Microfinance in India

Case Study Prompt

Client is a large microfinance institution in India that has seen its client base (largely rural women earning less than $3/day) growing at + 150% a year.  This is not unusual for private for-profit microfinance institutions as it’s a huge untapped market in India. Demand met is $5Bn of $55Bn. Microfinance Institutions (MFIs) cropped up in the 1990s as non-profit institutions (NGOs). In the 2000s, these NGOs began to convert to for-profit institutions to access commercial capital that would help them scale. The average MFI interest rate is between 25-30%, critics contend that MFIs are making money off the poor through their “high” interest rates

These MFIs has started to generate criticism over perceived high interest rates and harsh collection tactics of loan officers.  This came to a head when the media started to blame farmer suicides on microfinance-induced over-indebtedness and harsh collection practices. At that time, our client provided financial services to around 1mm women clients in 5 states in India. Loan officers are all locals themselves.

What should our client do in-response?

Deloitte Case Study Overview

Your client, a large Microfinance institution, is facing a media onslaught and PR nightmare due to recent suicides in their country that have been blamed on their collection practices. They have come to you to help them determine the appropriate response and next steps. It’s your job to delve into the situation, get to know the market and the local situation and come up with strategic recommendations that can help your client save their reputation and profitability while being sensitive to the current situation.

The Profitability Framework will give you a leg up in solving this Deloitte case study, but don’t stop there. For this case, you will need to leverage both the framework and your own business experience and wisdom to come to a solution that will help your client.

This case has two math diagrams. The qualitative difficulty is 3 out of 4, and is an advanced case study you could expect to see in a Deloitte second round interview.

Deloitte Interview Pointers

What does Deloitte look for in its case interview candidates? A good match for their team dynamics and someone adept at building a strong structure. As you prepare, be ready to communicate how you arrived at the solution and don’t underestimate the importance of the fit portion of your interview!

In this Deloitte case study, try to find 1 area to improve upon in your communication or presentation. Also focus on your timing (2min for structure, 5min for math, 2min for brainstorming, 2min for conclusion.)

For out-loud practice with an expert, book an hour with an ex-MBB coach.