Relative indemnity: risk, insurance, and kinship in Indian microfinance

Sohini Kar

Abstract:
With the growth of commercial microfinance in India, the poor have been increasingly enfolded into
circuits of global finance. In making these collateral-free loans, however, microfinance institutions
(MFIs) engage in new forms of risk management. While loans are made to women with the goal of
economic and social empowerment, MFIs require male kin to serve as guarantors. Drawing on fieldwork
in the city of Kolkata, I argue that through the requirement of male guarantors, MFIs hedge on kinship,
even as they speculate on the bottom of the pyramid as a new market of accumulation.

● Microfinance loans operate through kinship networks and produce new forms of relationality in
the service of financial profits. -303
● Financialisation by MFI’s put familial relationships in the urban poor neighbourhoods of Kolkata
under scrutiny and transform them too.
● Microfinance has proliferated over the last decade, drawing the poor into networks of
financialised debt.
● Meant to empower women socially and economically.
● This article shows how microfinance weaves through the complex networks of kinship relations
as women negotiate familial obligations to manage this debt, in terms of both access to and
recovery of loans. These negotiations include finding male kin guarantors as part of the loan
process, as well as convincing family members to borrow on one’s behalf when guarantors are
not readily available. Borrowers not only use existing familial bonds to access loans, but also
actively produce new or fictive forms of relationality through debt. -303
Financial speculation and systemic risks
● Financialisation = growing importance of finance as a source of profit over production in the
global economy. -304
● Expansion of finance into the lives of the poor requires speculation on new market and
mechanisms of risk management.
● Some shit i just don’t understand
● 14 months of fieldwork in Kolkata. Kar worked with DENA, a non-banking financial company
microfinance institution. (NBFC-MFI)
● Woman borrowers most urban poor living close to branch officers. Mainly Bengali Hindus from
various castes. She examines both Bengali kinship specifically and Indian kinship relations more
broadly
Photographing intimacy
● Microfinance borrower’s books for documenting transactions require a joint photo of woman
borrower and male guarantor.
● The joint photos requires that subjects are aware not of their individuality, but of some sense of
their mutuality, of the way in which microfinance loans bind people together in relations of
guarantee. -306
● The relations of guarantee that is to be captured by the joint photo – despite the serious
countenances most images portray – is that of intimacy. -307
Gendered guarantee
 ● Reasoning for male guarantors: Mr Guha said ‘We are giving loans to ladies, and almost every
man is working. If it is a lady guarantor, then pressure will have to go to the lady. It is better to
have a male’ -308
● The guarantor system did not challenge structural inequality bur capitalized on structural
inequality.
● Practices in which women seek out male guarantors make and unmake kinship practices
creatively.
Domestic interruptions
● Daisy’s household was scrutinised by MFI staff (asked her what fish she got etc to gauge how
bad her money sitch was, indirect assessment)
● MFIs bound borrowers in relations of guarantee that conformed to expectations of the life-course.
-309
Brothers seeking sisters
● The gendered practices of microfinance lending create complicated debt relationships between
parents or in-laws and children, as well as between siblings. -311
● Microfinance, despite its emphasis on empowering women, reinforces the dichotomy in access to
credit: small loans for women, large loans for men...Microfinance programmes do not cover the
gap in unequal access to formal credit by poor women-headed households. -311
Producing fictive kin
● MFIS accept brothers as guarantors too in absence of husbands and sons.
● For this, women mobilise channels of communication among friends and neighbours
● Despite her business success, and the fact she was creditworthy, Panchali still had to seek,
produce and formalise a fictive male kin member to be a guarantor, indirectly through her friend
and landlady.
● So essentially there is flexibility on guarantor regulations.
● They reflect and exploit on the perceive static nature and structure of kinship when they have an
imperative to do so
● In practice, neighbours and friends may be more integral to a person’s life than real kin. -312
● The requirement is arbitrary when woman has no male kin, even though guarantor is meant to
provide additional indemnity the production of fictive kin then flips direction of obligation.

Insuring relations
● MFIS increasingly asking for borrowers to buy compulsory life insurance when they get a loan.
● Insurance = another form of risk management. It allows them to take risk of lending to poor given
higher mortality rates
● Life insurance can produce new relational ties between kin.

Financial risk and ethical responsibility

● While reducing the risks of lending to the poor, life insurance also over-determines financial risk
over ethical modes of being for borrowers. -314
● Thus, MFIs work through practices of care in kinship to make lending to the poor profitable and
sustainable, but increasingly through financial mechanisms such as life insurance. -315

Securitizing credit,securing kinship

 ● Emergent forms of financial capitalism reflect a shift from industrial labour to lifestyle patterns as
the site for the extraction of surplus value. -315

SOCIAL CAPITAL AS COLLATERAL.