The Hindu Business Line : ‘Regulation needed for microfinance’

Hyderabad, Jan. 4 Microfinance needs a lot of regulation in the country as the experience with private microfinance has not been very good, according to Mr Verghese K. Jacob, Chief Integrator and Lead Partner, Byrraju Foundation.

Speaking at a seminar organised by the Association for Consumer Research-Asia Pacific Conference 2009, at the Indian School of Business here, he said that though the Andhra Pradesh Government was extending microfinance to self-help groups at 3.5 per cent interest rate, private institutions were charging between 20 and 25 per cent.

“When a person is still fighting poverty, you cannot expect him to pay high interest,” he added.

According to him, microfinance was usually taken for onetime investments and though the poor seek money for creating an asset and thereby economic activity, they generally end up clearing previous debts or giving it away in dowry to their daughter’s marriage or paying hospital bills.

Mr Jacob expressed the need for obtaining microfinance assessed and the healthy models of collection introduced.

Inclusive growth

Speaking on the initiatives taken by the Byrraju Foundation, which has so far adopted 200 villages, Mr Jacob said that the bottom of the pyramid should be reversed to ensure inclusive development.

“There is a lot of misfortune as far as people below the poverty line are concerned. I completely disagree that there is an economic opportunity which can be capitalised from the bottom of the pyramid,” Mr Jacob said.

He added that the real fortune that they have is not in their economic wealth, but is in their ability to manage with very little resources and optimise their resources.

More Stories on : Events | Andhra Pradesh

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page