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How long the vanilla won't melt?
As all of us have seen the industry as "it believes what is tested, successful and worked". The success of Grameen Model has been tasted by 95% of the mFIs. The target customers are the same, "women from urban slums, semi urban places or maximum from villages with good approach and all weather road". The ultimate result is "the same clients are being targeted by multiple mFIs". Even with the emergence of alpha (microfinance network) its extrimely difficult to bring self regulation. No mFI is going to loose their pie as long as they are able to recover their loan. This would certainly bring us evidence of more and more Kolar like incidence.

Having understood this, I fail to understand what stops mFIs to venture and design innovative financial product that would not only help them to diversify their portfolio (thereby reduce risk), build in large number of customer base in a compact geography, reduce cost of operation. The only answer could be nobody wants to take a risk. There are very rare and stray incidences in mF industry when the entire portfolio of the mFI evenly (rather propertionately) distributed across product though a few experimentation has taken place.

There is no reason (or evidence atleast) that other form of rural finance product would not work. mFIs like BASIX have already demonstrated that even risky loans like crop loans can be managed with zero delinquency. Why there is no takers for that?

I think the vanilla is in on the verge of melting and only those mFIs would thrive who have multiple flavors in their offerings!!!!

Note: The author is Mr. Shirish Chandra Panda, Head Operation at Akshaya Microfinance.

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