Nov 25, 2009

Micro-finance institutions on a looting spree: making profits from poverty

Poverty has literally become a big and organised business. If you are educated, and looking for a profitable business enterprise, and more so if you are a non-resident Indian and want to translocate to India and still make millions, micro-finance offers you the right avenue.

There can be no better business opportunity than starting a micro-finance institution with assured returns and 100 per cent loan recovery. You can even think of trading on the stock exchange after a couple of years. And still more importantly, you can hold your head high and claim that you are helping the poor to come out of the poverty trap. You don't have to feel ashamed and morally guilty. The elite in the society have knowingly (or unknowingly) given you a license to loot.

The unprecedented growth in micro-finance tells us that modern-day Shylocks are everywhere, looking at every possible opportunity to make profits from poverty. Rich countries become rich at the cost of the poor countries. Rich people in any society also (of course there are exceptions) follow the same path. Micro-finance is a classic example.

I am sure if Shakespeare were alive today, he would have easily penned down a sequel to his great classic Merchant of Venice.

Anyway, coming back to micro-finance. What prompted me to write this today is an edit page article in The Hindustan Times under an apt title The game changer (you can read the article at: http://www.hindustantimes.com/The-game-changer/H1-Article1-479838.aspx).

We agree that micro-finance institutions are the game changers. They have shifted the game from the hands of the villains of the story, the sahukars or money-lenders, to a sophisticatedly organised class of neomoney-lenders. These are not the usual banias but a highly educated class of people who use all sophisticated skills to rob the poor. And they have done it remarkably well. 

It is all in the name of empowering the poor. I have often asked academicians how you justify the exorbitant rate of interest the micro-finance institutions extract from the poorest of the poor. The answer I get is that at least it empowers the poor. At 24 per cent rate of interest if the micro-finance can empower the poorest of the poor I wonder why do we have to keep the rate of interest for the urbanites, whether it is for housing, for car, or for any other business activity, as low as 6 to 8 per cent.

If the poor can be empowered with a 24 per cent rate of interest, how come the resourceful people in the cities/towns need a much lower interest rate to get empowered? If the poor in the villages can make a business enterprise even after paying a 20-24 per cent rate of interest, why do people in the cities find it difficult to do so? Or is it that we need a different yardstick (and in this case it happens to be the interest rate on your borrowing) to empower the poor and the not-so-poor? In other words, since the poor have no voice, some of us (and that includes banks) have joined hands to exploit the poor in the name of development.

I think these are difficult questions that we in the cities simply try to ignore or brush aside for the simple reason that we are in a way or so the real beneficiary of this criminal exploitation.

Isn't it shocking that a poorest of the poor woman in a village, who may be only surviving on the NREGA promise of 100 days assured employment (not getting more than Rs 60 a day), has to pay a 24 per cent rate of interest if she borrows money to buy a goat, and we in the cities can get interest-free loans or loans with a minimal rate of interest for buying a nano car?

I am sure if that poorest of the poor woman were to also get a loan for buying a goat at a minimal rate of interest (say 4 per cent or even 7 per cent that we give to farmers) she would be driving a nano car at the end of the year. Also, I don't understand the logic of providing micro-finance to the poorest of the poor women with a high rate of interest of 20 to 24 per cent (on an average) whereas her husband (if he happens to be a farmers) gets crop loan at 7 per cent.

If the farmers cannot survive (and there are 600 million farmers in India, including their families) with a higher rate of interest, I wonder how do we expect his wife (who is part of the self-help groups) to pay out at the rate of 24 per cent?

Neverthess, the micro-finance business has grown manifold. India Microfinance Report 2009 tells us that the portfolio of the micro-finance institutions has grown by 97 per cent, and number of beneficiaries have also gone up by 60 per cent. More than 150 million are already borrowing from Micro-finance institutions. What the report however does not tell us but is quite apparent is that this organised group of money-lenders is now beginning to take over the unorganised villains of the game -- the sahukars or the traditional money lenders.

Another news report tells us that SKS Micro-finance is charging approximately 24 per cent rate of interest in Orissa, Karnataka and Andhra Pradesh; in southern India, Equitas Micro-finance is seeking 21-28 per cent interest rate and Basix Microfinance is providing small loans at 18-24 per cent interest rate. There are numerous other players, and they all rake in money. Sewa in Gujarat and the Grameen Bank in Bangladesh too thrive on a similarly high rate of interest.

It is time we put all of them under a scanner. The society cannot turn a blind eye to this organised loot.

We often hear success stories of women who borrowed and the transformation it has brought to their lives. I don't deny this. But perhaps what we don't want to know is that even when the private money lenders (the class we hate) were lending at 60 per cent or more, there were success stories. The business of money lending wouldn't have succeeded all these decades and centuries if it was not helping those who borrowed.

People went on borrowing from the money lenders or sahukars because they needed the money (even if it came with a very high interest rate), and it must have and still is making a difference to them otherwise the entire business of moneylending would have collapsed and become unsustainable. All that micro-finance institutions are doing now is to replace that class of moneylenders. Micro-finance institutions are also extracting their pound of flesh. The sahukars were using their own capital for lending and therefore charging a very high interest of 60 per cent or above. The micro-fianance use the bank finances (or donors money) and therefore charge a little less at 20-24 per cent.

The sahukars or money lenders were lending individually and therefore charged a higher rate of interest to cover up the risk. The micro-finance institutions go in for group lending, and that too to women, the most vulnerable section of the society, and therefore have their risk covered, and still charge 24 per rate of interest. In the process the banks (no wonder, they find it the most lucrative business) and the micro-finance institutions literally make a killing from robbing the poorest of the poor.

If the sahukars are guilty of a crime, so are the micro-finance institutions.

27 comments:

Yayaver said...

I am finding first time my concern about about microfinance for the first time n someone else word. I was also baffled the interest rate of 20-24% interest rate of loan. In contarst, interest rate for the urbanites, whether it is for housing, for car, or for any other business activity, as low as 6 to 10 %. And, interest rate was controlled by RBI in recession period for urban population who are center of economic power where as large population was excluded in rural sector of these regulations. Inclusive development upheld the principle of 'service before profit', unlike 'What is in it for me? ' principle of companies. This gold rush for each MNC for microfinance can now be understand easily with your article. thanks for that..

me1084 said...

well written. Thanks.

Anonymous said...

Your central objection to microfinance seems to be the high interest rates being paid by the microfinance borrowers compared to urbanites. However, I would like to know if you have attempted to find out why the interest rates are so high (your article does not seem to indicate that).

I would recommend lower rates, but only if the MFIs are able to cover their cost of capital, which can be extremely high compared to traditional financial institutions. As urbanites you and I have access to our banking accounts "online" (which results in reduced costs), whereas MFIs have to incur higher costs in servicing the borrowers (including meeting borrowers at their homes every week, staff salaries, transportation costs, etc).

Baskar said...

I wish Mr.Sharma does a proper and indepth study and then makes such comments. My sincere request to Mr.Sharma is to meet the customers and then come to conclusions. The Shaukar's intent was that the customer was always indebted and in case he failed to repay take away the assets of the customers;his repayments terms were such that it was not possible to repay.

This is not justify the practices of MFIs some of who have off late turned greedy and unethical but sincerely suggest that the comparison of 6% Vs 25% is not logical. The credit card company charges us 45%-50% interest alone and may be 20-40% on late charges.

Anonymous said...

This is not true. There is no justification for the MFIs to charge 10-12 per cent on an average over and above the interest rate at which the banks make the capital available to them, which is 12 per cent rate of interest.

If the MFIs employ IIM graduates and others from the business schools and pay them a high salary, it clearly shows the MFIs are exploiting the poor for their personal business interests. I know of some MFIs which charge only 2-3 per cent rate of interest over and above the bank rate, which means the borrowers gets the loan at 15 per cent or so.

There is quite a big difference in 15 per cent and 24 per cent rate of interest. This arguement that in the urgan centres people bank online and so the coasts are minimal is rubbish. I have never banked online in my life, and still haven't paid an abornmally high rate of interest that MFIs charge to the poorest of the poor. What a shame

It is a crime, and MFIs must be held responsible for it.

Devinder Sharma

Anonymous said...

To Baskar's reply, let me clarify the credit card companies indulge in loot when you default on a loan. The MFIs loot at 24 per cent even if you are a disciplined and regular in your repayments.

Devinder Sharma

Ankur said...

Dear Mr Sharma,

Thanks for bringing the concerns/ issues around microfinance to all of us. I believe your article will result in more debate, discussion and exchange of information and finally may bring more clarity to all of us on such issues.

As i understand, the concern you have shown for MFI's is that they charge interest rate in the range of 24% from the poor people whereas the people in urban areas can get interest free loans or loans at 8% interest rate. You have also compared that agriculture loans are at 7% to the same poor family who is getting microfinance loan at 24%.

