Norms and Values of the Various Microfinance Institutions

This article examines the role of norms and values in the Indian microfinance sector. It classifies MFIs along two axes, MFIs that follow the profit motive and MFIs that use inclusive decision making processes. The article states norms have existed in the microfinance sector since it began in the 1970s. Some MFIs base their interactions on rigid norms or rules, while others are based on values. The sector is increasingly shaped by norms, such as financial independence from donors. Conclusions include:

• Private sector will tend to influence the operating rules of the microfinance system in India;
• Not-for-profit institutions that use an inclusive decision-making process are more likely to influence ethical norms in the sector;
• This classification is not static;
• Recent events in South-India demonstrate that norms such as the interest rates, can be politically and emotionally motivated and can turn into values in the sector;
• One single type of organization structure would be inadequate to deal with the complexity and diversity of social and economic realities in South India;
• Strengths of various organizational structures can be combined within an effective overall microfinance framework.