Financializing Poverty
Labor and Risk in Indian Microfinance
Sohini Kar


Contents and Abstracts
Introduction: Enfolding the Poor
chapter abstract

This chapter outlines the main theoretical contributions of this book, as well as the methodological background of the study. It introduces the concept of "systemic enfolding" as a way to understand how the poor are being brought into the global financial network, which stabilizes rather than challenges forms of inequality. The Introduction identifies labor and risk as two key dimensions in understanding the processes through which the poor are drafted into global financial networks and signals how later chapters develop this argument. The chapter also introduces the methodology and Kolkata, the field site of the study, and addresses the particularities of urban microfinance.

1 Entrepreneurship and Work at the "Bottom of the Pyramid"
chapter abstract

The popularization of the "bottom of the pyramid," which turns the poor into a viable market opportunity, has produced new forms of profit seeking. This chapter traces the way in which social businesses claim a more ethical form of capitalism and the emergent ideologies that sustain them. From this perspective of the culture of entrepreneurship, social entrepreneurs, such as the founders of MFIs, are celebrated as the future of development by meeting the double bottom line of financial profit and social welfare. Meanwhile, the urban poor who already work in the precarious informal economy are further encouraged to become entrepreneurs themselves. The culture of entrepreneurship presses the poor to become more self-sufficient while ignoring the desire of many to attain more secure forms of livelihood and access to social services.

2 From Social Banking to Financial Inclusion
chapter abstract

This chapter traces the history and politics of microfinance in India. Microfinance, and financial inclusion policies more broadly, has to be situated within a longer history of banking practices in India. This history includes the role of moneylenders under British colonialism, the development of social banking postindependence, the liberalization of the banking sector in the 1990s, and the shift to the paradigm of financial inclusion. This history has led to the creation of multiple models of microfinance in India with different political stakes. The chapter concludes with an analysis of the 2010 microfinance crisis, dubbed India's subprime crisis, highlighting the intersecting political interests that have evolved historically and the contemporary expansion of commercial MFIs in India.

3 The Reluctant Moneylender
chapter abstract

This chapter shows how MFI staff, particularly loan officers and branch managers, interact with borrowers. Loan officers regularly collect repayment and determine creditworthiness. Simultaneously, they try to distinguish themselves from the culturally negatively marked but socially embedded moneylender as employees of the formal banking sector. They must produce and alienate debt relationships to create abstracted loan products for the MFIs for which they work. This creates a tension: Because debt is inherently relational, the loan officers are forced to navigate and negotiate the ethical demands of their own relationships with borrowers by demonstrating care and desiring respect. As microfinance becomes increasingly financialized, it produces complex financial products by bundling and repackaging loans to create securitized debts. Loan officers must make sense of the traces of relationality that remain even when the debt is made more distant through such securitization processes.

4 The Domestication of Microfinance
chapter abstract

This chapter shows how microfinance practices enfold women's domestic labor into the service of expanding financial networks. Proponents of microfinance often point to social capital as enabling women to overcome gender discrimination both by serving as a form of collateral and by creating social networks for women to rely on. Access to credit, however, requires "credit-work," the labor of women who must build and maintain these networks while also managing their time in weekly meetings with other forms of domestic labor. The dominant perspective of microfinance as intrinsically empowering does not appreciate the power of the hegemonic Bengali middle-class ideology that encourages women to be good wives and mothers in ways that puts even more demands on poor women. Despite the possibility for creating change in gender inequality, microfinance can create conservative outcomes as loans are enfolded into existing social and cultural norms of middle-class patriarchy.

5 Financial Risk and the Moral Economy of Credit
chapter abstract

This chapter argues that the conservative outcomes of microfinance introduced in the previous chapter are also tied to the need to minimize risk for the MFI. Beyond financial calculations about acceptable risks, loan officers rely on a moral economy to determine who ought to get loans. While appearing objective, risk analysis enfolds multiple forms of social discrimination and hierarchies, including caste, class, and religion, into the practice of microfinance. Even as MFIs turn to more formal systems of credit risk management, such as credit bureaus, the chapter shows that these data are always produced through these existing forms of social and cultural knowledge that can exclude the very people microfinance claims to empower.

6 Insured Death, Precarious Life
chapter abstract

This chapter traces the intimate link between debt and death. Analyzing the requirement for microfinance borrowers to buy life insurance, this chapter shows how MFIs collateralize microfinance loans against the lives of poor borrowers. By using higher mortality rates among the poor as justification for requiring borrowers to take out life insurance to protect their loans, the system of risk management used by MFIs has unexpected outcomes for borrowers. In particular, as borrowers face enormous pressure to repay their loans, death—often suicide—becomes perceived as the only way to escape debt. This chapter shows that the political and media focus on death obscures the reality of living in increasing conditions of precariousness and the costs of living.

chapter abstract

The Epilogue offers an overview of the book and addresses how ethnographic analysis of microfinance can be used for addressing development policy.