You have come to the conclusion that since interest rate charged by MFI's are high, they are making very high profits and you have put them in same league as money-lenders.

After reading your article, i have few questions for you:

1. At what interest rate MFI get debt from Banks, NABARD, SIDBI and other financial institutions ?

2. Why a poor women is taking loan at 24% from MFI's (Microfinance has reached 150 million people) when cheaper loans are available from other sources? Are MFI's forcing them to take loans ?

3. What is the repayment rate of agriculture loans vis-a-vis compared to MFI's ?

4. When we talk about money-lender- Is the rate of interest only variable that can put you in league of Money lender (the BAD people our Hindi films have portrayed) ?

5. What interest rate people pay on credit card loans (rural/ urban)?

6. Does agriculture loan required any collateral ? Is it available to landless poor ?

7. What collateral MFI's take against the loans they provide ?

Thanks and Regards

Ankur

Shirish said...

As we all understand that interest rate is a function of cost of capital/cost of operation/loan loss provision/administrative cost. Anything left after that is the margin available for the mFI and mFIs do not make a super natural profit after covering their costs. My response to the the debate is mix. We all would agree that had all the nationalized banks, RRBs, cooperative banks been successful (atleast honest in their endeavour) there was no need for microfinance institutions to emerge. They have committed even bigger a crime for not trusting the ability and creditworthiness of poor people and allowed them to be poor by not giving them an access to formal credit. Or at best what they did was giving them some interest free/subsidised money and there by developed a parasitic culture. In such a system neither the borrower nor the lender is into serious business. There would be many taker to the point that most of the massive goverment sponsered programme (IRDP,SGSY) did not yield the desired outcome.

On the other hand the most admirable aspect with the emergence of mFI was the trust they thrust in on the ability of the rural customer. They did not treat them as passive receiver unlike banks. With the emergence of many mFIs and some seriousness from the bank side now the rural customer have a choice from which mFI or banks they have to approach.

However having said this there is a very limited innovation have been made from the mFI side to pass on better product and value to customers. The average loan size till now is about Rs.7000 across the industry which is small enough to take on/scale up economic activity. On the other hand smaller ticket size adds to the cost of operation and brings in operational inefficiency. Most of the mFIs offer vanila product (JLG method) since this has worked across the golbe. Most of the mFIs again linking an insurance product along with the loan with out proper attempt to create an awareness about insurance as a social security tool.
mFIs have to do a lot better in term of product innovation, pricing strategy, delevery mechanism etc.
Employing management graduates, introducing good MIS is to bring efficiency into the system (mFIs need to ensure this, they should not be mere cost centers)
By the way giving sweeping statement is not going to help the poor any way. Such a large country requires multiple approach, system, organizations.

Anonymous said...

The artice is informative.Nice to know that the money lending has become more organized,transparent and cheaper to the customer.Emergence of micro finance sector has helped millions to access loans.Group loans has helped build social capital.The requirement is so huge is that there is lots of scope.Few choose it for soical purpose and few commercial.Both are fine.Now there are so called intellectuals who see RED(Left) in this.I would have been happy if Sharmaji had suggested few workable alternatives.

Anonymous said...

Thanks Yar
I am supporting you that why MFI taking more than 24% interst from poor family where Govt. providing less interst to well settled business man with subsidy.
there are no subsidy in MF why? how many sucess story in MF in ratio to loan distrubuted. most of Mf only provding loan and no background supports to develop a business. I know people are taking more than 5 loans from five MF.

It is business for MF or what?

I am not against to MF beacuse it reached to door of a poor family.

Need a special attenation to this asu.tripathy@gmail.com

Anonymous said...

Where the arguments went wrong in this article:

1) Author mentions interest rate charged by Village Sahukars as minimum 60% and cleverly avoids mentioning USUAL average interest rate charged by these people.
--> The usual interest rate charged by these Sahukars will be a minimum of 100%. When these Sahukars give 100/- as loan, they expect 150/- to be repaid in few weeks. Now you can calculate the annual interest rate charged by these people and see why they are villain.

2) Sahukar has little interest in progress of most of his loan receivers. He acts with ulterior motives and structures payment of loan amount to receiver according to his comfort and ulterior motives instead of satisfying the need of the receiver. This along with high interest rate results in near 100% default in loan-repayment and enables Sahukar to realize his ulterior goals (normally, capturing of property of loan receiver).

3) Sahukar is never going to give a loan to a person who has no capacity to repay the loan at Sahukar's usual interest rate of 500% for small sum of money and near 100% for large sum of money.

