Introduction for Financializing Poverty
INTRODUCTION ENFOLDING THE POOR
SHIPRA HAD FAILED to turn up at the microfinance group meeting that morning to repay her loan.1 After the meeting, her group’s leader, Poornima, came to tell Putul and Amit, the microfinance staff, that she had gone to see Shipra. “Did you get the money from her?” asked Amit. “No,” Poornima replied. “She’s been drinking [alcohol]. There was probably something with her husband. She’s saying she sent the money with a rickshaw driver. I don’t understand what she’s saying—you’ll have to go talk to her.” With that Poornima headed off to track down another borrower who had been absent.
Left alone, Amit, Putul, and I looked at each other, laughing awkwardly, uncomfortably. “Listen, you’ll have to go,” Putul instructed Amit. “Leave your bag here and go to her house.” Amit was visibly troubled by this development. With both hands on the roof of a car, he rested his head against the top of the door, eyes shut. When he lifted his head, Putul repeated her instructions. Catching my eye, Amit laughed wryly and said, “You haven’t seen this kind of thing yet, but now you see what really happens.”
I had been accompanying Putul, the branch manager, and Amit, a loan officer, on their regular rounds of group meetings that morning in Kolkata’s northeastern peripheries. The two worked for a commercial microfinance institution (MFI) that I call DENA and spent the mornings at group meetings where women repaid their loans in weekly installments. Microfinance is the business of giving small loans to poor borrowers that are paid back in frequent intervals with interest. Often these loans are targeted at women as a means of economic development and empowerment. In India, microfinance—including commercial or for-profit microfinance—has grown rapidly as a result of the government’s expansion of its financial inclusion policy. Drawing capital from banks and private and public equity, these commercial MFIs have increasingly enfolded the poor into the circuits of global finance. This process of financialization has required extensive labor on the part of both borrowers, who seek out and constantly repay mounting debts, and MFI staff, who ensure this capital is continually in circulation by extending and managing its recovery. The morning’s encounters between the borrowers and MFI staffreveal the complicated ways in which microfinance has enmeshed the urban poor of Kolkata into networks of formal finance.
Deliberating on what to do, Putul pulled out Shipra’s passbook and examined the joint photograph of Shipra and her husband—the male guarantor required for her loan—attached to the front page. “Oh, she’s elderly! Such an old person drinking?” she exclaimed. As she puzzled over the picture, another borrower from the group walked by. Recognizing her, Putul called out: “Do you know where Shipra-Didi lives?”2 “Just near here; down the street and left.” “Can you take us to where she lives?” “I know where she lives, but I couldn’t tell you which one her flat is,” the woman responded hesitantly, eager to leave. The creation of borrower groups is designed to reduce the risk of lending to poor individual borrowers who lack material collateral. MFIs require that women form small groups with their neighbors, usually living within walking distance of each other. This facilitates quicker meetings and easier monitoring of borrowers. Yet such moments of hesitation reveal the uncomfortable closeness these groups can cause when neighbors are called on to monitor each other’s creditworthiness.
In the middle of this exchange, Poornima returned. “Did you get the money [for the other loan]?” asked Amit. “No. They don’t have it ready yet. You’ll have to go there [to get it],” replied Poornima. “You’ll have to come with us,” Putul told Poornima. We headed down the street, where Poornima pointed out the small roadside restaurant belonging to the second absent borrower. Amit approached the woman working over a large hot karai (a deep iron pan), frying up the day’s lunch.
Microfinance is designed to help poor borrowers, typically women, start or sustain their own business and enable economic empowerment. As we waited, Putul wondered out loud: “They have a good establishment. They seem to be doing well; can you tell why she didn’t pay today?” “They had to buy fish in the morning or something and used up all the money,” explained Poornima. For borrowers such as the woman with the roadside restaurant, the regular repayments of microfinance intersect with the uncertainties of working in the informal economy. While there is little flexibility in the weekly repayment schedules of MFIs, the cost of buying fish can cut into the ability to make that day’s repayment. Amit returned with the collected money. “What was the problem?” asked Putul. “Who knows?” said Amit. He was happy to have gotten the money and did not dwell too much on the reasons.
The detour over, we headed once more to find Shipra. Poornima pointed and said, “It’s that building there.” As we neared the entrance of the building, I was a little hesitant about continuing inside to accompany Amit and Putul on what was now a debt collection visit. But I remembered Amit’s earlier comment that I had not seen what really happens; after all, this was as much a part of the reality of micro-finance practices as the cheerful women in group meetings, who smilingly held up their passbooks for me to photograph on cue from the loan officer. I decided to at least go to the door and judge from there whether to go inside or not.
