Attaining outreach with sustainability - A case study of a private micro-finance institution in Indonesia

Financial and economic deregulation in Indonesia since 1983 has encouraged the growth of microfinance institutions (MFIs). Combined with sustained eco nomic growth, this has resulted in drastic reductions in poverty The articl e analyses the performance of Bank Shinta Daya, a private rural bank in Jav a, in terms of outreach to the poor and nonpoor, financial viability and su stainability, resource mobilisation, and sound (best) micro-finance practic es. Bank Shinta Daya combines individual and group-lending technologies. Th e experience indicates that the latter cover their costs and greatly increa se the bank's outreach to the poor as a new market segment, but initially a dd little to the bank's overall profitability. The case study shows how via bility and sustainability can be attained in banking with the poor and the non-poor to conclude that only financially viable institutions can sustaina bly reach the poor in significant numbers.