Confusion continues to reign in the debate on microfinance that has unfolded following the promulgation of the Andhra ordinance, soon to be replaced by Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act, 2010. A key confusion has been that microfinance is a major instrument of poverty alleviation. Going by the available scientific evidence and agreement among scholars, to-date, there exists no compelling study linking the expansion of microfinance to...

Fearing a default from Andhra Pradesh-based Microfinance institutions (MFIs), whose cash flows have been disrupted by new laws, lenders have asked RBI to ensure stability by bringing the sector under its purview. In a meeting called by the Reserve Bank to discuss funding of MFIs, it asked banks whether the institutions were repaying loans on time and if the end-borrower was suffering because of the credit crunch faced by them. RBI...

“To make democracy function effectively, we must have inclusive growth. Microfinance has given a choice to those who were earlier excluded from the traditional institutional mode of finance. Since more than 80 per cent of Indian farmers do not get loans from such institutions, emergence of micro-finance has been beneficial to the rural poor.” Dr Amiya Sharma, executive director of the Rastriya Gramin Vikash Nidhi (RGVN) opined this at the fourth...

IT WAS a windfall five years ago that taught Panchali Satyavva the power of a lie. It happened one Monday afternoon in Someshwar village of Nizamabad district in Andhra Pradesh. It was raining in sheets and she had just placed a bucket under the steady trickle of water from the roof of her hut. Two men were at her door, holding umbrellas and offering her an unsolicited Rs. 5,000. They...

The Bill to regulate Microfinance institutions tabled in the Andhra Pradesh assembly on Friday has upset the Microfinance institutions (MFI) network, who say their concerns have not been addressed and that may force them to shut operations in the state. "Repayment has fallen drastically and so we are not in a position to continue operations in Andhra Pradesh unless the situation is remedied," said Vijay Mahajan, President, Micro Finance Institutions Network. The...