Should online micro-lending be for profit or for philanthropy? DhanaX and Rang De

Par Arvind Ashta, Djamchid Assadi
Asian Finance is not just about the formal organized sector. It is also about the billions of small savers and small borrowers, often known as microfinance. Today, technology is building the bridge between the organized formal finance sectors and the informal poor borrowers. Two major technologies are online lending and mobile banking. This paper focuses on online lending in India and uses this setting to explore ethical issues in governance, pricing and marketing. Two case studies are used: a for-profit company and a not-for-profit. The paper finds that both models are being practiced in different kinds of MFIs. Both are trying to be ethically correct. The main value added by this paper is to highlight how ethical debates in microfinance are influencing the online lending operators.
JEL codes: G21, I31, O16
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