ON this grand occasion, I would also like to add that our organization Milaap.org, a microfinace platform provider run a fundraising campaign Adopt an Entrepreneur successfully by adopting 28 budding entrepreneurs out of our goal of 30 financially and would pledge the Hon’ble chairman to take initiative for such campaigns which will land Microfinance, India on more popularity.

Hope, our Hon’ble Chairman would look forward to raise his voice on the concern.

Thank You

The result is an “Animal Farm” situation where we are now not able to distinguish between “pigs” and “humans” and vice versa. In fact, money-lenders have got a make-over by packaging themselves as MFIs. A good example is Mohd Yunis of Grameen Bank comes from a traditional money-lending caste. And of course, he got the Nobel Prize and so did Al Gore & Pachauri. Thank God the Nobel Committee did not confer Gandhiji the same distinction, by clubbing him with these scamsters.

The IPO of SKS, one of the largest MFIs in India, saw it over-subscribed by 15 times; their Ten-Rupee share was priced at a premium of Rs 985 – showing how much the market had confidence on their profitability while “banking with the poor”. MFIs argue that they have to charge high rates to maintain profitability. Profitability, which even private banks couldn’t match! Profitability that permits SKS to pay Rs 1 crore as bonus to their just fired CEO!

And how do they attain profitability?

A month ago, SKS in the state of Andhra Pradesh was accused of a series of farmer suicides that prompted the state government to introduce new restrictions on the microfinance industry by seeking to cap lending rates and end coercive means of recovery. Last week alone, Andhra Pradesh police arrested three loan agents of SKS Microfinance and Spandana Sphoorty Financial Ltd. after borrowers complain that they were illegally pressured by the agents to repay their small loans around $1,300. For those of us in the field, this conduct of MFIs is no surprise.

MFI research puts irinterest rates between 25-30%. But my experience (and this is my 30 years in the field) put this figure several times higher. Even if we take this range which they described as the lowest in the world, the only benefit of such loans is for working capital and not capital formation. What is the kind of subsidies Rata Tata gets to produce a one lakh car? We all are aware that a mere 0.5% rise in banking rates can crash the stock market, so sensitive is their profitability linked to interest rates. Compare this with those the poor is asked to bear.

AP’s share of outstanding microfinance loans represents nearly 40% of the sector’s total portfolio, according to CRISIL. Now if MFI is all about access to the poor, we can ask the question, why the clamour to be concentrated in a state which belong to top-five in development in the country? We would have thought they would have gone to the five lying at the bottom rung of the country. But no, they avoid it like plague. It is easy to see they do this on repayment potential of states. The interests MFIs pursue are interests of self sustenance and their own growth. The poor is hardly in the radar except for rhetoric. In fact, it is on the blood and coercion of the poor, MFIs like SKS can giveaway Rs 1 crore as bonus to the CEO.

The sooner MFIs are seen as profit enterprises, the better. The longer they pretend they are pro-poor, the longer they discredit the NGO sector that gave birth to a Frankenstein. Rather than regulate MFIs, I for one will welcome the day of their demise.

1. Conceptually speaking Micro finance is a package of financial services and micro credit is one among them. Micro credit alone cannot fully represent Micro finance. Further micro credit alone is inadequate to address the poverty issue. It is unfortunate to call the institutions dealing with micro credit alone acting as a money lender- as Micro financial institutions.
2 Addressing the question, neither Microfinance nor micro credit can end poverty. They are mere financial inputs . Unless supporting non financial inputs are integrated sequentially and suitably to the needs of different segments in the poverty pyramid, poverty cannot be either alleviated or reduced sustainably.

There is a lot of people wanting to help volunteering with disabled people and that help is not being managed correctly and disabled people are being left out from the help and support available to them.