As the cat continues to emerge from the bag in the Andhra Pradesh microcredit implosion, if there's anything that is clear it has to be this: microlenders can no longer bury their heads in the sand about engaging broadly in governance.
It's an open secret that microlending collection practices can exploit local customs and traditions to a jarring degree; check out anthropologist Lamia Karim's scathing indictment of microloan collection practices in Bangladesh. Recently headlines in Western media started to shed light on this gruesome underlying story. In what some see as a calculated political move considering the August IPO of SKS Microfinance, India's largest microlender, as a response to reports of intimidation and ruthless debt collection tactics, the Andhra Pradesh provincial government put forth an ordinance essentially urging debtors to stop repaying their loans.
Down went SKS' share price. Up went speculation about the future of microfinance.
Passionate yet very reasonable defenders of microfinance, like the Center for Financial Inclusion's Beth Rhyne, rose up to make the case that microfinance remains a pillar of progress for the world's poor. If that is true, then microlenders now have great incentive to reach out private sector organizations that exist to represent businesses, including microlenders, as a community in governance: independent, membership-driven chambers of commerce or business associations.