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. 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. 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.
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.