Apart from a few exceptions, many South Asian MFIs have doubtful performance records. Responding to the requirements of development banks and commercial lenders, the Indian organization M-CRIL has carried out a total of 110 creditworthiness ratings on MFIs. This article categorizes the operations of these MFIs as: Grameen Bank-type, individual banking programmes, and MFIs promoting self-help groups. The article then describes what the assessments reveal about the performance of these different programmes, and compares them with averages from the MicroBanking Bulletin. Although operating costs are relatively low for MFIs in the region, portfolio yields are even lower, and few of the MFIs have yet reached operational self-sufficiency.
There is a push for digitizing payments across the board in India. This has picked up steam after the demonetization of large currency notes in November 2016. But how ready and willing are low-income Indians (as well as low-income people in other developing countries) to adopt digital payments? This question needs more thought as there is a range of issues around mobile phone penetration, bank account features, acceptance of digital payments across value chains, and the viability of small transactions.
Taking Stock: Nothing exceeds like excess - The Indian microfinance crisis and what other countries should learn from it
The microfinance crisis in India – sometimes mistakenly described as the AP microfinance crisis – is a classic case study in political economy with all the ingredients of a cinematic potboiler.