Issues in Microfinance...some unstructured thoughts

Atul has rightly quoted quite a few issues in microfinance. While I am not sure under which category I can classify my thoughts, I am randomly putting them down which ofcourse need lot of refinement.

Social Concerns:
“Empowerment”, “Development”, and such others are heavily loaded jargons. For me everything in this world has two connotations – financial and social. So, when I talk about development I mean financial development and social development. One without the other does not lead anywhere. When I refer to social problems I mean, the case of dalits, the case of marginalized farmers, the case of landless labourers, the case of bonded labourers, the case of child labourers, the case of dowry victims, the case of trafficking victims, the case of child marriages…so on and so forth.

While microfinance has done tremendously well in providing financial security, it has not had a note worthy impact on social security. But then who will solve those problems?

People themselves.

Yes. Human beings are peculiar animals. They have not only created problems but also found many solutions.

The practice of Sati can never be seen in India anymore.
The Colonial Rule cannot be found in India anymore.
An illiterate good leader can still become the Prime Minister of democratic India.

Who has done this?

People themselves.

Coming back to microfinance…

Conceptually SHGs has the potential to start up a movement as strong as the above basically because the are supposed to be people’s formed units.

My hypothesis is:

SHG reduces/eliminates not only financial defaulters but also the social defaulters.

To prove my hypothesis partially right, Take the classic example of anti-arrack movement in Andhra Pradesh which later became the genesis of SHGs movement in AP and now microfinance has entered.

If all problems in the world are solved by SHGs then why are we still facing problems?

We could solve most of the problems in the world. But unfortunately I hardly found any TRUE SHG. There are ‘n’ number of organizations which say that they start SHGs. How can they start SHGs? SHGs have to be formed by people if they really feel it a necessity. To that extent we may need to provide training. But we cant just ask 10 people to assemble at one place and ask them to form an SHG. Is it not super imposing on them? The success of SHG depends largely on how voluntarily the members have come forward to form their own group. The less voluntary it is, the greater are the failure chances.

To sum up, microfinance should act merely as a catalyst and enable SHGs to function independently, autonomously and economically stronger!