An hour before midday, far away from the slaughterhouses, twenty women crowd a small room in a single room house in one of the shanty towns in Kolkata. The room is too small to house everyone so some are standing in the narrow corridor by the kitchen. The women gathered in this room are all ‘borrowers’. Every week, almost all of them assemble at this place-until the meeting point changes-to make ‘weekly repayment’ to the ‘loan officer’. Borrowers call these weekly meeting ‘matha batha’– headaches (192). There is Ajanta who runs a sari business, Purnima who runs a bookbinding workshop, Aditi’s husband who has a vegetable stand, another’s husband is a taxi driver, and Rekha who wants to lease a taxi too. Some women need to leave early to fetch water, few need to go home and start cooking, one needs to leave early to pick kids from school, the one whose house everyone is in, wants the meeting to end so she can start cooking.
Far from a picturesque commune where women sit in a circle to discuss domestic issues, the reality for many urban borrowers is one of managing time and domestic duties along with duties of being a microfinance borrower. The argument that microfinance has failed to live up to the hype is not new. In the last ten years, academic studies have critiqued the impact of microfinance and microcredit (Bateman, 2010; Karim, 2011; Sinclair, 2012). In the book, Financializing Poverty, Sohini Kar shows that microfinance is not only a bad development policy, but it is in fact incapable of providing a solution to the many ills of the people living in the global South. State, not private corporations and microfinance loans, should be held responsible for providing welfare and services to its citizens.
Marketed as a revolutionary development policy, microfinance has evolved over the years. When it started microfinance loans were simple loans but now MFIs provide ‘varied financial services….including savings and insurance, though credit remains predominant’ (8). The varieties of services are introduced to mitigate risks and increase recovery rates. However, these processes end up increasing the burden on the borrowers. The second evolution in microfinance is how the microfinance institutions generate income. MFIs are now deeply entrenched in stock markets and speculation. Any bubble or a bust affects borrowers at the end of this chain. Kar points out that despite the importance and impact of financialization on the global South, the ethnographic studies when discussing financialization tend to just focus on global North (12). Kar attempts to explore these gaps in the book.
Kar’s most fascinating contribution however is to show how small day-to-day bureaucracy of microfinance, the weekly meetings, the insurance forms, the guarantor forms, adds labour into their lives. Thus, far from ‘empowering’ the borrowers, microfinance increases women’s domestic labour. On the other side, the pressure for high collection rates concerns loan officers and staff members of the MFI. The discussion around this additional labour in the microfinance industry is discussed at length in the book.
The interaction between borrowers and loan officers ‘often extends beyond financial exchanges’. Loan officers often use the emotional strategies to recover loans from those who have fallen behind from their payment. In some cases, they will plead to the borrowers to pay the loans on time or else they, the staff, wouldn’t be paid. Hence such ‘pressure on the borrower obliges them (borrower) to recognize the personal responsibility to the loan officer rather than impersonal legal obligation to the MFI’ (97). These relationships manifest into other avatars too. Though forms are requirement for a borrower, Kar argues that ‘borrower’s creditworthiness is produced not so much because of the financial and biographical information …………but in the social interaction with the MFI staff’ (148).
The idea that microfinance increases the burden on the recipient is not shared by those running the business. Kar shows how MFI managers and CEOs see themselves as moral agents working to create a poverty-free environment. They see, like millions of others employed in the industry, microfinance as a positive tool for social change. Roshaneh Zafar, the founder and managing director of Kashf Foundation, a Non-Banking Microfinance Company, recently praised the virtues of microfinance sector in the leading newspaper in Pakistan: ‘In the long run, the growth of the microfinance sector, combined with access to skills development and education, can also go long way towards enhancing the productivity of micro-entrepreneurs.’ Zafar argues that people using microfinance are entrepreneurs who provide not only valuable services but also increase GDP of a country.
Hence, these micro-entrepreneurs should be admired and supported. In Financializing Poverty, Kar critiques this view. Microfinance, according to Kar, is nothing more than a ‘working-class credit’. Credit that people with low-income and with temporary jobs need to fill gaps in their income stream. But this temporary arrangement is not neutral, it increases the burden on the borrowers as well as those who work on the lower end of microfinance chain. Against the mainstream opinion of a microfinance entrepreneur who is smart, resourceful, engaging, and operational, Kar argues that at the bottom end of the pyramid, people often fight just for survival. And if there is a golden rule for most entrepreneurs in these situations, it is ‘jugaad’— making do (48).
Kar’s work shows that verification and other types of identity checks strains borrowers, who are mostly outside the peripheral vision of the state, with additional labour. Perhaps due to the timing of her research, Kar’s work has missed an opportunity to discuss and explore how microfinance would work alongside Aadhar Card. Aadhar card, the unique identity number for every Indian citizen, is now a prerequisite for loans. What additional labour are we to see after the introduction of this new biometric technology? A detailed economic and anthropological discussion of how people in microfinance are affected by the Aadhar card is needed and perhaps a subject of future discussion on this topic.
Date: 30 Jan 2019