Microfinance in India: a case study of Ujjivan and Grameen Koota

Abstract

Microfinance is one of the sectors in India where there is massive inflow of funds from different classes of investors. Combining better returns with social responsibility, microfinance institutions claim to uplift the poor of the country by utilizing funds from domestic and foreign investors. However, this may not be the situation on the field, with same areas being crowded with many institutions flush with funds and under pressure to utilize them to give out microcredit. This could lead the ultimate objective of the micro-finance sector, namely to provide credit to the poor for the betterment of their lives, being unsatisfied. There have been numerous studies on the clients of these microfinance institutions, as well as on their head offices. However, we realized that the field workers of these MFIs are a critical aspect, because they are the client facing personnel, who have to also fulfill the tasks set by the management of the MFI. To that extent, they have a difficult job, especially when the interests of the two stakeholders diverge. In this study, we have set out to examine if the macro-level policies of the organization affect the dealings with the clients. Our study focuses on two MFIs operating in Karnataka, Ujjivan and Grameen Koota. The reason for choosing these two MFIs is that while one of them, Ujjivan, is funded by external investors including foreign funds, the other, GK, is funded by donors. For the purpose of the study, we have interviewed field workers, attended center meetings with them and have also spoken with the head offices to know their perspective on the issues raised by us. The report is structured in such a way that the two institutions under study are presented as separate cases, after which the similarities and differences between them are identified and analyzed.