We entered an old building, with apartments built around a light-less courtyard. Poornima directed us up the stairs and to the first door. Standing back, she declared that she would not go in and would wait downstairs. Amit rang the doorbell, but there was no answer. He continued ringing the bell until the door cracked open. Standing in the doorway was a skeletal woman, appearing to be in her early fifties. “I’m unwell,” she said in a shaky voice and started to close the door. “Shipra-Didi?” said Amit, wedging himself in the open door. “Don’t you recognize who this is?” asked Putul, indicating Amit. Shipra looked blankly. “It’s Sir from DENA,” said Putul curtly. A glimmer of recognition and embarrassment flashed across Shipra’s face. “Of course, of course,” she said. “I’m sorry, I’ve been sick from yesterday. I sent the money with the rickshaw driver. I don’t know what happened. This has never happened before. You know that. I’ve always sent the money. I don’t know what happened. Please, I’m not well; I’ll get it to you later.” “We have to get the money today,” said Putul. “Please, you’ll have to manage somehow.” Even if Shipra were ill, there would be no reprieve from repaying the loan. To succeed and continue to attract capital, MFIs must maintain loan recovery rates well over 90 percent, for which MFI staff are responsible—sometimes with their own pay and promotions at risk. Only the death of a borrower or her guarantor will let them off from repaying, and even that risk is managed through mandatory life insurance.
Putul promptly went in, followed by the hesitant Amit. I hovered at the doorway, not knowing whether to go in or not, and finally decided to wait outside. Shipra, however, noticed me. “Come in, please, sit down,” she called, slurring her words slightly. At the entrance of the flat was a pool of spilled liquid. “It’s water,” said Shipra quickly, as I stepped over the puddle. “My grandson spilled it.” In close proximity now, I could smell the alcohol on her breath. There were vestiges of her grandson in the room: a deck of children’s trading cards on the table, a digital collage photograph of Shipra and her husband with their son and grandson. On the dining table was a steel container with leftover rice and lentils. Compared to the one-room hut where the group meeting was held, this was a relatively nice flat, with a separate bedroom in the back and equipped with a television and DVD player. A few knickknacks in the cabinets made for decorations.
The television was on, playing a popular Bengali serial, Ma, which centered on the matriarch of a family. “We’ll stay and watch the serial,” said Putul in a gentler tone. Sitting down on the green sofa, she gave Shipra time to figure out what to do. Clutching her mobile phone, which she had retrieved from underneath the sofa, Shipra disappeared into the bedroom. A few minutes later she emerged, smiling. “I’ll be back. I’m so embarrassed. I don’t know how this happened. It’s never happened before,” she repeated as she went out of the apartment.
“They have [lease] rickshaws,” observed Putul. “I wonder why she didn’t get the money. You know, the other women were saying that they don’t let her into the meeting. Seems like she’s like this a lot. . . . They just make her wait outside the house so that you [Amit] don’t see her,” she continued. The group to which Shipra belonged borrowed carefully and managed her presence in front of MFI staff. Her regular income through her husband’s job as a baggage handler at the airport and from leasing out the rickshaws they owned meant that they had the financial resources for the loans. However, Shipra’s drinking—something looked down on, particularly among women in India—counted strongly against her. The other borrowers did not want their own creditworthiness to be tarnished by Shipra’s reputation. Despite claims to financial inclusion, microfinance requires loan officers deploy alternative forms of risk management, including assessing borrowers’ creditworthiness through nonfinancial means such as lifestyle.
As we waited, Putul became engrossed in the serial, commenting now and then on the show. After a few minutes—growing uncomfortable with the situation—Amit said he would be waiting downstairs and stepped out. I asked Putul if this kind of thing happened often. “It happens,” she replied. “But she [Shipra] won’t do this again. See how embarrassed she was; she won’t miss another payment. And it’s good for Amit that I was here, because people will say even Madam [branch manager] had to go to her house.” More than social capital among group members, MFIs rely on their staff to ensure the celebrated high rates of loan recovery. With moneylenders negatively marked in Indian society, loan officers have to struggle against their own stigmatization as debt collectors, while ensuring they complete their work. To emphasize their difference, they use powerful and coercive affective pressures such as embarrassment and shame rather than violence to make sure borrowers repay.
