Making Women Pay: Microfinance in Urban India

by Smitha Radhakrishnan, Durham, NC and London: Duke University Press, 2022

Reviewed by Deborah Eade

On being invited to review Making Women Pay: Microfinance in Urban India, I wondered how much remained to be said on the subject. Critiques of microcredit, the predecessor of today’s commercial microfinance institutions (MFIs), date back to at least Rahman Khan’s (1995) article on women in the Restaurant Programme in Bangladesh, and the searing attack on the ‘anti-poverty’ discourse of ‘micro-finance evangelism’ by Rogaly (1996). The 11-page bibliography underscored my feeling that there were already hardly any stones left unturned.

The opening chapter dispelled such fears. Smitha Radhakrishnan combines a novelist’s eye with a sharp, feminist analysis. By sympathetically bringing to life the people she encounters in her research in southern India and the USA, she illustrates the serious underlying issues. She argues that MFIs are part of a ‘gendered financial ecosystem’ that systematically extracts profit from India’s poorest women; both benefiting from their social and economic exclusion, and locking them into greater dependence via high interest rates and, if necessary, coercion. Effectively, this is gaslighting on an epic scale, claiming that loans will help liberate women from poverty, and so blaming them for their failure to overcome the structural oppression that underpins their susceptibility to the lure of MFIs’ promises in the first place.

Four aspects stand out. The focus on MFIs’ work in the urban sector; the exploration of the MFI frontline workers who form and train women’s loan groups; debunking of commonplace but lazy assumptions that ‘women are better credit risks than men’, as if women are an undifferentiated bundle of shared needs, interests, and motivations; and the role of international MFIs, personal donations, and foreign staff and volunteers in the MFI global value chain. Radhakrishnan shows how this ‘value chain’ links ‘clients’, frontline workers, the upper echelons in the MFI hierarchy, and the MFI industry in the local, national, and global economy.

Frontline MFI workers experience gendered hierarchies that favour men and leave women, particularly mothers, on a ‘sticky floor’. Male, typically young, MFI trainers ‘perform’ authority and respect for their ‘clients’ (many having a mother who takes out such loans; p. 75), while women (some of whom themselves benefited from MFI loans) appear more relatable as they ‘perform’ femininity and ‘benevolent protectionism’ (p. 49). Despite genuinely believing that their motives are generous, if not altruistic, MFI workers are not merely role-playing, since their career advancement depends on how their ‘clients’ perform, as MFIs ‘balance their profit orientation and their political legitimacy’ (p. 72). This may result in perverse outcomes, such as deliberately recruiting wealthier women, or in one extreme case, encouraging ‘clients’ to burgle the home of a woman who had left and defected on her loan, selling her property to raise the money, or even themselves stumping up the unpaid dues. They also face outright or implicit rejection – such as when ‘clients’ do not buy into an agenda of personal transformation, but simply want practical advice on how best to earn a steady income and a fair return on their labour, and are uninterested in abstract notions of empowerment, or in redefining their gendered roles as mothers and
homemakers as ‘entrepreneurial’ (p. 142). For them, MFIs are simply a lifebelt to secure their current survival, not to swim in another direction.

Nor does the MFIs’ audit culture prevent ‘ghost lending’, whereby one woman takes on a large loan and earns a tidy sum by using it to dole out micro loans to other women; or indeed for women to obtain loans on the strength of business plans showing how they would earn enough to repay, while also providing for their children’s education, when what they really want is to retrieve their jewellery from the pawnbroker, or to meet other immediate needs – often repaying one loan by taking out another and paying interest on each, exactly as desperate people in wealthier countries obtain new store cards to pay off part of what they already owe on other cards, racking up vast debts in the process.

Internationally, MFIs and related organisations encourage ‘making a difference’ in the lives of individual women that in reality no number of ‘personal stories’ or ‘empowerment tropes’ (p. 154) about how a seemingly tiny loan has helped them to stand on their own two feet (as if they’d previously been standing on one leg!) can bridge. Charitable giving is at least as much about doing ‘the right thing’ as what difference it actually makes; such ‘do-gooding’, often based on a sense of guilt, makes individual donors resist evidence that their little bit achieved nothing, let alone made matters worse. This cosy image was shattered when the ticking clock on one MFI’s website was shown to be just a marketing ploy to encourage more donations. Rather than patronising people living in poverty on the other side of the world, or indeed closer to home, those who are concerned with global inequality and inequitable relations would be better engaging in the hard graft of policy advocacy (p. 175). Once again, giving via MFIs extracts profit, this time from well-intentioned donors.

Ultimately, the question is whether MFIs help women who are living in some degree of poverty to improve their own lives, since ‘a gendered study of impact’, along with ‘an intersectional understanding of class and gender crucially advances an impoverished conception of impact that continues to plague the literature on microfinance and other similar development interventions’ (p. 178). The findings are modest: at best, loans might provide some stability or a cushion to alleviate but not change women’s basic conditions. Frontline MFI workers may, however, significantly improve their social and economic status; frustrated by their lack of career progression, some succeed in moving from a subaltern reality, based on the intersections of ‘caste, gender and geography’, up the professional ladder, with all the attendant advantages – not quite what the MFIs’ narrative claims about helping the poorest.

For the women on whom MFIs depend, the author’s ‘intersectional and industry-wide understanding of impact injects political sensibilities into an economistic concept that has been used to justify narrow assessments of programmes oriented toward women’s empowerment’ (p. 106), demands a nuanced engagement with labour markets, patriarchal institutions, access to health and education, and property ownership. In sum, Making Women Pay offers a disturbing but rewarding read.