Cash transfers, the latest global development fashion, involve several risks in India, not least the risk of forgetting the need for continuing structural change. WHEN I was growing up, several decades ago, middle-class society in India was always a little delayed in catching on to Western fashions whether in music or dress or in other aspects. The past decades of globalisation seemed to have changed all that. Modern communications technology...

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...

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...

An empirical analysis of the Microfinance industry shows that the recommendations of the Malegam committee would have significantly more detrimental consequences than have been anticipated in the report. The Microfinance exchange (www.mixmarket.org) is the most comprehensive data source for MFIs across the world. Table 1 displays the information on several parameters of Indian MFI performance for 2009. Column 2 displays the average values of performance parameters across 88 Indian MFIs....

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...