Abstract

Recently, the policymakers in India swung into action and issued an order for banning Maggi, when the samples were tested positively for lead content. Few years back, a similar thing happened with the microfinance sector, which intends to cater to the poor.A number cases of farmers' suicidesin one of the Indian states-Andhra Pradesh,were linked to exacting practices adopted by microfinance institutions (MFIs) in recovering the loans lent to the poor. The policymakers of Andhra Pradesh were prompt in issuing proscriptionto the banks to stop lending to MFIs, which resulted in cripplingthe entire microfinance sector in the country. Many MFIs suffered loss of business and even some were permanently pushed out of business. But this kind of rush to issuing public policiesraises several questions. Like why microfinance, which was once considered as an important tool for inclusive development, was seen using predatory practices? Does that mean microfinance is bad per se?Is such rush for proscribing really benefitthe poor? Given these questions, the paper examines significance of access to financial services in the lives of poor and what affect does it have on the entire ecosystem and associated components in microfinance.

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