“Goodbye, microfinance,” a column by opinion writer T K Arun, of The Economic Times, foresees an end to microfinance. The Economic Times is a publication focusing on the Indian economy. Mr Arun argues that the conditions that led to the success of microfinance are eroding in his home country of India.

He attributes much of the need for microfinance to historically poor outreach by formal finance. In these situations, entrepreneurs were faced to deal with moneylenders and landlords at exorbitant interest rates. He states that this condition is rapidly disappearing, as a result of a rapidly developing nationwide technology infrastructure, which would support mobile banking.

Additionally, he attributes repayment on microfinance loans to fear of losing creditworthiness and community standing. He claims a result of the rapid growth of microfinance is that there are enough creditors such that “some other desperate chaser of micro gold at the bottom of the pyramid was at your doorstep with a loan offer.”

By Matthew Castner, Research Assistant

Additional Resources

“Goodbye, microfinance,” by T K Arun. August 12, 2010, http://economictimes.indiatimes.com/Opinion/Columnists/T-K-Arun/Goodbye-microfinance/articleshow/6296631.cms?curpg=1

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