The Gold Standard | Sad news for microfinance

John Elliott (ht: Narayan Ramachandran) has a good piece on Dr. Manmohan Singh’s (non) role in India’s economic reforms. On this aspect, Surjit Bhalla got it right. Once he correctly lauded Mr. Yashwant Singh, finance minister in the NDA government, as a more genuine reformer. To an extent, Mr. Chidambaram could also be considered a reformer. He tried a bold budget in 1997.

Sajjid Chinoy tries to shed some optimism on India’s reform prospects. One hopes that he is right.

This is very sad news indeed. Bharatiya Samruddhi Finance Limited – India’s oldest Microfinance Institution – is on the verge of closure, according to this MINT story. I know Mr. Vijay Mahajan well. I have tremendous respect and admiration for the work he has done at the policy level and at the grassroots level. I sincerely hope that closure is not eventually required. The Andhra Pradesh Government has burnt down the house to kill a few bedbugs and, in the process, has dealt a heavy blow to financial inclusion.

The sector needed a crisis, alright, to mend its ways but it did not deserve a death blow. Further, the Andhra Pradesh Government has plans to set up its own Non-Banking Finance Corporation. Is that 21st century governance? Should governments be running NBFCs?

As Vijay correctly points out in this news-article, 92 lakh borrowers are now unlikely to get credit from any bank, let alone future MFI. Is that financial inclusion?

I hope this serves as a wake-up call for the AP Government rather than the beginning of the end of the private sector MFI

And, finally, Yeddyurappa resigns.

DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.