Hand Dough or Hand-Hold: Dilemma at a Microfinance Institution
K.S. Ranjani
NITIE, India
Srinivas Gunta
Indian Institute of Management Indore, India
Volume 13: 2018, pp. 363-380; ABSTRACT
While plain-vanilla credit disbursement works well in the short term for a microfinance institution, it needs to improve profitability through scaling up initiatives that call for standardized and effective deployment of low-cost, low-skill employees. In our case, we deal with a microfinance institution / business correspondent that not only tries scaling up but also focuses on two seemingly unrelated yet tightly linked areas: increase the capacity of the clientele base for life-enhancing credit programmes; and generate a broad support for microfinance as an instrument of positive social change. In this case study of a microfinance firm, we look at how it tries to balance these imperatives, focusing on long-term operational sustainability while simultaneously providing a fulcrum for the social objectives. The firm is making unconventional choices in terms of empowering its borrowers and offering skill building. Whether this pursuit of bottom up and demand driven growth strategy would lead to better quality of relationship with its borrowers, needs to be seen in the coming years.
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