Taking Stock of Microfinance

This paper explores the current global turmoil in microfinance in the context of the problems that have arisen at SKS Microfinance in India. The authors argue that the roots of the current crisis lay in the attempt to scale-up the original “Grameen†model of microfinance set up in Bangladesh I order to establish profit-seeking bodies which have neglected the core value of trust underlying successful initiatives. Unfortunately, corrective steps may exacerbate existing problems. The founders of microfinance may have overestimated the impact of microfinance in abolishing poverty, but the hasty regulation that has been imposed to address some of the setbacks experienced in India, may only undermine further trust between borrowers and lenders. Undoubtedly, microfinance institutions have has an impact…