Microfinance Debate

Originally posted on Blackboard by Tanseem Chowdhury

http://www.nytimes.com/2010/11/18/world/asia/18micro.html?scp=1&sq=india%20microcredit&st=cse

Microfinance has been a very popular topic in the last few years, especially after Muhammad Yunus won the Nobel Peace Prize in 2006 for his work in the field of microfinance. Most observers reveled at the maverick idea of alleviating poverty by providing small loans to the poor. Yunus’ work with Grameen Bank showed the revolutionary powers of microfinance with banks facing minimal defaults and women being empowered. However, in the last three years, microfinance has been confronted with a great amount of backlash, especially with the events which occurred in the Indian region of Andhra Pradesh. In Andhra Pradesh, borrowers were unable to repay microloans and the microfinance system in the country was on the verge of collapse. Observers, politicians, bankers, and economists threw scathing remarks at Dr. Yunus and the sustainability of microfinancing. However, I don’t think Dr. Yunus intended microfinance to be a profit-seeking enterprise. It should be questioned whether providing small loans at high interest rates, as was done in Andhra Pradesh, should be referred to as microfinancing as intended by Yunus.

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About tchowdh

I am Junior at Tulane University View all posts by tchowdh

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