27 th rank with a score of 43.1 in the overall microfinance business environment. It possesses 22 nd rank in regulatory framework and practices, 20 th place in supporting institutional framework and 40 th rank in terms of stability. The Government of India had strongly promoted the Self-Help Group model through the National Rural Livelihood Mission by offering cheap funding and also to restrict market-based lending. A perception prevails that the rapid growth had slow down by the local politicians ability to use rural credit more. In a study carried out by Microrate MIV survey 2011 [Luis A. Viada, 2011], Latin America and the Caribbean (LAC) and Europe and Central Asia continue to account for the majority of microfinance investments receiving a combined total of 73% of all microfinance investment in JP Morgan s CGAP Global Equity Valuation Survey 2012 has reported that LAC has more than half the investment followed by Asia [Global Microfinance Equity Valuation Survey, 2012]. India is the major contributor with more than 92% of Asian s investment levels. The Gross Loan Portfolio The gross loan portfolio is very high in Latin America & Caribbean (28,66,309). MENA ranks second with loan portfolio of 23,02,788. had less gross loan Portfolio comparatively with other 5 regions, during But this trend had found to be changing in the next year, where it (-9,01,087) could perform better than (8,16,720). Table 3 Gross Loan Portfolio Gross Loan Portfolio LAC MENA Market Leadership Position LAC MENA LAC The growth of Gross loan portfolio of LAC had increased by 12,51,41,593 between the years The gross loan portfolio to total assets had been 84.58% than the previous year (2010). Table 4 Gross Loan Portfolio / Total Assets (%) Gross Loan Portfolio / Total Assets (%) East Asia & Eastern Europe & Latin America & the Middle East & North Pacific (EAP) Central Asia (EECA) Caribbean (LAC) (MENA) (SA) Though the industry seems to have growth in Gross Loan Portfolio/ Total Assets invariably for all the countries during 2011, the trend from is fluctuating. Except Eastern Europe & Central Asia, Latin America and the Caribbean all other countries had a dip during But Latin America and the Caribbean had experienced a light fall in the subsequent ISSN: X 2013 Published by The Standard International Journals (The SIJ) 42

4 year 2008 while regions like, East Asia & pacific and Eastern Europe & Central Asia were incrementally growing. During the year 2011 a significant data of Eastern Asia & Pacific makes the world to observe them, as it had % from 74.6% comparatively with other regions. The borrowings have reduced by 5.48% from 3,35,59,161 to 3,17,21,406 in Bhutan during 2009 & The number of MFIs count decreased from 100 to 94 in India and found to be common scenario in all other countries except Pakistan. Portfolio at Risk (90 days) For the country like India PaR has reduced considerably to 0.13% during Thereafter it seems to be inconsistent; it is hiking year after year. During 2010 the PaR had been 0.64% from 0.16% the previous year. This sort of hike in PaR has not been experienced by this industry earlier. It is also evident that Bhutan being the leader the depositors, the loans outstanding will be naturally high and the PaR seems to be very high comparatively with other nations ie 11.7%. But the land of microfinance origin is under promising side where their PaR has come down to 4.47 % (2010) from 5.34% previous year. It is also noticeable that Nepal has the lowest PaR with 0.63% (2010). The PaR weighted average 30 days of India had been very alarming with 24.86% amounting to Rs.3, 42, 76,696 loans outstanding out of gross loan portfolio of Rs. 5,25,11,14,052. The active borrowers in India (2010) is 3,17,09,335, while in Bhutan it is just 24, 476. The deposit sum during the year 2010 for India had been Rs. 30,07,60,871, whereas in Bangladesh it is Rs. 2,17,12,20,435 which tops among all the 7 nations. The deposit sum is just Rs. 3,26,45,020 for Bhutan whereas Srilanka has considerable deposits of Rs. 49,41,30,770 which is higher than India, inspite Srilanka comparatively having less active borrowers (13,34,744). The gross loan portfolio of India is considerably increasing from the year ie. (46,15,10,391 to 5,25,11,14,052). Though Bhutan s entry was from 2008, it also has tasted the growth in its gross loan portfolio ((5,14,66,128 to 7,93,89,045 (2010)). The number of depositors in India has increased in a large way. But it has experienced an exponential increase during the 2010 (65,01,658) while considering the previous year (20,36,591). Table 5 Loan Loss Rate Loan Loss Rate Pacific & Central Asia Caribbean North The loan loss rate is found to be very high in MENA than other regions which accounts to 6.38% of the loan portfolio during the year Inspite of having large loan portfolio LAC has only 1.83 % extent of loan loss rate which promotes additional portfolio growth. Table 6 Operating Expenses / Loan Portfolio Operating Expenses / Loan Portfolio (%) Pacific & Central Asia Caribbean North ISSN: X 2013 Published by The Standard International Journals (The SIJ) 43

