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Journal of Indian Institute of Management Bangalore

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Microfinance: Is the Double Bottom Line Attainable?-Context of Interview with David S Gibbons

Volume 20, Number 3 Article by N Annapurna September, 2008

Microfinance: Is the Double Bottom Line Attainable?-Context of Interview with David S Gibbons :

In the 1990s, after studying the methodology of the pioneering Grameen Bank and successfully incubating AIM, a microfinance institution (MFI) in Malaysia, David S Gibbons ventured into India to set up CASHPOR Microcredit (CMC). Gibbons chose to seed his MFI in Uttar Pradesh (UP) and Bihar, two of India's poorest states, which also had a reputation for lawlessness. Today CMC serves more than 300,000 poor women in UP and Bihar, and plans to reach 2.5 million poor women in the next five years. Straddling the Welfarist School or the poverty lending approach and the Institutionist School or the financial systems approach, Gibbons has striven to achieve the 'double bottom line's, that is, a productive balance between social and financial returns, in envisioning and operationalising CMC as 'a financially sustainable MFI for the poor.

Professor Gibbons spoke to N Annapurna on the hurdles faced by CMC in the initial years as they established their credibility, the legal and regulatory challenges, and the experimentation with the lending methodology. In achieving the double bottom line, CMC has sought subordinated debt and commercial loans rather than grants, charged higher than market rate of interest initially and brought it down subsequently, and has a No Tolerance for Arrears policy. The CASHPOR Housing Index (CHI) and the assets test are the two components of CMC's tool to identify poor clients and prevent 'mission drift' or the subordination of their social objectives to their financial goals. CMC has also evolved a hybrid of the ASA (Bangladesh) and the Grameen models to suit local conditions.

Reprint No 08303a