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Attaining Outreach with Sustainability: A Case Study of a Private Microfinance Institution in Indonesia

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  • Seibel, Hans Dieter

Abstract

Financial and economic deregulation in Indonesia since 1983 has encouraged the growth of microfinance institutions (MFIs). Combined with sustained economic growth, this has resulted in drastic reductions in poverty. The paper analyses 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 mobilisation, and sound (best) microfinance practices. Bank Shinta Daya combines individual and group-lending technologies. The experience indicates that the latter cover their costs and greatly increase the bank's outreach to the poor as a new market segment, but initially add little to the bank's overall profitability. The case study shows how viability and sustainability can be attained in banking with the poor and the NON-POOR to conclude that only financially viable institutions can SUSTAINABLY reach the poor in significant numbers.

Suggested Citation

  • Seibel, Hans Dieter, 1999. "Attaining Outreach with Sustainability: A Case Study of a Private Microfinance Institution in Indonesia," Working Papers 1999,2, University of Cologne, Development Research Center.
    • Handle: RePEc:zbw:uocaef:19992
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