Reddy Subramaniam is the principal secretary of Andhra Pradesh. He participated in the creation of the new laws that protect borrowers from the abuses of greedy microlenders. Now the state government is launching an apex cooperative society to give loans to very poor borrowers at a cheaper rate. In an interview with The Wall Street Journal’s blog livemint.com he mentioned the need to boost the credit availability for the rural poor in India. Through this initiative “inefficient MFIs, whose costs of operations are high, will be out of the picture, because they don’t address the requirement of the segment they are trying to serve”. The proposed scheme works as a cooperative society supported by the government, it is aimed to reducing radically the operative costs (that explain the high interest rates charged by commercial MFIs) and improving the level of efficiency. The moral is: in order to survive MFIs should be more competitive.

Read article