5 Table 7 Operating Expenses / Total Assets (%) Operating Expenses / Total Assets (%) East Asia & Pacific Operating Expenses Gross Loan Portfolio / Operating Expenses / Gross Loan Portfolio Portfolio Portfolio / Loan Portfolio (%) Total Assets Loan Portfolio (%) / Total Assets The operational expenses / portfolio had been comparatively very high for EAP (19.64%), though it has slightly decreased from the previous year. East Asia & pacific had very high gross loan portfolio/ total assets during the year But the operational expense/ portfolio was surprisingly low during 2010 for that region. But the very next year the operational expenses / portfolio & operational expenses had been very high, as the portfolio size had a larger hike by 8.18 times. The n region is facing upside down situations where the portfolio size has declined (2011), but the operating expenses have nearly the double the times with reference to the previous years. The EECA had an effective control over its operating expenses. It could manage its portfolio with just 1.34%, though the portfolio has expanded by 13.8 times. Table 8 Yield on Gross Portfolio (Real) Yield on Gross Portfolio (Real) (%) Pacific & Central Asia Caribbean North It is notable that all the regions have experienced a downfall during the year 2009, largely due to the impact of economic slowdown. Thereafter the scenario has improved the very next year (2010) to a large extent. LAC tops in the yield on gross loan portfolio comparatively with 24.83% (2010). It is closely followed by regions like EECA, & MENA. But EECA had experienced a dip in yield during the year Table 9 Return on Assets (Median) (%) Return on Assets (Median) (%) East Asia & Eastern Europe & Latin America & the Middle East & Pacific Central Asia Caribbean North The Return on Assets (RoA) of n region have shown as tremendous improvement from -0.53% (2003) to 7.08% (2011), inspite of large fluctuation during the course of time. Similarly East Asia and Pacific have improved and tops in RoA with 8.93% during the year Though LAC has higher gross loan portfolio, it has picked a very low RoA comparatively to an extent of 1.87% (2011) though it has improved from the previous year. The RoA of LAC had not been attractive with respect to the portfolio size it holds. ISSN: X 2013 Published by The Standard International Journals (The SIJ) 44

6 Table 10 Return on Equity (Median) Return on Equity (Median) (%) Pacific & Central Asia Caribbean North Profit Margin Though the return on assets (RoA) was very promising for n region RoE had found to be negative. But EAP, EECA regions had good ROE of 42.55% & 22.97% which has exponentially grown from 11.98% & 7.85% respectively for the years 2010 & 11. LAC has also enjoyed increase in RoE from 6.94% to 12.14% for the years 2010 & 11. Profit Margin The profit margin had improved in a larger way to all regions except MENA which had steeply declined from 23.61% to 17.83% during the years 2010 & 11. Table 11 Number of Loans Outstanding Number of Loans Outstanding East Asia & Eastern Europe Latin America & Middle East & Pacific & Central Asia the Caribbean North The loans outstanding had been found to be very high for which had been consistently growing over the years. & MENA regions have tactically reduced their loans outstanding. The noticeable fact is that MENA have reduced outstanding loans with less operating expenses. Table 12 Number of MFIs Number of MFIs Pacific & Central Asia Caribbean North The number of MFIs has gone up for LAC, MENA & SA regions, while in other regions, it is observed to have larger winding up of MFIs from 2007 onwards. This is crucial to understand, as the globe was experiencing recession during the same session. But even the LAC, MENA & SA regions had tasted the bitter of closing down MFIs 2009 onwards. ISSN: X 2013 Published by The Standard International Journals (The SIJ) 45

