Resources
Introduction
Globally microfinance has emerged as an inalienable part of strategies to address poverty. From concept to commissioning, microfinance has development underpinnings. The commercial business perspective is considered quite alien. Access to microfinance services has enlarged the choices and opportunities for the poor to raise their income level and improve their quality of life. It is more of development finance and not charity nor a pure commercial business. It has been demonstrated that the microfinance operations per se is sustainable on its own without commercial motives. However there is wider appreciation over the need for public investment in the infrastructure, putting-in place systems and capacity building to realize the full potential of microfinance intervention in terms of scaling-up the livelihoods, expanding businesses and enlarging the enterprises. In other words the microfinance clients should not be burdened with such costs.
With this clarity and sense of purpose, microfinance operations have started expanding globally and in countries like India and other Asian countries the development focus has had the primacy. The microfinance is seen as an alternative finance to the mainstream finance which is inaccessible to the poor as well as to the informal system which is exploitative. The contexts like Africa and Americas, microfinance institutions have been established to deliver micro credit, whereas in context like India, the mainstream banking system, is mandated for social lending have reached out to the SHGs for financial linkage. This has led to the question as when microfinance will become part of mainstream finance. Further, micro credit and its delivery has occupied the center stage, whereas, its bouquet of financial services would be much more effective in achieving the purpose of poverty reduction, which means offering savings, insurance and remittance services.
Alternative Paradigm and Perspectives
There is a greater concern across the globe that microfinance programmes have been drifting from the original purpose and moved away from the primary objective of addressing poverty rather more concerned with the sustainability resulting in crass commercialization with its attendant impact of chasing profits at the expense of clients and hence increasingly we are asking the question what has gone wrong with microfinance. However the alternative perspectives of community ownerships, building social capital through microfinance and leveraging microfinance for larger development process and outcome have been expressed well in many microfinance programmes across the globe, particularly in Asia.
Savings first approach lays strong foundation for a suitable microfinance programmes and the social capital provides platform for the micro insurance services. The social development interventions involving health, education, livelihoods, gender empowerment and mainstreaming are among the important perspectives in this alternative paradigm. These alternative principles and approaches are embedded in poverty school approach. It is this focus, combining the social, financial and economic inclusion which set the tone for the alternative summit.
Alternative to Mainstreaming
Should these alternative perspectives and practices continue to remain so? This is currently generating quite a debate as to when and how the mainstreaming would happen. In fact it is a formidable challenge, which needs to be realistically looked at for different contexts in the globe. From this perspective, it is a matter of gratification that India has put the best foot forward by initiating, advancing and advocating the social capital model of microfinance intervention under the enabling framework, wherein the development NGOs/Governments are playing the facilitating and enabling role. The microfinance has been rooted in the communities and their institutions. Whereby microfinance being pivot around which grassroots community institutions, leadership have spawned and sustained livelihoods, health and education programmes. This leveraging of the social and financial capital created by microfinance holds greater promise for engendering larger positive developmental impact. This should be the dominant paradigm of microfinance and when that happens, mainstreaming of microfinance would have been achieved and microfinance would be much more meaningful, that is microfinance as it should be.
The Alternative MF Summit
This Alternative MF Summit organized at Hyderabad, India sets the tone and marks the beginning of the process towards mainstreaming. The menu of sessions scheduled given below in this programme book would vouchsafe.
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| Alternative MF Summit Perspective Papers | NRLM Booklet |
