ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Microfinance: Lessons from a Crisis

The rural distress in Andhra Pradesh has been more than evident in reported incidents of farmers' suicides and hunger deaths. The incidence of indebtedness, particularly among small and marginal farming households in the state, is the highest in India. By passively encouraging microfinance institutions to expand without limits in a policy and institutional vacuum, the state had created the conditions for a crisis. This is the time for finding out the pros and cons of completely trusting a credit-based poverty reduction strategy to the neglect of more critical structural and institutional solutions.

Micronance: Lessons operation of the MFIs in the state. The ordi   nance, among other things, requires MFIs from a Crisis to register themselves, and prevents lend   ing in cases where loans are already out   standing. It allows for only monthly repay   ments and demands the display of interest Tara S Nair rates charged by the MFIs. Even as the

Sincere thanks to R Nagaraj for an encouraging and insightful discussion that triggered this write-up and P S Vijayashankar and Daksha Niranjan Shah for a helpful exchange of ideas.

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