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Endnotes
1 There will be many disagreements with this chapter, not all stemming from respective biases. It
attempts to present the facts fairly, although the facts themselves were very hard to establish in the
short time available. It will have served its purpose if it provokes discussion and increases awareness.
I am grateful to a number of officials of the AP government for sparing time to meet and discuss with
me, and to the MFI leaders concerned. I am particularly grateful to Dr CS Reddy and Dr Raja Reddy of
APMAS who generously shared their time and the studies relied on in this chapter, and Padmaja Reddy
of Spandana for always being available to present her perspective. As she points out, Spandana has
never tried to hide its profits (which were much lauded before the crisis, and resulted from Spandana's
equally lauded efficiency) and has always opened its doors to researchers, two of whom are cited in
this chapter, enabling closer understanding of issues generic to the sector. It needs to be remembered
that it is very easy to be wise after the event, and that both MFIs have brought valued financial services
to almost 2 million poor borrowers.
2 SHARE had 927,290 members in March 2006, with Rs 366 crore in loans outstanding, while Spandana
had 784,323 members, and loans outstanding of Rs 305 crore. According to a report in the Economic
Times (August 30, 2006), 10 MFIs had operations in Krishna district with 1 lakh borrowers and loans
outstanding of Rs 130 crore. In the 10 districts of coastal Andhra they had about Rs 1,400 crore
outstanding to 1 million borrowers.
3 For prescient observations on the need for Spandana to address political risk, see Sriram (2005).
4 See Times of India, September 25, 2006. The villages selected were presumably those where overdues
to the MFIs were the highest. Loans above Rs 25,000 were to be rescheduled over two years. As
discussed in Chapter 7A, under the partnership model, the loans remain on the books of the lender, and
by handing over their servicing to the VOs in those villages the MFIs were presumably released from
their FLDG obligations for that part of the portfolio. Thus the VOs will in effect be used as partners
under the partnership or BC models (see Chapter 7A) for at least the second part of the credit
transaction, loan collections, for an undisclosed share of the 15 per cent interest rate. The arrangement
is a characteristically creative response on the part of the lender. It will be interesting to see whether
the experiment results in a wider relationship of the lender with VOs generally.
5 The current government changed the name of the programme to Indira Kranti Patham.
6 Two of them, an NGO and the other a MACS, had borrowed from FWWB.
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7 They provide loans of Rs 500 repayable in 12 weekly instalments of Rs 50 each, after deducting Rs 10
for a pass-book.