The industry hailed itself as the saviour of the poor. But it is now stuck in its own web. An insider's perspective on how it got itself into this mess
Growth at a Scorching Pace
From people carrying a sling bag on their shoulders and dressed in a khadi kurta, the microfinance industry has moved upmarket either to suits or FabIndia kurtas. A netbook has replaced the sling bag. In about a decade, microfinance has moved from helping the poor to access finance to an interesting business at the bottom of the pyramid. This paradigm shift happened with the entry of funding, initially from Silicon Valley, and then from the people who funded and fuelled the growth of Silicon Valley.
In Krishna, we suddenly decided that we could afford to reduce interest rates and continue with life as usual. Does that mean that we were charging more? How do we tread the fine line between trying to seek “what the market can pay” price and not appear greedy?
(This story appears in the 21 May, 2010 issue of Forbes India. To visit our Archives, click here.)