When The Poor Became Profitable

SHRIYA MOHAN traces the Indian microfinance story and what stops it from making a dent in poverty

WHEN MUHAMMAD Yunus, winner of the Nobel Peace Prize in 2006, showed the world what a small loan could do to a group of poor villagers in Bangladesh, people wondered why such a simple idea had never been thought of before.

According to N Srinivasan’s State of the Sector Report on Microfinance, published by Sage, over 800 microfinance institutions (MFIs) now operate in India, reaching out to over 140 lakh clients, with an outstanding cumulative loan of Rs 5,900 crores in small loans. Over 54 million clients from the Self Help Group (SHG)
— Bank linkage programme and MFIs, today access microfinance services. The Indian microfinance sector has seen phenomenal growth in the last few years. In 2007-08 alone, MFIs have had a growth rate of 40 percent.

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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.

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  1. A

    November 30, 2008 at 11:15 am

    I am a veterinarian in Kashmir and I have seen so many cases of the scenario Mr. Vijay Mahajan is giving where a loan provided for alleviating poverty through livestock farming (self help groups) have turned bad and become liabilities for the intended beneficiaries. The need is to repaint the whole picture rather than small parts of it.

  2. Abhay

    November 30, 2008 at 10:03 pm

    Dear friend agree with what you have to say..

    They are trying to effect course corrections but looks like it will take time..

  3. Sanjay

    June 20, 2009 at 9:24 am

    I think portfolio size and reach does not suggest the extent of poverty eradication. we also do need to understand the kind of credit discipline of both the system. I strongly feel microfinance is a better instrument for not only eradicating poverty, but it also help them to become self dependant and make the poor people more bankable. In other words, it is giving an oppertunity for the formal banking system to grow beyond their limitations.

  4. Anonymous

    July 28, 2009 at 5:49 pm

    Dear All

    Let me learn

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