Information Systems in Indian Microfinance

Abstract

A high quality management information system (MIS) is a key component of any high performing microfinance institution (MFI). Information systems allow MFIs to reduce time spent on rote paperwork, more effectively monitor both staff and clients, and quickly roll out new products and services. An independent survey conducted by the CMF reveals that many Indian MFIs, despite being located in a country with readily available IT talent, suff er from very low quality information systems. Further, a brief analysis of average times required to perform basic functions by MFIs with low quality information systems compared to those with high quality information systems provides strong evidence that the costs associated with having a low quality MIS significantly exceed the cost of upgrading to a higher quality MIS. We estimate that the MFIs with the most basic MISs in our sample could reduce their overall annual cost per client by 38.1 rupees simply by moving to an off -the-shelf MIS and that such an investment would payoff within two years. We propose some potential causes for this apparent under-investment in MIS technology and evaluate prospects for improvement.

Keywords: microfinance, MIS