Qualitative Phase: Mismanagement of the Factors Affecting and Discriminating Sustainability—Learnings from Indian Microfinance Crisis

In the preceding chapter, the strategies used by the efficient and sustainable Indian Microfinance Institutions (MFIs), to manage the determinant and discriminant factors of their sustainability are documented. This documentation is expected to serve as a reference for other relatively less efficient Indian MFIs to understand how their efficient and sustainable counterparts are managing sustainability. Though this knowledge is important for them to improve sustainability, it is also pertinent for MFIs to understand the dangers that are imminent, if they mismanage the sustenance factors. Mismanagement occurs if MFIs become overly conscious of sustainability, oblivious of its impact on client welfare. By referring to Indian microfinance crisis and the literature associated with it, the author portrays such mismanagement issues and the adverse affects it can have on microfinance clients. This discussion ends by reminding the MFI players of an old tenet that governs the sector: sustainability is only a means to achieve the goal of poverty alleviation, and not an end in itself.