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Commercialisation of Microfinance in India: A Discussion on the Emperor’s Apparel

By Sriram M S

Abstract

The paper looks at the growth and commercialization of microfinance in India. It starts out be looking at how the commercial microfinance has evolved internationally by discussing two specific examples and then moves on to examine the specifics cases of four large microfinance institutions in India. The basic argument of the paper is that most of the early microfinance in India happened through donor and philanthropic funds. These funds came in to not-for-profit organizations. However as the activities scaled up, it was imperative to move to a commercial format. The paper examines the growth imperatives and the transformation processes. The paper then proceeds to look at the implications of the transformation process and its effect on the personal enrichment of the promoters of MFI as well as the governance implications. Basically it questions the moral and ethical fabric on which some to the large microfinance institutions are built. It ends by answering a set of questions that may emanate out of this discussion.

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