4) Gov't Bank providing loan to Villagers:
All these screwed by greedy corrupt bank officers.

I will just tell a real-life story which I came to learn in my childhood from a villager in our area. In 1992, that villager, a SC person and educated till Higher secondary school, received the loan from SBI under some government scheme to support entrepreneurship by SC/ST people. Bank manager of the SBI threatened him either to just receive 4000/- in name of 8000/- loan (that is 50% of loan money in pocket of the Bank Mgr) to be repaid in 3 years or get no loan at all.
--> real rate of interest : (8000-4000)/(4000*3) = 33% which went into pocket of corrupt SBI bank official
+ some 10% interest rate charged by SBI under that scheme for SC/ST people
= 43%

--> loan was low interest only on paper.

--> It is a MYTH that poor villagers (here person in example was enough educated) can get low-interest rate loan from gov't banks.

5) Considering all above, if poor are really repaying the loan from these MicroFI at 25% interest rate, nothing can be great !! No wonder, loan repayment rate is near 100% !

Regards,
Ravindra Sonwani
Chhattisgarh

dr said...

Dear Sir,

I appreciate your concern, but the article is an effort to express your biased concerns rather than getting into the reality. If the situation is same for all, then why there is a debate of India and Bharat. If your financial system is so strong that there should be uniformity, then from where these MFIs came. So I do not think MFIs are neo money lenders. I think we need to have basic business ideas to understand these dynamics. Basic motive of business is profit and MFIs are doing business to earn profit and at the same time they are adressing certain social concerns and fulfiling social objectives. There are organisations which are carrying out microfinance activities in a non profit mode, but again they are based upon the grants, which they do not need to repay. Besided that just go through the kind of products some of the MFIs are bringing to the market and the kind of changes these are bringing in the lives of poor people. So, the article need to be based on a fair and detailed study. But we always do have an attitude to criticise new things and good initiatives rather than appreciate the positive aspects. The article seems to be perfectly fitting into that framework.

Sanjaya

Baskar said...

It is pretty heartening to see such a good debate emerging on this topic. Thanks Mr.Sharma.

My take- each one of us are taking one view and just on seeing the other view at all.

For a moment let us assume that there comes a cap on interest rates to be charged at say 15% and MFIs/ Investors / banks feel that this is unviable (actually it will be unless one of these low interest propenents take up even a small project and prove that this is possible)and the flow of credit stops, will this do any good to the end customers. No doubt that MFIs need discipline, a cap on their greed and the customers' benefit in mind.But to go to extremes, is no solution.

We in this country are used to critising when things happen(even with side effects) but are all ok if there is inaction. If low ineterest rates is the only solution, government intervention will be the best. But the fact is that the way it is done / executed is also important.

All this debate is mainly because of non-step personal wealth creation focus of promoters and these discussions will seize if the promoters become transparent and keep teh social angle in mind. If not such discussions/ negative publicity will come homw to haunt and disturb the industry in a major way.

The end sufferers are THE CUSTOMERS.

sudhir said...

Why such biased view. Though I share your concerns I have to say this that your article would have been worthy of notice if it was more balanced and you suggested alternatives to MF. As for your concern on higher ROI have you tried to find out the reasons for it. As you have suggested all through the article that MFI's are making super profits please go through their Balance sheets.

Anonymous said...

Good article and valid arguments. I believe that we should also look at ways to improve the condition as individuals and not just leave it to the bigger organizations.

Peer to peer lending actually addresses the concerns of high interest rates as depicted by the author. Check out www.rangde.org and how it is making a difference, albeit small.

Harihara said...

Mr Sharma has written an article which definitely raise a debate. It is good that the debate has come up sooner than later and its somehow true to quite some extend. But the article lacks understanding of the sector and alternative suggestions. I believe it is easier to write article and criticise others than to suggest a workable formula to the Govt.RBI/Banks to go and lend the poor people at 6-8% rate. After 60 years of independence not even 10% population is well served. He should first write about the Govt and Banks adventure as urganised failure while also criticizing the MFIs. I personally feel that MFIs are charging more than what they should, but writing such an article would kill the small and emerging but not-for-profit initiatives at all. So Mr Sharma should make distinction of different entities within the microfinance sector and write accordingly

Anonymous said...

Mr Sharma, I am a proponent of microfinance and have been following it since its evolution. I am shocked at the shallowness of your research and appalled by the fact that you are able to blast an industry based on loose facts!