7 Table 13 Average Loan / Borrower Average Loan / Borrower Pacific & Central Asia Caribbean North The average loan/ borrower had been reduced from 2009 onwards in, EAP and EECA regions. Inversely LAC, MENA & SA have increased the average loan / borrower in their regions during the same period. LAC has doubled the average loan/ borrower between 2010 & 11; whereas the EAP has reduced by half during the same period. Table 14 Administrative Expenses / Total Assets Administrative Expenses / Total Assets East Asia & Eastern Europe & Latin America & the Middle East & Pacific Central Asia Caribbean North It is understood that EECA and LAC has taken measures to curtail the administrative expenses significantly inspite of increase in portfolio size. The administrative expenses have drastically increased in n, EAP regions and have incrementally increased in MENA during Table 15 Number of Depositors (Sum) Number of Depositors (Sum) East Asia & Eastern Europe Latin America & Middle East & Pacific & Central Asia the Caribbean North ,48,059 13,04,673 8,90,716 9,43,675 6,886 1,34,03, ,05,409 15,42,817 11,86,099 32,10,057 5,539 1,59,41, ,54,102 20,97,382 15,87,235 63,50,983 13,589 1,91,36, ,91,585 65,93,152 27,14,996 76,40,896 87,664 2,64,38, ,16,96,536 32,55,613 39,11,986 97,10,388 81,397 3,01,71, ,71,37,730 46,14,980 52,44,592 1,35,64,741 97,489 3,20,18, ,05,72,668 48,99,512 27,99,959 1,71,68,351 63,748 3,23,06, ,70,60,833 58,30,700 28,32,014 1,54,49,440 89,552 2,67,69, ,975 6,34,999 10,114 41,19, The number of depositors (sum) statistics shows an alarming picture throughout the world invariably. There had been huge decline in the number of Depositors (sum). Table 16 Deposit (Sum) Deposit (Sum) East Asia and Eastern Europe Latin America and Middle East and the Pacific and Central Asia The Caribbean North ,06,07,065 3,30,75,49,344 13,10,88,591 75,74,81,525 69,147 17,35,93, ,05,64,877 10,57,19,602 3,53,98,226 2,21,84,87,228 1,72,475 22,38,44, ,97,01,224 3,96,67,65,831 1,24,80,03,627 5,04,44,25,869 2,48,514 65,95,07, ,34,28,72,904 5,34,71,92,014 2,24,06,02,281 6,79,95,66,116 12,51,398 89,78,61, ,25,76,11,106 6,01,01,40,130 5,04,03,90,748 8,71,83,52,564 6,29,38,252 1,18,93,12, ,00,24,07,301 6,15,99,25,668 6,16,45,05,179 10,00,99,71,646 7,50,47,789 1,99,85,11, ,28,21,32,767 8,44,20,68,436 5,23,56,99,452 13,35,25,83,689 11,88,54,318 2,54,50,11, ,88,27,93,790 11,77,51,31,989 6,42,28,31,882 15,26,39,26,637 12,19,64,001 3,29,98,39, ,20,885 3,64,35,971 2,80,64,933 7,25,14,12, As like the number of depositors, the Deposit sum also has declined unusually during 2011 than ever from 2003 onwards. ISSN: X 2013 Published by The Standard International Journals (The SIJ) 46

8 Table 17 Number of Deposit Accounts (Sum) Number of Deposit Accounts (Sum) East Asia and Eastern Europe and Latin America & The Middle East and the Pacific Central Asia Caribbean North ,26,637 6,95,896 91,284 7,11,282 6,886 73,41, ,22,956 10,60,147 68,487 32,17, ,63, ,06,264 16,77,336 16,71,455 66,61,154 12,752 1,86,66, ,73,651 63,56,632 26,64,091 83,05,769 59,940 2,55,56, ,13,26,263 33,14,652 39,25,301 1,02,16,212 81,973 2,24,92, ,73,55,114 47,10,330 53,61,769 1,53,18,807 1,03,735 3,37,75, ,94,56,799 52,68,279 54,65,615 1,92,76,038 75,749 3,47,82, ,84,71,894 67,48,727 59,62,453 1,89,50,966 89,552 3,11,31, ,017 7,55,281 11,307 45,04, Large number of deposit accounts has been closed during the year 2011 in all the economies. But it has started earlier during the year 2010 itself for economies like, LAC and SA. Table 18 Number of Active Borrowers Number of Active Borrowers East Asia and the Eastern Europe Latin America and Middle East and Pacific and Central Asia The Caribbean North ,96,988 44,93,322 6,90,076 34,64,294 5,07,120 1,35,12, ,24,066 54,08,477 9,72,016 47,42,094 8,03,425 1,78,82, ,81,183 94,68,511 12,89,100 78,05,509 12,41,019 2,43,83, ,79,867 1,07,25,120 18,45,936 94,43,992 17,36,626 2,99,60, ,87,181 87,83,244 24,47,050 1,20,53,183 22,55,182 3,63,93, ,99,295 1,54,56,165 30,62,732 1,30,58,610 24,84,605 4,24,61, ,08,512 1,39,11,940 27,87,687 1,43,05,288 25,00,362 4,99,96, ,22,529 1,57,94,001 27,73,436 1,57,24,890 22,15,603 5,85,94, ,867 6,29,458 2,87,611 40,29,773 28,450 0 The decline in active borrowers has reflected in reduction in deposit too. Though LAC (2011) is comparatively good than other regions, when compared with the yester years it had experienced a steep fall in its accounts. Table 19 Cost per Borrower Cost per Borrower East Asia and Eastern Europe Latin America and Middle East and the Pacific and Central Asia The Caribbean North Table 20 Cost per Loan Cost per Loan (Median) East Asia and Eastern Europe Latin America and Middle East and the Pacific and Central Asia The Caribbean North ISSN: X 2013 Published by The Standard International Journals (The SIJ) 47

