Commercialization and Responsible Finance
The performance of the industry has mitigated and obscured the tensions created by commercialization and accessing mainstream capital markets.
Various voluntary efforts for MFIs to behave better in Andhra Pradesh went unheeded. Unfortunately, these voluntary commitments were never honored, resulting in a metastasized problem in AP in 2010.
We need to focus on the real underlying issue and thinking that it is commercialization that is the problem.
Microfinance is at a critical juncture, and as we reflect on how we got here, should ask: What makes us different from what was previously done through the ages, since coins were first established as a medium of exchange? And how do we maintain what’s different and avoid slipping into the well-worn paths that emerge when we examine the history of usury?
The topic of commercialization has been hotly debated, largely because it raises fundamental questions about whether the dual social and financial missions of microfinance can coexist.