By Adriana Garcia

MIAMI, April 5 (Reuters) - Microfinance loans could offer more than $20 billion in credit to the poor in Latin America by 2012, up from $8.6 billion last year, as services expand and rates fall, an Inter-American Development Bank official said on Saturday.

"The reason (for growth) is that you'll find millions of new borrowers in markets like Mexico, Brazil and Argentina," Donald Terry, the IADB's Multilateral Investment Fund manager, told Reuters at the bank's annual meeting in Miami.

Growth will come as the regulatory environment for these types of loans, which try to stimulate productive activity among the poorest, improves in those countries, he added.

Up to 600 microfinance institutions served 8 million clients last year in Latin America, up from just 2 million and a portfolio of $1 billion in 2001, the bank said in a report covering 25 countries. Average loans ranged from $748 to $1,337.

Microfinance institutions in only a few countries, such as Bolivia and El Salvador, had interest rates of less than 25 percent. The interest rates charged by such institutions in Paraguay and Mexico exceeded 40 percent, with an average rate in Mexico last year of 64.9 percent.

Terry said Mexican rates had been about 80 percent two years earlier, but needed to come down further.

Interest rates are heavily influenced by the competitive and regulatory environment and institutional efficiency but, on average, the microfinance institutions charge a premium of about 6 percentage points over commercial bank rates, the report said.

COST AND POTENTIAL