Comments on: MicroSave Asks Clients in Andhra Pradesh: How Are You Coping without MFIs? http://cfi-blog.org/2011/12/15/more-lessons-from-andhra-pradesh/ Thu, 11 Sep 2014 16:05:17 +0000 hourly 1 http://wordpress.com/ By: Holly Padgett http://cfi-blog.org/2011/12/15/more-lessons-from-andhra-pradesh/#comment-2567 Mon, 19 Dec 2011 18:12:20 +0000 http://centerforfinancialinclusionblog.wordpress.com/?p=4889#comment-2567 Thank you for your comment and the information!

I encourage anyone else interested in the post to check out the full report by MicroSave (linked to above), since I only briefly skimmed the surface.

]]> By: sahadev http://cfi-blog.org/2011/12/15/more-lessons-from-andhra-pradesh/#comment-2565 Mon, 19 Dec 2011 15:50:17 +0000 http://centerforfinancialinclusionblog.wordpress.com/?p=4889#comment-2565 The media coverage of MFIs in Andhra Pradesh has led one to believe that before the advent of MFIs in India, people were paying exhorbitant rates of interest to loan sharks. The reality is that there are three distinct types of institutions working in micro finance sector, of which the now troubled MFIs form a small part. The state assisted bank linkage programee has 564089 self helf groups availing Rs. Rs. 670664 lacs loans as on March, 2010 with nominal interest rate of 12 % subsidised by the state government by 8 % resulting in a net interest rate of $ %. The outstandng loans as on March, 2010 is Rs. 1173953 lacs ( Source : NABARD Report on State of Micro Finance 2009-10). The other category of mutually aided co-op credit societies is also still active and continuing their lending and recovery operations even today. They are charging 18-24 % on the loans and paying 9-12 % on thrift deposits of members. It is entirely wrong to say that people once again paying exorbitant rates of interest after the collapse of the big MFIs. The typical interest rate on unsecured loans given by village money lender is 36 % , and no hidden charges, penalties, forced insurance policies are part of such loans. This rate of interest is in no way usurious when compared to the interest rates of the big MFIs. In fact, the big MFIs made excellent use of the infrastructure of lakhs of SHGs built up through the decade long efforts of the state government, agencies like OXFAM, CARE , NABARD o and played havoc with multiple financing leading to their own downfall. The self help groups and co -op institutions which have grown from the grass root level continue to carry on their activities without any hindrance. The state of Andhra Pradesh also has one of the most progressive legislation in the field of co-operative societies, namely the Mutually Aided Co-op Societies Act which gives enormous operating freedom and flexibility to the societies. This act has helped the formation and excellent running of a number of co-operative credit societies in the field of micro finance. I request the media to give balanced coverage to the microfinance sector in the state of Andhra Pradesh . The equation Microfinance = Big MFI is not at all true

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