So is the microfinance dream well and truly dead? In other words, can such a business have social upliftment as its mission and turn a profit at the same time? It would seem not, at least going by the words of a now sadder and wiser management at SKS Microfinance Ltd, the country’s biggest microlender and its only listed one. After much fiscal pain and seven quarters of losses in a row, SKS made a tiny profit in the quarter ended December.
In hindsight, according to the current leadership of the company, one of the big mistakes was holding on to the high-minded ideals of poverty eradication while turning into a company that needed to give shareholders a return. Another flaw was that lending rates didn’t decline despite intense competition.
Still, those who believe in the transformative power of microfinance have to hope there’s more to the story than the salutary experience of one company.