Criticism of IFMR-CMF Study on Microfinance and IFMR's Response

CMF Study on Access to Finance in Andhra Pradesh: Some Observations for The RBI and Other Stakeholders…

By Ramesh S Arunachalam, Rural Finance Practitioner

The CMF study on access to finance is a very interesting one and I would like to congratulate the CMF team for its hard work. That said, there appear to be some interesting findings from the study and I discuss these with other relevant issues about the study, its context, methodology etc – especially because the study is being increasingly relied on by policy makers and other stakeholders and therefore, it becomes very important to provide a fair and objective assessment of the study and its methodology and findings…that is the sole objective here and again, I would like to state that the work of CMF and IFMR require full appreciation because there is hardly any serious research of the kind they do, at least in Indian micro-finance…

Having set the context, here are some observations…

Mr. Justin Oliver writes in his post blog…on the CGAP blog…on November 11th 2010

Who’s the Culprit? Accessing Finance in Andhra Pradesh

“More than six months before these problems came up, the Centre for Micro Finance at IFMR Research, with funding from the Banker’s Institute for Rural Development at NABARD, conducted a household survey of 1,920 households in rural Andhra Pradesh to understand their access to and use of financial services. Led by Doug Johnson and Sushmita Meka, this was a representative survey of the state’s entire rural population, rich and poor, and collected detailed information on household savings and borrowing from SHGs, MFIs, banks, moneylenders, friends and family, and other sources. What we found is startling, and challenges many of the assumptions people have about microfinance in Andhra Pradesh.”

Two aspects in the above statement require clarification:

a) The timing of the study, its posting on the CGAP blog and its overall positioning; and

b) Its claim on being a “representative survey of the state’s entire population, rich and poor and borrowing from SHGs, MFIs, banks, moneylenders, friends and family, and other sources.”

First let us look at timing and related aspects. The study was conducted in June – Oct 2009 according to one the authors, who has said this in response to my query on the CGAP blog post. Read more on Microfinance in India

ifmr center for microfinance

Response to Criticism of “Access to Finance in Andhra Pradesh”

Thanks to the blog “Candid Unheard Voice of Microfinance” for devoting a post to the CMF study “Access to Finance in Rural Andhra Pradesh,” which appears, rather unexpectedly, to have become a hot topic given the issues in Andhra over the past several months. Little did we know when we first proposed the study to NABARD’s Bankers’ Institute for Rural Development that it might one day get such attention! But it has, and with that has come some misunderstandings which are worth clearing up.

1. The author is concerned that the study does not include urban areas. This is in fact the case. I wish we could have covered urban areas too — and in fact we included urban areas in our initial proposal to NABARD, but, understandably, given NABARD’s mandate, they requested us to focus on rural areas only. The study states this very clearly of course, and nowhere has anyone from CMF attempted to say that it includes information on urban areas too.

Read the rest on India Development Blog

Abhay N

Author : 

Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

    Contact via :
  • googleplus
  • skype


  1. Ramesh S Arunachalam

    January 25, 2011 at 1:48 pm

    Dear Doug

    Thanks for taking the time to clarify and really appreciate it! Your points are well taken on the aspect of effective interest rates (EIR’s) and the source of funds for repayment – there are genuine difficulties in getting this information but I am sure that you will agree that any access to finance study will have limited utility, if it does not present information on effective interest rates. All of us have access to finance but at differential rates and therefore, we need to understand the EIR’s for the various sources and only then, can we come to an informed judgment about the quality of access to finance and not mere access to finance.

    Likewise, it is important to understand the sources of cash for repayment as I have often come across clients borrowing from one source to repay another and also taking a 2nd/3rd loan to pay off the first and this does not take them anywhere…in the medium and long term…I just wanted to understand this aspect with regard to the study…I am sure you will agree that it would be important to know this…Much of the present crisis has been caused by huge levels of indebtedness with very little genuine repayment capacity… as Dr Y V Reddy, Mr Aditya Puri and others have regularly remarked…I felt your study could have provided valuable information to the world on this critical aspect…especially because it was conducted in AP

    On the point of the districts, I am sorry but I missed figure 15 and yes, the districts names can be got from there but I would have still preferred you coming out and saying that this study was conducted in “such and such districts”…for such and such reasons. I found it very difficult to read the fine print as well… I still feel that irrespective of the reason, the inability to survey and include highly saturated districts like Krishna, Guntur, East/West Godavari, Nellore, Kurnool, Khamman make the findings of the study less representative. I am sure that your study would have had very different results if some of these highly saturated districts, with lots of MFIs and multiple lending, had been included.

    On the issue of the study being representative and also stating the exclusion of the urban areas, I still feel that it could have been presented in a straight forward manner…if one were to look at the title of the paper or even executive summary (and not read the real fine print which many people would not), one would not see your comments on it being representative of rural AP minus Krishna. Likewise, I feel that the aspect of urban areas having been left out should also have been explicitly mentioned

    The point on NABARD not wanting to survey urban areas is perhaps understandable and also your point of therefore leaving out urban areas is well appreciated. However, the fact of the matter is that this survey does not cover urban areas where MFIs grew and proliferated at a frantic pace and where multiple, ghost and over lending was rampant. This indeed limits any inference with regard to multiple lending and associated aspects in Andhra Pradesh and I am sure you would agree with this

    Again, knowledge about the sources of funds for the friends who lent for interest would have thrown light on whether – as Mr N Srinivasan has argued – clients were engaged in using (benami or other) loan money for money lending as an enterprise. Please see my post on agents (http://microfinance-in-india.blogspot.com/2011/01/broker-agent-in-indian-micro-finance.html) in Tamilnadu where MFIs themselves admit this…Hence I raised this issue…

    And on the study being presented as a fresh study on AP, I am sorry but I beg to differ. Apart from the manner in which it was introduced in the CGAP blog and also the timing of its introduction, there are e mails from people close to CMF which have positioned the study rather incorrectly…I can share these with you…but the point is not to fault any one individual…so let us leave it at that…as I have made my position rather clear…


    Warm Regards


  2. Anupam Pal

    March 11, 2012 at 8:38 am

    Dear Sir,

    I am Anupam Pal,from WestBengal,a Govt. Institute certified ITI Surveyor,4years+ experience of various company,also I have experience 8 months Mechanical survey job, and 1year survey incharge post of ONGC survey job, and also have auto cad experience and I have 2years GPS instrument handalling,and experience.I also very successfully operate TOTAL STATION and LEVELLING instrument.

    Sir few month ago I sent my biodata to your email id. I dont know you receive that or not. My last resign company was L&T(Madhya Pradesh)Hindalco, Mahan alluminium plant. Now I am posted at same site, company name Technomack Engineers Pvt. Ltd.

    Sir now I look better chance or position for me, and so I want to join your esteemed and reputated organisation. Sir if you have any vacancy for me please advise me how can I do for join your company.
    I attached my biodata in this email kindly watch this.

    Thank you.

    Ph. No. -09933585721

    Email Id -anupam.pal37@yahoo.com

    Yours faithfully
    Anupam Pal

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top