Tamil Nadu - Tiruchi   

Course correction for MFIs advocated

— .PHOTO:R.M. RAJARATHINAM.

Right point: Malcolm Harper, Chairman, Micro Credit Rating International Ltd, London, releasing the souvenir at a function in Tiruchi on Friday

TIRUCHI: Financial empowerment of the millions of members belonging to women self-help groups through NABARD would serve the intended purpose of poverty alleviation better. Micro-Finance Institutions (MFI) charging exorbitant interest have failed to rectify poverty. The six to seven per cent return on investment that MFIs enjoy was enormous, according to Malcolm Harper, Chairman, Micro Credit Rating International Limited.

Mr. Harper was addressing the inaugural of a national seminar on ‘Micro Finance for Inclusive Growth: Challenges in Sustainability of Micro Finance Operations and Interventions' organised by the Department of Women's Studies, Bharathidasan University. The two-day event is sponsored by the University Grants Commission (UGC).

Mr. Harper did not rule out MFIs turning insolvent, faulting bankers and venture capitalists for viewing the MFIs as dependable customers. The borrowers have been misguided and the MFIs were making huge money at the bottom of the pyramid, he observed, wondering why there was procrastination on the part of the regulator. The gap between the poor and the rich have only widened. He saw a strange phenomenon in men promoting micro-finance institutions supposedly directed for welfare of women. The approach to poverty alleviation through micro-finance was working much better in the neighbouring States of Bangladesh and Pakistan, he said.

Merger of MFIs with (nationalised) banks or their transformation into banks, community ownership, meaningful insuring of loan seekers, and inclusion of men as beneficiaries were some of the remedies Mr. Harper advocated on Friday for placing the MFIs on the right trajectory.

Presiding over, S. Devaraj, Chairperson and Managing Director, Grama Vidiyal Finance Limited, Tiruchi, said the MFIs, in general, were only able to break even with the interests they charge after meeting the operational costs. The hassles MFIs faced in Andhra Pradesh were due to the problems created by money-lending politicians. MFIs have to move beyond extending credit by way of federating the clients and initiating them into income-generation activities, Mr. Devaraj said.

Delivering the key-note address, K. Parthasarathy, Syndicate Member and Director, Institute for Entrepreneurship and Career Development, called for collaboration between MFIs, bankers and universities whereby short-term courses could be conceptualised for initiating the loan-seekers into entrepreneurship and ensure their socio-economic progress. The conference was to harmonise the objectives of the MFI and SHG movements, said N. Manimekalai, Seminar Coordinator and Director, Department of Women's Studies.

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