The Burning Case of Micro-finance

burning microfinance

A burning matchstick having fire can cause havoc if does not handled properly. Death toll rises to 80 and claimed to be increasing sharply due to the suicidal incident of debt ridden customers of microfinance which is a lending hand to poor.

Some people are selling their cows or buffalos, which they have bought for earning a living, or another committed suicide which costs a life and leaves their family behind to mourn and regret about their beloved one’s life. Another side of a coin, microfinance, begged a ‘Nobel Peace Prize’ and gaining glorious momentum to capture angel investors, venture capitalists and non-government organizations’ bird’s eye. The holy figures of people coming out of poverty with inspiring faces to make the world believe in microcredit’s auspicious and fruitful effects to alleviate poverty from the planet earth, which is one of the millennium development goals aimed to be achieved by 2020.

Whether the shining luminous glazing light becomes dim or dull lusture began to luminate. From then to now, ‘Microfinance’ word creates illusion of debt remover, is disappearing with the sound of money stash in profit making business of poverty alleviation. Even Mohd. Yunus is now shouting for the profit making business of microfinance which is quite different path from its foundation goal.

First time in history, the ‘Social Entrepreneurship’ emerged as a powerful and exciting business arena to abridge the gap between poor and rich. Last few months are capturing ‘microfinance businesses’ in vicious cycle of controversies to question the integrity and the notion of microfinance, and continuously following as a shadow.

In my opinion, conundrum of microfinance does not lie in the business of microfinance but the way it is operated. Not only this but also on whom and how they must be operated. Microfinance pundits’ have to be more cautious while dealing with the clients on which the foundation of social business of micro credit depends.

Firstly, credit to the needy must be provided, but not to the person who is always in need of credit. Proper evaluation of business skills and their successful implementation up to the stipulated period should be made. If everything is fine, go for a loan approval.

Secondly, the problem of easy loan disbursement to a person without checking his loan repaying capacity, will definitely lead to a daunting and scary verdict which will become newspapers’ breaking news.

Thirdly, over burden of debt have to be enquired before sanctioning of a loan. A loan cannot be given to fulfill the monthly targets. In many cases, borrower takes two or more loans from different sources, which later becomes a headache and cost the borrower’s life.

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This article is written by Dushyant Sethiya, Author of the Book Micro-finance : A Helping Hand