Mfi in Kerala
INDIAN INSTITUTE OF MANAGEMENT, KOZHIKODE | KUDUMBASHREE | A Study on Microfinance in Kerala | | | Section - E
Manju Nair – PGP/015/288
Harini Narayanan – PGP/015/278
Samarth Wadhwa – PGP/015/316
Samresh Kumar – PGP/015/317
Siddhartha Roy - PGP/015/321
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INTRODUCTION
In the early 1990s, following explosive demand for their services, a number of nongovernmental organizations (NGOs) that provided loans to the poor decided that the only way to keep up with the demand was to spin off commercial microfinance organizations. These new organizations combined two previously separate institutional “logics”: a development logic that guided their mission to help the poor, and a banking logic that required profits sufficient to support ongoing operations and fulfil fiduciary obligations.1 However the microfinance organizations faced a double challenge in terms of having to survive as new ventures while striking a delicate balance between the banking and development logics they combined so as to avoid “mission drift.” Basically it is a hybrid organizational structure that is being talked about in case of Microfinance organizations. Microfinance being a new type of hybrid organization cannot rely on any “ready-to-wear” model. Research has shown that in this context, tensions and conflicts among logics may abate as one logic gains dominance over others2. The origin of microfinance is generally credited to the Grameen Bank of Bangladesh under the leadership of its famous Nobel prize winning founder, Mohammed Yunus, who characterizes the mission of microfinance organizations as providing the poor—whom he describes as “natural entrepreneurs”—with working capital with which they can realize their entrepreneurial instincts (Bruck, 2006). Before the Microfinance industry came into being, small loans were only available from informal lenders who were basically loan sharks and pawnshops at annual rates well over 100 percent
Manju Nair – PGP/015/288
Harini Narayanan – PGP/015/278
Samarth Wadhwa – PGP/015/316
Samresh Kumar – PGP/015/317
Siddhartha Roy - PGP/015/321
|
|
INTRODUCTION
In the early 1990s, following explosive demand for their services, a number of nongovernmental organizations (NGOs) that provided loans to the poor decided that the only way to keep up with the demand was to spin off commercial microfinance organizations. These new organizations combined two previously separate institutional “logics”: a development logic that guided their mission to help the poor, and a banking logic that required profits sufficient to support ongoing operations and fulfil fiduciary obligations.1 However the microfinance organizations faced a double challenge in terms of having to survive as new ventures while striking a delicate balance between the banking and development logics they combined so as to avoid “mission drift.” Basically it is a hybrid organizational structure that is being talked about in case of Microfinance organizations. Microfinance being a new type of hybrid organization cannot rely on any “ready-to-wear” model. Research has shown that in this context, tensions and conflicts among logics may abate as one logic gains dominance over others2. The origin of microfinance is generally credited to the Grameen Bank of Bangladesh under the leadership of its famous Nobel prize winning founder, Mohammed Yunus, who characterizes the mission of microfinance organizations as providing the poor—whom he describes as “natural entrepreneurs”—with working capital with which they can realize their entrepreneurial instincts (Bruck, 2006). Before the Microfinance industry came into being, small loans were only available from informal lenders who were basically loan sharks and pawnshops at annual rates well over 100 percent
References: 1Institutional logics are taken for-granted social prescriptions that guide actors’ behaviour (Friedland & Alford, 1991; Ocasio, 1997; Suddaby & Greenwood, 2005; Thornton, 2004) in fields of activity. 2(Selznick, 1949) 3(Drake & Otero, 1992; Otero & Rhyne, 1994) 4 Commercialisation of Microfinance in India: A Discussion on the Emperor’s Apparel : M S Sriram, IIM Ahmedabad 5 Dr VP Raghavan,Professor of Economics and Executive Director, Towards a New Approach in Poverty Alleviation and Women Empowerment: The Case of Kudumbashree Projects in Kerala 6www.kudumbasree.org 7www.crd.kerala.gov.in/kudumbasree210608.pdf 8 Jacob John, study on Kudumbashree project :A Poverty Eradication Programme in Kerala :Performance, Impact and Lessons for other States 9Manoj PK, Prospects and Problems of Housing Microfinance inIndia: Evidence from “Bhavanashree” Project in Kerala State