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Commercialisation of Microfinance in India: A Discussion on the Emperor’s Apparel

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Abstract

The paper looks at the growth and commercialization of microfinance in India. It starts out be looking at how the commercial microfinance has evolved internationally by discussing two specific examples and then moves on to examine the specifics cases of four large microfinance institutions in India. The basic argument of the paper is that most of the early microfinance in India happened through donor and philanthropic funds. These funds came in to not-for-profit organizations. However as the activities scaled up, it was imperative to move to a commercial format. The paper examines the growth imperatives and the transformation processes. The paper then proceeds to look at the implications of the transformation process and its effect on the personal enrichment of the promoters of MFI as well as the governance implications. Basically it questions the moral and ethical fabric on which some to the large microfinance institutions are built. It ends by answering a set of questions that may emanate out of this discussion.

Suggested Citation

  • Sriram M S, 2010. "Commercialisation of Microfinance in India: A Discussion on the Emperor’s Apparel," IIMA Working Papers WP2010-03-04, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:9867
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    Cited by:

    1. Biswajit Ghose & S. Joplinshisha Paliar & Liha Mena, 2018. "Does Legal Status Affect Performance of Microfinance Institutions?: Empirical Evidence from India," Vision, , vol. 22(3), pages 316-328, September.
    2. Saxena, Vibhor & Bindal, Ishaan & LeMay-Boucher, Philippe, 2020. "Social groups and credit shocks: Evidence of inequalities in consumption smoothing," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 311-326.
    3. Vibhor Saxena & Ishaan Bindal & Philippe LeMay-Boucher, 2019. "Social groups and credit shocks: Evidence of inequalities in consumption smoothing," Discussion Paper Series, School of Economics and Finance 201901, School of Economics and Finance, University of St Andrews.
    4. Raul Lejano & Savita Shankar, 2013. "The contextualist turn and schematics of institutional fit: Theory and a case study from Southern India," Policy Sciences, Springer;Society of Policy Sciences, vol. 46(1), pages 83-102, March.
    5. Lalitagauri Kulkarni, 2017. "Financial efficiency versus social outreach of Indian microfinance institutions: mission drift or character shift?," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 19(2), pages 323-340, October.
    6. Jean Paul Bonnici & Simon Grima & Sharon Seychell, 2019. "An Analysis of Efficiency and Productivity Change in Microfinance Institutions in the European Union: A DEA-MPI Approach," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 9(1-2), pages 94-123.
    7. Arzi Adbi, 2023. "Financial Sustainability of For-Profit Versus Non-Profit Microfinance Organizations Following a Scandal," Journal of Business Ethics, Springer, vol. 188(1), pages 57-74, November.
    8. Nilanjana Sengupta, 2013. "Poor Women’s Empowerment: The Discursive Space of Microfinance," Indian Journal of Gender Studies, Centre for Women's Development Studies, vol. 20(2), pages 279-304, June.
    9. Sarin, Ankur & Sriram M S, 2020. "Social Enterprises and the Pursuit of Mission: Form Matters," IIMA Working Papers WP 2020-07-03, Indian Institute of Management Ahmedabad, Research and Publication Department.

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