Editorial
The Centre for Micro Finance recently celebrated its first anniversary. Today, we are happy to release our first newsletter. Through Eye on Micro Finance, we will update our readers regularly on our activities, pilots, research projects and findings, as well as give a voice to our microfinance partners.

Who is the CMF? Through its research, consulting services and training, CMF responds to some of the most critical issues in the sector to support MFIs in their growth: understanding the sector better (why are recovery rates so high? how do people behave with respect to financial services?), improving and diversifying services (can repayment schedules be more flexible? what designs work for health insurance?), improving organizations (how to make organizations more efficient? how to improve information management?) and promoting a growth-friendly environment (what regulations are required for microfinance? how to share information?).

The goal of the CMF is to maximize the impact of microfinance in India: reach deeper, better. With the microfinance sector progressing fast, witnessing rapid changes and receiving a great deal of attention, it is imperative now, more than ever, to take a step back and analyze the impact that micro finance has had so far in improving the lives of the poor and think of ways in which this can be maximized in the future. The challenge today is making micro finance more accessible, customized, comprehensive and effective, while ensuring sustainable growth. In order for microfinance to be a useful mechanism for poverty alleviation, and to reach the 500 million under-banked households, several questions need to be answered and challenges to be addressed.

The Research Unit of CMF, with its 18 research associates, supports various initiatives aiming at better understanding which programmes work and which do not in order to help design more effective interventions. In partnership with several microfinance institutions in India and leading academic institutions in India and abroad (including MIT, Yale, Harvard, NYU, and ISB), we undertake impact evaluations of various microfinancial products, experimentation on product design (with a focus on customer segmentation), analysis of microenterprise and constraints to productivity, as well as research on financial and organizational aspects of MFIs.

More recently, the MFI Strategy Unit has been set up within CMF and now has 6 members. Its objectives are to help MFIs define and execute their growth strategy. The MSU aims to do this by addressing some of the main constraints that MFIs face in terms of capital structure (equity/debt) and access to financial markets (venture capital, securitisation), HR (training, recruitment, incentives), organizational design (MIS, processes of operations, governance), marketing strategy (customer segments to target, products to develop to serve these segments, portfolio management) and overall strategy (SWOT analysis). Moreover, the MSU assists in identifying missing market linkages at the customers' level in co-ordination with MFIs and in selecting relevant partners to create these linkages (private companies, NGOs, government entities). This effort is being undertaken through close collaboration with MFIs and organization of thematic consultations. Some of the value chains the MSU is currently focusing on are dairy, handicrafts, fisheries, pulp wood and mint.

To reflect the fact that our research is action oriented, we have chosen to change our name and to call ourselves the "Center for Micro Finance", which we hope will soon become a full-fledged resource for the microfinance sector in India.

Is microfinance the solution? Yes, if growth is properly managed and questions are correctly answered. CMF will help this effort.

~ Annie Duflo & Sarah Djari
Annie Duflo is the research coordinator for the Centre for Micro Finance. Sarah Djari is the Micro Finance Institutions Strategy Unit coordinator at the CMF.