It has been lauded as one of the most promising ways of using the market to reduce poverty and boost economies in some of the world's most deprived areas. But in recent months the work of Microfinance institutions (MFIs), which provide small loans to poor people with no access to traditional banking services, has come under scrutiny after a spate of suicides in the Indian province of Andhra Pradesh was linked...
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Isaac hints at law to curb microfinancing
Finance Minister T.M. Thomas Isaac has said the State government may push a legislation to regulate lending by Microfinance institutions. Addressing a press conference here on Sunday, he pointed out the relevance of the Andhra Pradesh Microfinance institutions (Regulation of Money Lending) Bill, 2010. “The entry of the Janasree Sustainable Development Mission into the microfinance sector poses a risk. Leader of the Opposition Oommen Chandy should clarify his stand on the risk...
More »ADB plans to set up $250 mn guarantee fund for microfinance by Aveek Datta and Anup Roy
India’s Microfinance institutions (MFIs), under pressure because of stricter rules in their largest market Andhra Pradesh and the consequent slump in repayments there, may get a boost from the Asian Development Bank (ADB). ADB is constituting a $250 million (around Rs1,135 crore) facility to offer guarantees against loans to MFIs extended by banks in the Asia-Pacific region where it operates, including India. The move is aimed at encouraging banks to lend...
More »Who is responsible for India's poor – the state or the private sector?
Regulation in India's microfinance sector aims to address feckless borrowing and reckless lending – but will the new restrictions entrench poverty, rather than end it? One of the many crushing burdens for India's poor bear is debt; unable to make ends meet, they turn to traditional moneylenders. They are willing to extend credit, but at unconscionably high rates – sometimes exceeding 80%, and keeping borrowers in lifelong penury. Popular cinema and...
More »Maximum Dithering for Minimum Wages!
Even though the Central Government agreed to link the wages paid under MG-NREGA to the Consumer Price Index for Agricultural Labourers (CPIAL), it shied away from paying statutory minimum wages in various states of India. Their logic for this: Lack of clarity on who will bear the extra financial burden—the Centre or the states? A letter from the Prime Minister Manmohan Singh to UPA and NAC Chairperson Sonia Gandhi dated 31...
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