Since I donated through Kiva to a fruit seller, I thought it would be interesting to learn about how Microfinance is viewed by experts in social development in India. Today’s article provides views Aloysius Fernandez (founder of Myrada), Madhura Swaminathan (professor in Indian Statistical Institute), and KG Karmakar (managing director of NABARD).

Some interesting views are:

“Microfinance in rural areas by itself cannot eradicate poverty. Credit may be a trigger for growth, but it requires a context of all-round development to function. This must be promoted by the government, the private sector or by the NGOs in really remote regions. It is this all-round development that creates investment options which the poor can choose from.”

“There is the admirable record of high repayment, but this success is not costless. A system based on the quick repayment of very small loans does not allow for funds to go into income-bearing activities that have a gestation period of any significance.”

“If we assess the average loan size per SHG borrowings, it is only Rs 7,000. This amount is too low to eradicate poverty. Many more cycles of micro credit availment may enable a rural family to achieve some levels of prosperity, provided the group remains in existence. It is estimated that an amount of rupees one lakh is the minimum amount necessary for a rural family to rise above poverty levels.”

You can read the entire article at: