Are MFIs really serving the poor?

2006-10-31T05:35:00.000-08:00

Dear Friends,

In the recent days, I am very much worrying about the functioning of the MFIs - Micro-Finance Institutions. The concept of MFIs now totally diluted with commercial approach where the borrowers are exploited with high rate of hidden interest. The people who got loan from the MFIs don't know what high rate of interest they are paying. The simple tactics that the MFIs are practicing that anyone can get loan within a short period of time. One cannot get easily loan from the nationalised banks though the interest is more than 5 times lesser than the MFIs. The poverty and the inability of the people are well utilised by the MFIs. As a result the MFIs are getting lot of profits from the interest they are charging. Here it is only the question of access to money. No matter how much the MFIs are charging from the borrowers. The borrowers need not tell the MFIs the purpose for which they need money. One can get loans repeatedly from MFI if he/she settle the previous loan amount. For settling the previous loan, she/he can avail more amount of loan from the same MFI or other MFIs and this practice will go on. As a result, she/he will be a permanent borrower and always having debts in her/his lifetime that cannot be reversed easily. At last, she/he had to settle the overdues by pledging the assets or selling it.

My view is that MFI can do a better job and serve the people who really need helping hands from others. The MFIs can be effective in serving the poor communities and the people who need money to improve their income status by charging nominal rate of interest and cutting down the operational costs. My plan is to establish such MFI which will really help people to find better access to money at affordable rate of interest. Can anyone of you help me in this regard? Please click below to understand some recent views on MFIs.
Microfinance model needs tweak in India

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2006-10-30T23:33:00.000-08:00

Dear Friends,

I am S.Damodaran born and brought up at Woraiur, Tiruchirappalli in the central part of Tamil Nadu, India. All my school education right from the primary to college studies and my profession started at Tiruchirappalli. I love very much the city where I have grown up and working. If you ask me why I like Tiruchi, it is because of the River Cauvery, the St.Joseph's Church and the Rockfort temple. I have started the NGO Gramalaya in the year 1987 with my friends. Gramalaya is an organisation working for the promotion of water and sanitation for all. Gramalaya is a non-governmental organisation working for the amelioration of rural and urban slum dwellers with grants from donor agencies and government departments. I can proudly say that in the water and sanitation sector, Gramalaya is one of the leading NGOs in India. The works of Gramalaya are given in the following website : www.gramalaya.org

To introduce my family background, my father and grandfather were stone sculpturists who engaged in construction of temples, making idols of different gods and to some extent agriculture. I am aged 44 years and having two daughters, Priyanka and Preethi. My wife Vijayalakshmi assists me in my profession though she is a housewife. I have studied in Bishop Heber College of Tiruchirappalli and completed my post graduation in Commerce.

Currently, I am working as the Country Director for WaterPartners International for India projects. WaterPartners International is a US based donor agency which supports NGOs and MFIs for promoting water and sanitation for the needy in developing countries. The website of WaterPartners International provide you more details : www.water.org

Damodar online

Are MFIs really serving the poor?

My Profile