By Melissa Beran Samuelson, Clinical Instructor of Global Entrepreneurship
Our friends in the US are seeing increasing attention to microfinance in the news through the New York Times and a blog in the Wall Street Journal. For those students with me on the Microfinance in India Winterim, the contemporary debates surrounding microfinance in India have surrounded us. Our course started in Delhi, where we’ve had the opportunity to be introduced to industry leaders and gain understanding of microfinance, how it works, and the issues surrounding criticisms of the industry.
Byomkesh Mishra of the Royal Bank of Scotland Foundation and Shrikand Shrivastava, Vice President and Head of Microfinance at RBS Global Banking, helped kick off our program, along with playing a central role by arranging access to their partners in the industry. The program so far has included speakers Brij Mohan, Deepak Alok, Founder and Director of M2i Consulting, and Mathew Titus, Executive Director of Sa-Dhan, the leading microfinance network in India, who have all met with us to discuss contemporary issues and implications of the current conditions of microfinance in India.
The regulatory and repayment issues that have struck Andhra Pradesh have not occurred in other parts of the country, but our discussions with these industry leaders, microfinance institutions (MFIs), and the Royal Bank of Scotland Foundation that lends money and support services to MFIs, have made it clear that the industry is bracing itself.
“Microfinance has delivered in the field over and above the financial inclusion side,” said Mr. Mohan, who is widely considered to be the father of Indian microfinance. He added that “dreams were fulfilled, but in the process we made crucial mistakes and we are paying for those mistakes.” Thus, a large part of our winterim has focused on identifying those mistakes and understanding what went right and how microfinance can go wrong.
In large part, Mr. Titus argued that the “problem in microfinance is one of perspective versus reality” and “what we have to fix is our approach.” Part of the issue is that India has a long history of strong states and when it comes to concerns about the role of microfinance and how it operates, “the state won’t be a silent spectator.” How to operate in that environment and how the industry will emerge from this debate are questions without a quick answer, but having the opportunity to be here and ask these important questions of industry experts and leaders is a fascinating experience.