Can you please let us know your research methodology and whom did you meet as a part of your research related to this article. Your comparison with local money lenders is short on logic and proves that you have not researched thoroughly. Maybe you should compare with the numerous schemes the government and donor agencies have conjured in the past half century.

A big chunk of a MFIs cost goes in to client selection and very close intense followup for recovery. This is the only reason why MFIs clock 99%+ recovery rates and exactly the reason why banks are not able to recover from the same segment - simply because their model does not support intense monitoring and follow up.

MFI operations are designed to accommodate over 70-80 touch points (door step) per client during the term of the loan. Try managing costs involved in client education over 10 days (2 hr a day) before giving the loan. Try going every week to a remote village and collect repayments. Try managing 250 employees (mostly high school pass outs) from 30 locations across a 200-300 km radius. Added to the above - try managing the local money lender, local politicians and goondas who are out to get your money. Also add costs incurred for regulatory compliance and taxes.

Have you ever asked - why the numerous populist loan waiver schemes have not pulled people out of poverty? - why micro finance clients are very happy with mFIs?- why the government's pet financial inclusion project, 'Business Correspondent' of banks has not taken off? - why is the government not waiving the service tax on micro-insurance payments in spite of numerous appeals?

Management guru's advocate that NO business model is successful unless clients accept it. If it is true - you know why MFIs have demonstrated success.

Your story should focus on the real story - based on solid research which has depth. It is of course easier to research shallow!

Even successful models evolve all the time. Microfinance models have clearly demonstrated success while evolving - and are also facing critical issues to deal at his point in time. A brilliant person like you should perhaps focus on how to make this successful model evolve better.

Anonymous said...

I am amazed to find som many people lauding this poorly researched and misleading story.

Mr. Sharma has not bothered to explain some of his claims and assertions (low rate of interest to farmers, reasons for higher interest rate on MFI loans, etc).

Classic case of a journalist picking up on a story and targeting it at the emotions of those people that genuinely sympathize with the poor and swaying thm in the wrong direction.

MFI loan rate defaults are higher than regular loans. Hence the cost of securitising the loan is higher.

The cost of recovery is also high (collecting Rs 100 a month from a poor person costs more than recovering Rs 6500 car loan EMI from an urbanite).

Administrative costs per loanee are high due to the smaller loan size.

A fair comparison is the interest rate charged by credit card companies on Outstanding payments which is often 30% per annum. The business risks of these two products are comparable.

Mr. Devinder Sharma probably has an axe to grind against some microfinance organization.

Happens all the time in the business of news.

Devinder Sharma said...

Well, if you are finding it difficult to do business at an rate of interest lower than 24 per cent, please quit.

The poor don't need an organised money lending class to suck their blood anymore. This is a crime, and I will go on fighting it.

Devinder Sharma

Anonymous said...

Well, the article seems highly under-researched. It's easy to criticize someone just like that without knowing the details. Having done an extensive research in microfinance myself, I have to say that 24% interest rate is indeed too high and it should be reduced but the reason is not that MFIs are exploiting the poor but our regulatory system which increases the total cost of microfinance for these MFIs. Indian regulations doesn't allow circulating deposits to non-banking institutions. This increases the total cost of operation. Grameen bank has been able to do the same at almost market rate because it can act like a bank and move deposits (Your Grameen bank information is not correct, pls check again). I do agree that there are some MFIs which are trying to simply make money out of poverty but not all. Please do a better research before blindly criticizing anyone. I have myself seen the difference microfinance could bring into the lives of the poor. Please do not overlook that. I am disappointd at this utterly immature article.

- IIM Bangalore student

Devinder Sharma said...

I suggest you read this study published in Boston Globe.

It is published under the head: Microfinance dosn't work, claims Boston Globe (read the report at http://indiamicrofinance.com/blog/microfinance/microfinance-articles/microfinance-doesnt-work-claims-boston-globe.html)

Hope it helps bring the realities to you.

Devinder Sharma

Perwinder Singh said...

Thanks to all for updating on issues in MF.

Micro finance somehow is on a right way.
MFI should reduce the interest rate on working with innovations, Grass root innovations. If an MFI has been established, properly. Then do not go for expansion they have to go for reducing interest rate on same area.

Other way as per of my personal feeling: I, fight for reducing poverty and want to see a self dependent people or village or community not for showing money to poor people because they are always needy/ready. Like if you show them Rs.1 lacs ($2000) they can take it, but they dont know where and how to use. they will also promise you that we will repay on time etc commitment.

