Letters to the Editor — October 9, 2021

Terror again

It is unfortunate that terrorism is showing its ugly head again in the Valley, with civilians as targets (Page 1, October 8). After making Jammu and Kashmir a Union Territory, the Centre seems to have slowed down in its initiative to instil confidence among the people and local leaders, and develop inclusiveness in government programmes and policies in the Valley. The all-party meet with the Prime Minister seemed promising, but there do not seem to be steps after this.

D. Sethuraman,


The targeted killings of Kashmir’s religious minorities revive the horrific memories of the orchestrated expulsion of the Pandits from the Valley in the 1990s. Pakistan’s hidden hand in the murders is palpably visible. What is shocking is the inability and unwillingness of India’s political class to condemn the targeting of minorities.

V.N. Mukundarajan,


Microfinance, inclusion

I write this as the CEO of the Microfinance Institutions Network (MFIN). While it is good to have different perspectives, the article, “RBI microfinance proposals that are anti-poor” (Editorial page, October 6, 2021) is not entirely factually correct. One thing which stands out is the writer’s fear that private financiers will profiteer and interest rates will go northward; there is even an erroneous example as an illustration. MFIs charge interest rate on a declining principal basis and the example given is erroneous as interest amount cannot be the same for 24 months; it will decline each month. NBFC-MFIs (only on whom interest rate prescription applies) make up for a mere 32% of market share. And the interest rates of major institutions are in the range of 19% to 21%, with a cost of funds of ~12%. Anybody familiar with finance knows that interest rate is a function of cost of funds, transaction cost and risk cost is well understood. And NBFC-MFIs in India have the lowest transaction cost when compared globally, while delivering doorstep services.

On the writer’s fear of rate deregulation and rates going up, besides the point of only 32% of market having cap, the example of banks in India comes to mind. Have the rates gone beyond the roof or actually fallen, post-deregulation in 1991, including private banks? The facts are there to see. Such things can happen under oligopolistic conditions but not in India where the microfinance market is fiercely competitive with nearly 200 lenders (banks, NBFCs and NBFC-MFIs) and which will be complemented by the RBI and SRO oversight. Global research shows that caps only create market inefficiencies and often defeat the policy objective of universal inclusion. To illustrate, in a margin-capped environment, institutions will shy away from far-flung areas as operational costs go up — which need the services the most. On the writer’s point of “private” and “profit”, MFIs have suffered losses for three years in the last five years due to extraneous reasons such as COVID-19. It is now well accepted by Indian policy that any institution (public or private) needs to be sustainable and not subsidy driven. Both public and private institutions have a role in meeting the challenge of exclusion, but sustainably.

Alok Misra,

New Delhi

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Printable version | Dec 6, 2021 2:41:31 PM | https://www.thehindu.com/opinion/letters/letters-to-the-editor-october-9-2021/article36905912.ece

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