The Journey of Indian Micro-Finance
In 2010, India's micro-finance industry suffered a crisis of faith that questioned the very basis of its existence. The Government of Andhra Pradesh, a state often described as the micro-finance capital of India, reported that as many as 54 people had committed suicide due to harassment related to debt repayment. For a country that has yet to recover from the agrarian crisis that continues to claim the lives of farmers at a regular rate, this was yet another blow. The champions of the downtrodden had turned into agents of oppression and harassment - or so it seemed. Why did such a fate befall an industry that, even during the global economic crisis, was the darling of bankers and investors worldwide? This book offers an objective view into the functioning of the industry and provides numbers to substantiate the enormity and the implications of the crisis, born primarily out of the pressures of commercialization and incentives gone terribly wrong, the lack of sufficient regulatory/supervisory attention, and the rigid and impractical stand of some state governments. Turning the crisis into a learning opportunity, the book touches on critical issues, such as India's corporate governance, MIS, internal controls, risk management, compensation, regulation/supervision, financial inclusion, and other aspects. A framework of suggested remedial measures highlights practical actions that need to be taken if the industry is to regain its credibility as a prime mover in the area of development and inclusive growth.
Publication Date: 11/15/2011