Indian MFIs have deviated from idea of micro credit: Muhammad Yunus. ET Bureau Feb 14, 2012, 02.54AM IST MUMBAI: Microfinance institutions in India have deviated from the idea of micro credit, Professor Muhammad Yunus, chairman of Yunus Centre and pioneer of micro-credit, has said.
"They (MFIs) moved away from the idea of micro credit. That has created all the problems," said Yunus, in a media brefing in Mumbai. "MFIs based in Andhra Pradesh have drifted from their mission. They need to extract and reintroduce themselves to do business. The economist from Bangladesh, who created the innovative programme of providing small loans to poor people, especially women, to help eradicate poverty, said that listing of MFIs on the bourses was a wrong move. "This is a business done with poor people. The business model that was meant to eradicate poverty in the rural segment and help in financial inclusion has undergone a sea change. "Policymakers have to be careful while framing guidelines," Prof Yunus said. Muhammad Yunus banks on beating the enemies of microfinance.
Muhammad Yunus is good at being calm.
At 7.30am in a chilly office in central London, he talks with urbane charm and all the dispassionate objectivity of a philosopher as he considers the Bangladeshi government's campaign against him, and the possibility that it might destroy his life's work building up the world's first microfinance bank. He is Bangladesh's most famous son, known as the world's banker to the poor, winner in 2006 with the Grameen Bank of the Nobel peace prize, a tireless campaigner at global summits for microfinance and social enterprise who can count Hillary Clinton, Nicolas Sarkozy and Mary Robinson among his many friends. But as the saying goes, a prophet is never recognised in his own country. Neither the global acclaim – nor the protestations of both the French and the US government – is making much difference to a government intent on destroying Yunus's hold on Grameen Bank and the network of social enterprise companies he has developed over the last four decades.
Alternative currencies, monetary systems. Microfinance Goes Bad in India. The microfinance movement began in south Asia when Muhammad Yunus started Grameen Bank in Bangladesh in the 1970′s.
He was awarded a Nobel Prize for his efforts in helping bring women out of poverty in that country. It has been a successful experiment in social lending extolled by the likes of Bill Clinton, Kofi Annan and many other world leaders. These days, however, microfinance is starting to lose its luster. In the last month there have been several news stories on the dark side of microfinace. There was this story on NPR, the New York Times and Vator.tv and many others. In the Indian state of Andhra Pradesh, home to 75% of the microfinance companies in India, the state legislature has passed a new law that will likely send most microfinance companies out of business.
The problems stem from the predatory lending practices in place at many of these microfinance companies. Where is Kiva? One great part about Kiva is that they do try to be transparent about their field partners.
Microfinance. Community-based savings bank in Cambodia.
There are a rich variety of financial institutions which serve micro-entrepreneurs and small businesses. Microfinance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group. In some regions, for example Southern Africa, microfinance is used to describe the supply of financial services to low-income employees, which is closer to the retail finance model prevalent in mainstream banking. Microfinance is a broad category of services, which includes microcredit.
Background Purpose Traditionally, banks have not provided financial services, such as loans, to clients with little or no cash income.