As a product manager working for Ujjivan, I would say that it’s harder for people in the North to accept group guarantee than it is in the South.
In the North, they are ready to take the first loan at lower interest rates in a group environment, but by the second loan cycle they start to baulk at accepting the group guarantee.
I feel the northern states also need badly to catch up with financial literacy, which means that MFIs must make more effort to educate their clients and inculcate in them financial discipline. The MFIs also need to do a lot more to empower the women. I encounter a lot of women asking for loans for their husbands or children rather than for themselves.
I feel that a lot of clients think of MFIs as a source of cheap loans rather than looking at them as a source of money that can develop their lives. Such clients look at MFI loans as providing money for marriage and other needs that could be described as consumption needs.
As for the ‘mission drift’ that MFIs have been accused of, I’d say it might not be the problem at every MFI. There are drastic changes going on in the microfinance sector. For example, there is now focus on social performance of an MFI, which should push the sector towards more conscientious fulfillment of its mission of financial inclusion.