Several recent events have undermined confidence in microfinance and microfinance institutions (MFIs). These events range from the collapse of the microfinance industry in Andhra Pradesh to the Bangladesh government's dismissal of Grameen Bank President Muhammad Yunus?Nobel Prize laureate and venerated father of microcredit?to the increasing publicity about micro-loan debt bondage and debt-induced suicides of MFI clients.
What do these crises signify for the future of microfinance? Are the basic principles of finance for the poor salvageable? Can the model be improved?
From its inception in 1996, BASIX?one of the largest microfinance institutions in India?has realized that focusing solely on loans will not improve the lives of its poor clients. Recognizing that the complex problems of poverty require complex solutions, it has melded financial services with livelihood development and institutional sustainability to achieve its goals, all the while maintaining impeccable ethical standards and practices of social inclusion.
The BASIX experience presents a vital model for a revamped microfinance organization of the future, one that responds to clients' diverse needs equitably and effectively.