Kalyani mission to Dhaka in 1995 said ‘NO to MFIs for India’.

Kalyani and her Associate Sabetha paid homage at the war memorial of Dhaka, Miss.P.Kalyani, 25, an enterprising and educated young woman from Trichirappalli, a multi linguistic personality with superb Bengali language background had a mission to Bangladesh in April 1995 along with a team of 3 more learned senior persons from a Trichy based NGO.The team headed by Kalyani was to study Grameen Bank system for replication of the model in India as recommended by a leading international agency. The origin of Grameen Bank can be traced back about 35 years from now when Dr. Muhammad Yannus, Professor and Head of the Rural Economics Programme in the University of Chittagong, launched an action research programme to examine the possibilities of designing a comprehensive banking framework to provide the banking services to the rural poor. This is the time of the visit of four member team from Trichy had undertaken this mission, most world population viewed that Grameen Bank has reversed the conventional banking wisdom by removing collateral requirement and created a banking system which is based on mutual trust, strict supervision, accountability, participation and creativity.

At Grameen Bank, credit is the entry point and it serves as a catalyst in the overall development process. Grameen Bank sees credit as an empowering agent, an enabling element in the development of socio-economic conditions of the poor who have been kept outside the banking orbit on the simple ground that they are poor and hence not bankable. The founder of the Bank views credit as a powerful weapon He asserts that credit is a fundamental human right. Professor Yunus puts it as "creating favourable conditions for making a living through self-employment is a much more dignified way of solving the unemployment than initiating a system of doles and welfare payments".
The mission headed by Kalyani visited the entire Bangladesh the Grameen Bank and also its off-shoots and several other micro institutions those had Micro Finance Institutions mushroomed in Bangladesh. The mission headed by Kalyani admitted ‘Grameen Bank in recent years has not only expanded its credit operations which are targeted at the poorest of the poor in rural Bangladesh, it has also rapidly diversified its activities. However, a torrent of criticism from this mission of 1995 had cast a significant amount of doubt on the effectiveness of microfinance.. In this mission’s view, ‘we’re going through a skepticism phase after the initial honeymoon period:”Microcredit had this magical glow to it … It’s gone away, and that’s healthy. But you wouldn’t say that just because of the mortgage crisis, we shouldn’t have mortgages.”

Kalyani was firm that if the grameen system in the form MFI had been implemented, it would be burdening the poor with loads of debt as the companies themselves make millions. The mission narrated that “No evidence was found to suggest that microcredit empowers women or improves health or educational outcomes.”Kalyani also said that ‘There was also the problem of stability. Privatizing foreign aid has its risks, as evidenced by microfinance bubbles that popped in Bosnia and Nicaragua’. They further added that ”All kinds of credit — whether it’s mortgage lending in the developed world or microcredit in the developing world — tend to go through cycles..That means microfinance companies are susceptible to the same kinds of financial stresses that other lenders are susceptible to. The loans are tiny, yes, but if enough people default on them you’ve got yourself a crisis. Still, it would be unwise to jump to conclusions about the efficacy of microfinance until more time passes and we can examine the long-term health and financial status of families that received microloans. An idea this big and this ambitious deserves more time to be tested, with the caveat that regulation of micro lenders and careful, complete analysis of existing programs are a must’ Kalyani concludes that the Indian NGOs should be aware of the Return on Investment even for micro credit and fix a differential rate of interest for SHGs so that the investment would generate employment/livelihood. This report of this mission headed by young Kalyani at that time regarding the MFIs replication in India was well received by the Head of the NGO and the core team, not to venture into the MFI model of Grameen. Although God has called Kalyani back to his heavenly place at her young age, her wisdom of cautioning the NGO she was working and also those international sponsors, save the 7000 self help groups from certain  crude MFIs of the day. These women SHGs have adequate funds for their quality of life improvement and their way of life is harmonious and those got struck with MFIs are in deep trouble as the rate of interest collected from the SHGs by MFI works out around 36%, whereas the Return on Investment is around 18%, scuh a poor approach makes the women vulnerable due to their unbearable debts.Villuthuhal SHG federation gratefully remember Kalyani’s no to MFIs’-Etram News Service.