tag:blogger.com,1999:blog-7182576430045656062.post1094059504429098743..comments2024-02-25T13:47:07.003+05:30Comments on Candid Unheard Voice of Indian Microfinance: Have The Commission Agents Finally Arrived in Indian Micro-Finance?Ramesh S Arunachalamhttp://www.blogger.com/profile/09264606020720529040noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7182576430045656062.post-25478314665625943962011-01-26T13:48:57.278+05:302011-01-26T13:48:57.278+05:30Dear Sekhar and Peter
Thanks for your useful feed...Dear Sekhar and Peter<br /><br />Thanks for your useful feedback. <br /><br />I cover the operational evolution of the agents in a separate post and will use your insights in this<br /><br />Thanks<br /><br />Warm regards<br /><br />RameshRamesh S Arunachalamhttps://www.blogger.com/profile/09264606020720529040noreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-68078399164353333692011-01-26T13:11:45.277+05:302011-01-26T13:11:45.277+05:30Good to know atleast now about the deep root of br...Good to know atleast now about the deep root of broker and agent presence in mfi operations.<br /><br />Now all mfis must come and share the truth than hiddig the matters.<br /><br />These agents are organised in a systematic manner, but Mfis are in unorganised stage.<br />so, it is better to work with transparency and accountability .<br />unless we weedout agent model one day mfis has to pay a big price for this kind of events???.<br />Even now it is not too late.peternoreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-67962561419803029782011-01-26T10:09:06.331+05:302011-01-26T10:09:06.331+05:30(and this is the third and final comment from me o...(and this is the third and final comment from me on le agents)<br /><br />two. larger thoughts.<br />The smaller agents lead lives of quiet desperation. If the borrower defaults, the MFI will contact the women. And then, they will point at the agent. Who will probably get hauled off to the police. The bigger agents raise questions about the utility of microfinance itself. They thrive on patronage. Which translates into a complete negation of what microfinance stood for. I am reminded of something that Lenin Raghuvanshi, founder and executive director of Peoples' Vigilance Committee on Human Rights, who works with the beleaguered weavers of banaras, says communities such as these are structurally marginalised. To ensure repayment, MFIs are tying up with local Dabanng characters. “But if an MFI ties up with the local elite to disburse funds, isn't it getting coopted into the existing semi-feudal society?" If so, what kind of qualitative change in the lives of its clients can it possibly bring about?<br /><br />cheers<br />shekharAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-54033388963257550632011-01-26T10:08:24.866+05:302011-01-26T10:08:24.866+05:30There are some larger points to be made here. It i...There are some larger points to be made here. It is in the interest of the agent to keep the repayments on track. He/She stands to lose if the arrangement collapses. Also, the fact that agents are doing the onlending need not be bad per se. They know the market, and can customise loans far better than the MFIs – they might lend anywhere between 2000 to 200,000 to a borrower, offer flexible repayment schedules, all the while ingeniously ensuring weekly repayments are on schedule. Until, of course, an external shock throws all calculations awry.<br /><br />Which is what happened in Kolar. Accrding to an M-CRIL report on the crisis, a local agent called Sardar Khan had taken a loan in the name of 20-25 local women, and onlent it further. When he failed to repay, the MFI staff went after these women. Who in turn told Khan to pay up. In the heat of the moment, he drank poison, landed in hospital, his friends complained to the local Anjuman Committee, which issued a fatwa banning any business with MFIs.<br /><br />4. The third model is more predatory. Here, a local political agent steps in as a local intermediary. In this case, he becomes the local agent with the intent of converting the loans into political capital. Says an ex-employee of both SKS Microfinance and Spandana: " "In most of the slums, there is usually one ganglord whose permission you need to work in that area.""<br /><br />The balance of power here is in the agent’s favour. If the agent leaves, the MFI will not know who its final clients were. Nor would the clients know who the MFI is – because if the MFI tries to promote itself in the village/locality, it will alienate its agent. Also, if another MFI comes in, the agent can play the two against each other. Or start representing it as well. The branch staff of the first MFI will rarely be in a position to object. Also, if the agent is not able to keep the repayments coming, the branch staff is likely to advance him/her a fresh loan to avoid a default which would expose the distortion.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-22515431290726408842011-01-26T10:07:46.582+05:302011-01-26T10:07:46.582+05:30dear ramesh,
am pasting some notes from a story th...dear ramesh,<br />am pasting some notes from a story that i had been researching about the mf agents. like you say, while more studies are needed to quantify the prevalence of agents, the structural reasons responsible for their entry into microfinance might be widespread.<br /><br />one. the generic agent models.<br />1. The centre leader, usually a more affluent woman, uses her position to hold on to some of the borrowers’ loans. If she oversees, say, 8-10 groups (about 40-50 women), she retains and uses a part of the overall loan portfolio -- for consumption, or to put into her own business. While the loans continue to be in the names of the members, the centre leader makes the repayments. For this to happen, the field executive and the branch manager have to outsource the responsibility for disbursing and collecting money to the centre leader. She then decides whom to lend to. .<br /><br />2. In a second model, an community member -- a shopkeeper, a local bigwig, a rickshaw puller, etc -- offers to supply borrowers to the MFI. Over time, he becomes the local point person, and all the MFI's work is done through him. He does the lending and he does the recollections. He might lend to the women. Or he might take their names on the application forms but lend to someone else.Anonymousnoreply@blogger.com