Microfinance

Vineet Rai article on Microfinance Crisis in Andhra Pradesh, India

Vineet Rai the Founder and Chairman of Intellecap has written an article on the Microfinance Crisis in Andhra Pradesh for the Harvard Business Review. The article follows below :

India’s Microfinance Crisis is a Battle to Monopolize the Poor

A king had a trusted monkey that was trained to wield a sword. As the king’s bodyguard, the monkey would go to any length to protect him. One day, while the king was sleeping, a fly started pestering him. The monkey tried to shoo the fly away but it always came back. Frustrated, the monkey decided to kill the fly. He struck the sword right where it stood — on the king’s face.

India has a strong oral tradition. Children are raised on stories passed from generation to generation, and every story holds lessons. The above tale teaches that good intentions are not enough — an overzealous protector can actually cause harm to those it loves. For proof, we need only look to the microfinance crisis playing out in Andhra Pradesh.

Vineet Rai, Founder Intellecap .Img-credit:.sankalpforum.com

Andhra Pradesh is the motherland of Indian microfinance largely due to the early and extraordinary work of its state government. In the late 1980s, it built the Self Help Group-Bank Linkage Programme (SHG-Bank Linkage) with support from the National Bank of Agriculture and Rural Development and World Bank Loans. It invested heavily in client education and, along with the not-for-profit sector, built up a robust microfinance portfolio.

Read the rest on the Harvard Business Review Website

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