Madura Micro Finance Limited (MMFL) whose core business is providing financial products i.e. credit, to the rural customer is poised for rapid growth in the next three years. A clear strategy and the necessary systems have been put in place to propel the company to greater heights. The primary customer for MMFL is women and together with self-help groups (SHG’s) the company expects to touch a figure of 1.5 million members from the current 400,000 in the next three years. MMFL is focused only in Tamilnadu and hopes to reach 20% of the rural households in Tamilnadu.

Addressing a press conference in Chennai, Dr. Tara Thiagarajan, Chairperson, MMFL said “We have two clear USP’s in our favour. The first is that we have the lowest interest rates on loans given to rural women, and are proud of the distinction of been rated Number ONE worldwide by Forbes magazine for operational efficiency. Our operating cost is just 3.5% and this enables us to provide micro finance loans at the lowest possible interest rates and still have a healthy bottom line. Secondly, we bring a lot of value addition in all our offerings that brings various long-term benefits to our customers beyond just credit alone.

Explaining the financials, Dr. Tara Thiagarajan said, “The portfolio size is Rs. 120 crores and total disbursals in last 27 months is Rs. 260 crores”. MMFL provides Short Term Loans of Rs. 2,500 per member on 6 months repayment; Term Loan of Rs. 5,000 per member on 12 months repayment and Activity Term Loan of Rs. 12,500 to Rs. 25,000 per member on 42 months repayment. The Lending Rates are as low as 17% to 19.5% p.a. compared to 25 to30% for other MFIs in the market. The repayment rate is as high as 99.97%. MMFL raises money from lending partners like ICICI Bank, SIDBI, City Union Bank, ING Vysya, Axis Bank, Karur Vysya, HDFC, Indian Overseas Bank.

Talking about the difference in approach and the value addition that Madura Micro Finance gives to its borrowers, Dr Tara added, “Given that our company was founded as a vehicle for rural development, we take great efforts to ensure that our loans are applied for productive purpose. Studies by experts indicate that almost 70% of micro finance loans are used for consumption and not utilized for productive purpose. Our major focus going forward is to introduce and build on products and services that facilitate productive deployment of micro finance loans. Among these are:

(i) Providing business training: In collaboration with the NGO Marketplace Literacy, MMFL will introduce a 6 module mini MBA in 2009 for its’ SHG members that takes a film based approach, tailored to the rural context.

(ii) Facilitating market opportunities in urban areas by compiling a comprehensive database of rural products that is marketed through our website www.microcreditindia.org

(iii) Providing free classifieds for our members: A new classifieds section in our monthly ‘Seidhi Malar’ allows SHG members to advertise their products to one another free of cost.

(iv) Identifying opportunities for economies of scale: Small enterprises pay the highest costs for raw materials. We will therefore make efforts to aggregate demand of our SHG members in order to bring them lower prices on their inputs.”

Madura Micro Finance is all geared up to aggressively spearhead this new and rational thinking of its management team and as Dr Tara Thiagarajan proudly says ”with our input we want our customers to move from micro to macro”.