9 The cost per borrower and cost per loan has inflated twice for LAC during 2011, thrice while comparing it from MENA also has experienced the inflation in maintaining a borrower. But n and AEP regions have felt a dip due to large decline in their active borrowers. The cost per loan has multiplied 1.5 times for MENA regions. The EAP has declined during 2011 more than half the cost. V. CONCLUSION The global scenario is not promising for the MFI industry as such. Though some economies had booked portfolio, it is found that they are struggling hard to manage their expenses. State of the Microcredit Summit Campaign Report 2012 had said that number of initiatives like values of responsibility, corporate ethics and social performance management have emerged to address the field challenges. MFIs have to adopt new strategies to bring back their customers and as well reduce their operating and administrative expenses. REFERENCES [1] Maitreyee Gaikwad (2006), Micro Finance Emerging Concerns and Policy Implications, All India Women's Democratic Association ( ). [2] Milford Bateman & Dean Sinkovic (2009), Global Financial Crisis and Related Country-Level Financial Sector Disasters: The Case of Microfinance in Croatia, 8th International Conference on Challenges of Europe: Financial Crisis and Climate Change, Pp [3] K.O. Osotimehin, Charles.A Jegede & Babatunde Hamed Akinlabi (2011), Determinants of Microfinance Outreach in South-Western Nigeria: An Empirical Analysis, Interdisciplinary Journal of Contemporary Research in Business, Vol. 3, No 8, Pp [4] Xavier Reille & Daniel Rozas (2011), Discovering Limits - Global Microfinance Valuation Survey 2011, Global Equity Research, Pp [5] James Clark (2011), The Microfinance Movement Benefits Canada, Vol. 35, No. 7, Pp. 55. [6] Ayi Gavriel Ayayi (2011), Credit Risk Assessment in the Microfinance Industry, Economics of Transition, The European Bank for Reconstruction and Development. Blackwell Publishing Ltd, USA, Pp [7] Global Microscope on the Microfinance Business Environment (2011), URL: _Microfinance_Eng_2011_WEB.pdf&mode=wp&campaignid= microscope2011. Pp [8] Luis A. Viada (2011), MicroRate s 6th Annual Survey & Analysis of MIVs, The-State-of-Microfinance-Investment MicroRate, Pp [9] Venugopalan Puhazhendhi (2012), Microfinance India: State of the Sector Report 2012, SAGE Publications, India, Pp [10] Ayi Gavriel Ayayi (2012), Associate Professor of Financial Economics, Economics of Transition, Vol. 20, No. 1, Pp , DOI: /j x. [11] Global Microfinance Equity Valuation Survey 2012, URL: ents/ope3efsbaos/m-_28rltoiij, Pp [12] K.M.S. Padma, A.M. Suresh & L Vijayashree (2012), Micro Finance and its Risk Management Practices in India: A Conceptual Study, Synergy (January, 2012), Vol. X, No. I, Pp Dr. K. Chitra is the Director of Department of Management Studies, Sri Ramakrishna Engineering College, Coimbatore. Her research domain is marketing. She has published 25 articles and 3 books. She is a Reviewer for 4 International Journal, Member in Board of studies, Chairperson for Conferences conducted in India and abroad, Interacted with academicians in Singapore, Malaysia and Newyork. She is a Member in All India Management Association; Member in education & Industry Institution Interaction, Panel of (CIII); Executive Committee member Coimbatore Management Association (CMA); National Institution of Personnel Management (NIPM); Management Teachers Consortium (MTC). S. Sangeetha has 10 years of experience to her credit and specializes in Finance. Currently she is pursuing her doctoral degree in Management at Anna University, Chennai. Her research domain is microfinance. She received Excellent grade in the field study viva voce. She is an alumnus of Indian institute of Management, Kozhikode. She has presented more than 19 empirical papers in International and National Level Conferences in reputed institutes like IIMA, IIMB and also has published papers in journals. ISSN: X 2013 Published by The Standard International Journals (The SIJ) 48