Bangalore International Centre had arranged a talk on “Microfinance in India- Issues and Prospects” by Mr. Anal Jain, Advisor, Sa-Dhan, The National Association of the Indian Microfinance Sector, on Wednesday, 17th November, 2010 at 6:30 pm. The Talk was moderated by Dr. Narendar Pani, Professor, School of Social Studies, National Institute of Advanced Studies.
In a lucid analysis, aided through a power-point presentation, Mr. Jain highlighted the objectives of Microfinance as those of providing the poor with financial services on a sustainable basis, as well as a channel for Micro credit for Income Generation activities. He drew attention to the highly- acclaimed Grameen model of Microfinance, developed by Prof. Muhammad Yunus of Bangladesh, which fetched Prof. Yunus the Nobel Peace Prize in 2006 and stated that in India there was another model, apart from Grameen Model, which was based on the linkage of self-help Groups with the Banks. The two models had both similarities as well as dissimilarities and advantages as well as disadvantages. On balance, however, the Grameen model has better growth potentials, even though the current statistics indicates greater credit disbursal through the SHG- Bank linkage. Region-wise, Micro-finance has spread more rapidly in the South (50%), followed by East (25%), North (13%) and West (12%). Under the Grameen model, the total operating expenses of an average Microfinance Centre is lower than the SHG- Bank model. Mr. Jain traced the origin of the present crisis in Microfinance Industry to growing commercialization, focus on growth at the cost of portfolio quality and multiple lending/ over-borrowing over indebtedness and felt that the ordinance promulgated at Andhra Pradesh is likely to throw out the baby with the bathwater. He advocated appropriate regulations to allow savings and enabling Associations and MFI’s to enforce a code of conduct evolved by them.
It was a totally civilized and interactive evening of discussion which threw more light, and generated less heat, on an interesting, and often intriguing, subject.