The Social Life of Microfinance Projects: Brokerage and Resistance - A Case Study in South India

This paper uses case studies from South India to demonstrate that relationships between borrowers and microfinance NGOs are not merely market-based. Instead, they are based on patronage and brokerage, built by the active role of credit officers and group leaders. Client-NGO relations are characterised by the diversity of goods and services exchanged, with support, protection and loyalty at its core. Findings include:

• Microfinance organizations are continually seeking control of territory and population due to ongoing competition;
• Relationships between microfinance organizations and clients are mutually beneficial;
• Building patronage and brokerage relations ensure client loyalty for the providers;
• Services provided by credit officers and group leaders help clients cope with financial, health, administrative, juridical and private risks;
• Clients are ready to submit to some kind of control and hierarchy, if services meet their expectations;
• Clients are not content in relations of deference and submission; they negotiate, bargain and use various tactical ways of manipulation and resistance.

The case study underlines the risks of uncontrolled growth, ambiguity and ambivalence of the SHG approach and the critical role of credit officers and group leaders.