The Messy Reality of Microfinance: Women’s Struggle for Financial Inclusionin India
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Microfinance, the lending practice that targets vulnerable women without collateral, has dominated India’s financial news for a decade. Despite its reputation for helping women entrepreneurs become self-sufficient, it appears that the reality is far messier.
The majority of women borrowers use loans to pay for school fees, medical expenses, and clear debts, struggling to make ends meet. While the industry continues to receive considerable investment, its outward mission to serve excluded women has shifted, and microfinance institutions seldom consider the real needs of women in their strategizing.
A recent book based on a decade of research on India’s commercial microfinance sector reveals that the industry’s everyday functioning systematically reinforces gender inequality, both within their organizations and in their interactions with clients. Women borrowers perform unpaid labor, organizing groups and leveraging personal information to ensure debts are paid. They take out larger loans each year if they repay their debt, providing microfinance institutions with larger profit margins. The women workers within microfinance institutions, who hold positions many borrowers envy, find themselves on something of a sticky floor with limited options for career growth.
Women workers are the backbone of the microfinance industry, but they lack intimate knowledge of their client’s needs and how to form groups that best serve them. India’s microfinance industry needs to refocus its mission to genuinely serve excluded women and provide them with the necessary support and services. Until then, women will continue to borrow money to make ends meet, and the industry will continue to profit from their struggles.
Re-Reported from the story originally published in Dailyhunt
