The Transforming World of Indian Microfinance

Upscaling the provision of microfinance on the strength of its performance, measured primarily in terms of the repayment rates and financial sustainability indicators of a handful of microfinance institutions and without a serious reconsideration of certain vital development issues, may prove in the long-run to be an imprudent development strategy. Any effort at upscaling thus needs to be viewed with caution as it could actually lead to increased failures and credit indiscipline in the field. In the meanwhile, globally there is a visible trend of the commercialisation of microfinance, with NGOs transforming themselves into regulated financial institutions or non-banking financial companies and commercial banks entering the business of microfinance.