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LATEST NEWS UPDATES | No small change this -TV Jayan

No small change this -TV Jayan

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published Published on Oct 22, 2018   modified Modified on Oct 22, 2018
-The Hindu Business Line

Roy tracks how microfinance, despite its blemishes, has empowered the unbanked in the country

For the poor in rural India, till not very long ago, credit meant the unscrupulous mahajans who roamed the villages with wads of cash. Dime a dozen Bollywood movies had depicted the wily moneylender who not just ripped off the hapless creditors, but who was also cruel enough to grab their movable and immovable property. Moneylenders are still prevalent in the Indian hinterland, even though their grip on rural credit market has loosened considerably in the last 2-3 decades, thanks to the advent of microfinance institutions (MFI), which started mushrooming in India by the 1990s.

The late blooming of microfinance as a concept in India is an irony considering that there is a shining example from the neighbouring Bangladesh how micro-credit can bring about a substantial difference to the lives of the poor. Since the mid-1970s, Muhammad Yunus and his microfinance organisation, Grameen Bank — winner of the 2006 Nobel Peace Prize — have been making affordable finance a reality for rural people in Bangladesh, particularly for women.

Credit to poor

Microfinance is defined as the provision of thrift, credit and other financial services — often of very small amounts — to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and attain a meaningful livelihood. Notwithstanding their late entry on the Indian scene, MFIs — be they are formed as societies, trusts or non-banking finance corporations (NBFCs) — assumed a lead role in providing credit to the poor.

In Ujjivan: Transforming With Technology, senior journalist Subir Roy chronicles the tale of a latest entrant into the field, Ujjivan, but in the process he also retraces the history of the organised microfinance landscape in India.

The book briefly touches upon the sporadic history of governments extending taccavi , or short-term loans, to villagers by rulers in medieval India, during British period as well as immediately after India attaining independence. Ujjivan, which Samit Ghosh, a banker of 40-odd years of experience, and others founded in 2005, is unique in many senses. In its brief existence, The Bengaluru-headquartered MFI negotiated several unexpected policy minefields — an existential crisis precipitated by an ordinance, and subsequently a State law, passed by Andhra Pradesh government in 2010 to restrict the operations of MFIs and demonetisation by the Narendra Modi government in November 2016 — with aplomb.

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The Hindu Business Line, 21 October, 2018, https://www.thehindubusinessline.com/opinion/books/no-small-change-this/article25280015.ece?homepage=true


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