Grameen & the Human Side of Microfinance

March 24, 2010

Muhammad Yunus may be caught up in a legal imbroglio over his tenure at Grameen Bank in Bangladesh - he's currently appealing his government-ordered dismissal - but that hasn't stopped the Grameen Foundation from pursuing microfinance initiatives elsewhere on the Indian Subcontinent.

The global non-profit just announced stepped-up efforts to improve human capital management strategies at microfinance institutions in India. It also released a set guidelines for replicating the Grameen example of microfinance elsewhere.

The announcements come amidst heightened criticism of microfinance, especially in areas of India. Suicides by over-extended borrowers sparked protests last year and put a spotlight on the "people practices" of MFIs.

"The microfinance industry is at a critical juncture in its development and this moment provides an important opportunity to reexamine practices especially in areas such as human capital management that make up a major cost center for the sector, and could translate into greater impact on poverty and better overall performance," said Alex Counts, President and CEO of Grameen Foundation.

Grameen Foundation India Private Limited (GFI), a wholly owned subsidiary of the Foundation, will spearhead the project. The Citi Foundation, the McGraw Hill Companies and The Capital Group are donating in total $550,000 and professional support for the project.

"Given the challenges that come with rapid growth in any industry, the work of the Grameen Foundation is more important now than ever in setting best practices for developing innovative and impactful human capital products and services in the microfiance sector," said Pam Flaherty, President and CEO of Citi Foundation.

Guidelines for Establishing and Operating Grameen-Style Microcredit Programs is a 260-page tome based on practices and experiences operating Grameen-style MFIs.

In a related development, the Reserve Bank of India has announced the creation and funding of a new, government-run MFI liquidity fund. The India Microfinance Equity Fund is expected to help MFIs stretched thin by gun-shy investors, especially commercial banks, according to published reports.

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