Right now as per of following link:
http://www.mixmarket.org/mfi/country/India

we have only 16 mill active borrowers in India which is just equal to 2% of total all village population. It may be 3% if we count other MFIs who are not included in mix data base. Still we have a very big pie to cover.

I would say we need to work on our existing models and some innovative methods to reduce interest rate. Try to work on PULL method where needy themselves comes to us and ask for loan. Right now we are going to villages and asking them to make groups and take loans. In pulling methods we can reduce transaction cost.

I am not big researcher but trying to become. I am big fan of micro-finance because this is only tool where private companies are coming forward to invest not spend. It is the best tool ever i have seen which is accepted by poor people.

I likes to give solution then giving argues on argues. Always try to solve the issue rather discussion.

Anyway good to see you, great effort Mr.Sharma for using other side of the coin.

Thanks

S S Sangra said...

Well I appreciate Mr. Sharma's grit and courage to expose the exploitative practices the so called poor man's bankers' adopting and taking credit of alleviating poverty in this massive poverty struck Nation which needs an Honest credit purveying system and structure but alas! that's a wishful thinking only in this biggest banking network Nation. Everyone has reasonsto explain for the Exploitative practices and the failures but is there anyone who has the solution? The highest authorities of this Nation accept the rampant corruption in the Govt. fund distribution and the credit disbursement systems but no one come forward with remedy and the poor has to suffer the most.The Nation is doing well on the Economic front and we being the second largest developing economy in the World is not able to devise the effective and untarnished systems and procedures for serving the poor.Mr. Sharma is absolutely right in terming the issue exploitative because "AAM Aadmi" is generally not allowed to know the rate of interest charged by our financial institutions whether it is the Urban Elite with the credit cards or the microfinance or the agriculture credit( supposed to be available at 7% but the poor farmer has to pay extra even to get KCC).If the poor has to be served in the right earnest it needs to develop a corruption free, Honest and understanding Financial Organisation. I dont think all the financial organisation involved in financing to poor have this capability and inclination of this kind.

Anonymous said...

Friends, its true that the operation cost for MFIs are high hence they justify the high interest rate. However, when you actually calculate the interest rate charged by the MFIs, you would find it much much higher then the mentioned 25 percent. Since the money is collected on an weekly basis the cumulative interest rate would be around 35 to 40 percent. Whereas, the interest paid by the MFIs for its capital (taken as debt from Bank) is based on annual basis. The MFI repays its lender on an annual basis, hence you can make out the difference. The money is huge...

MFIs, no doubt have saved the people from the money lenders, but they are no good and no great. I have closely worked with the typical clients of microfinance and have found that the clients remain in the debt trap as they remained with the money lenders and on the contrary the MFIs have grown up to become big companies hiring IIM graduates and all....

The other thing which I noticed was that the new so called MFIs which have come into existence specially in the urban areas are not at all serving the poor. They are serving the Low income class people who have a job, small house etc, however no access to financial services from the formal financial institutions.

Anyways, I can go on and on...Mr. Sharma, the fight against the high interest rate is on but I think the greed amongst us is more powerful then the need. I have resigned...

Anonymous said...

And above all, don't you think...why the hell the Venture Capitalists want to come in Microfinance.

It paisa paisa and the return is huge for the MFIs. On the name of sustainability and service to the poor the MFIs are minting money.

Sajan said...

Dear sir,
Thanks for your research and findings and it is eyeopener like me .Even in Kerala these looting gangs are very alive and they keep involve in religious activities also so they will get the support from religious leaders.Along with MF activitie they will maintain some more activities like
1.Natural resources
2.Advocacy
3.councilling
4.Education for poor
4.Health programmes
So, the people as well as govt think they are uplifters of poor,these blood suckers of the poor must remove from our country.

Aditya Nararan Garnaik said...

Mr.Sharma,your concern is genuine.Please continue your research.Concept of microfinance is noble,but its commercialisation is unethical.Absence of effective regulatory framework is another factor for modern shyloks joining the race.Did our freedomfighters ever dreamt that our many of elected public representitives will be looting our own country?
Unitedly pass a bill for their higher perks and debate endlessly over BPL limit.Of course all MFIs are not shylocks,as all moneylenders in venice were not shylocks. There should be regulation to see that MFIs should be not profiting and transparent.The existing public sector Banks and Co-operatives can be utilised to promote MF at their branch level by adopting SHGs,which can be catalytic and comparatively competative with profit oriented MFIs.
Thanks for your debatable yet thought provoking topic.
Aditya Narayan Garnaik
a Consumer Activist