Perhaps the heedlessly expanding Indian microcredit industry deserved a smackdown. But what matters most is not what is fair to the microcreditors but what is best for the poor. The Indian government has built an impressive 50-year track record failing to meet the financial service needs of the poor. Under the right circumstances the private sector can help fill the gap. The goal should be to reform microfinance, not kill it.” so writes David Roodman, one of the sanest voices on India’s microfinance crisis.
There are lessons in this crisis for the Social Capital Market and Impact Investing. The mission got lost in the pursuit of achieving “real venture capital returns,” in doing business with and at the expense of the poor.