Fifteen minutes later, Shipra returned with Rs 300 (about US$6) for her week’s installment, continuing to apologize. “I don’t know what happened. You know I always pay back. I’m so embarrassed.” Filling in her passbook to acknowledge the receipt of the money, Putul tried to assuage Shipra’s humiliation: “It’s okay, I won’t think anything of it.” As we were at the door, Shipra quietly added, “Poornima could have paid the money for me, you know. She owed me money. She could have not made me look small.” Shipra’s failure to repay stemmed not just from her absence but also from the fractures in her relationships with her husband, with whom she had argued, and with Poornima, who had refused to protect her reputation. Even as women forged relationships with other microfinance group members or with their guarantors, microfinance disclosed how neighbors, friends, and kin could both come together and fall apart because of debt.
Walking out of Shipra’s place, Putul observed, “You know, we could have the meeting in Shipra-Didi’s place. It’s quite spacious.” “She’s going to get another loan?” asked Amit, surprised. “No, but it would have been a good meeting place.” Ever on the lookout to expand loans, Putul regretted the loss of an ideal meeting space.
As occurs with borrowers like Shipra and Poornima, debt has always been a part of poor people’s lives in India, whether extended through informal moneylenders, kin, friends, or neighbors. The introduction of microfinance, however, structures debt relationships in new ways. As MFIs have proliferated across the country, women have access to multiple new streams of credit. While interest rates at these MFIs are lower than those of moneylenders, they are higher than those available from commercial banks so they can be profitable, meaning women are often paying annual interest rates of 25 percent or more for these small loans. MFIs offer little flexibility of repayment, creating new challenges for borrowers who must constantly keep up with these loans. Due to ongoing inflation, spiraling expenses, and poor social services, the loans have become necessary as “lump sums” to pay for various privatized services (e.g., schools and hospitals). Maintaining access to credit has become an invaluable part of women’s domestic work. Meanwhile, the objective for loan officers, unlike that for informal moneylenders, is not to recover their own money; rather, capital extended and recovered must be circulated back into the financial system. MFIs can continue to profit only if they maintain their own lines of credit from commercial banks and other financial institutions and simultaneously profit these financial entities. The beneficiaries in this circulation are rarely the borrowers or the on-the-ground staff, working out of the branch offices.
Financializing Poverty discusses the ways in which financialized debt is extended to the poor and comes to shape people’s lives in particular ways. Commercial microfinance, like other growing bottom-of-the-pyramid services for the poor, including health, education, and housing, is increasingly shaped by investment interests. Such financialization of poverty taps into the productive and consumptive capabilities of the poor to circulate more and more capital. Private firms can extract wealth from the poor through new financial products such as health or life insurance or new educational and housing loans. In the absence of good public services, the poor increasingly seek out loans and buy insurance to access services such as private education and health care. In both cases, the everyday precariousness of life for much of India’s poor remains unchanged with these new financial flows.
THE PROMISE AND PITFALLS OF MICROFINANCE
With an estimated 60 percent of the Indian population historically not having access to formal financial services, successive Indian governments have promoted “financial inclusion” as a policy since the mid-2000s.3 The policy—promoted by both the left-leaning Congress Party and the right-leaning Bharatiya Janata Party (BJP)—has aimed to bring those traditionally excluded from the formal economy into the formal financial fold through access to bank accounts and credit for the poor. Microfinance has been one such area in the promotion of financial inclusion for the Indian government. Often drawing on Muhammad Yunus’s (2003) Grameen Bank model in Bangladesh, microfinance has expanded globally in the last two decades. In its early stages, microcredit referred to the provision of small loans to poor borrowers who lacked collateral to access credit from formal financial institutions. By forming small groups, poor borrowers could make up for the lack of material capital through social capital (e.g., group members could guarantee each other’s loans). In more recent years, microfinance refers to the more varied financial services that microfinance institutions offer to their customers, including savings and insurance, though credit remains predominant.
With microfinance capturing the popular imagination as a solution to the failures of state-led development, the United Nations declared 2005 the “Year of Microcredit,” and in 2006 the Nobel Peace Prize was awarded to Muhammad Yunus and the Grameen Bank. Public figures ranging from journalist Nicholas Kristof to entrepreneur and eBay founder Pierre Omidyar and philanthropic organizations such as the Gates Foundation have lauded microfinance.4 Major global financial corporations, including Citigroup, J. P. Morgan, and Deutsche Bank, have also invested in microfinance initiatives both as part of corporate social responsibility (CSR) programs and as profitable investment opportunities. With the tightening of credit in the United States following the 2008 financial crisis, microfinance—born out of developmental concerns in the global South—has become a source of credit for small businesses even in the global North.5
Proponents, both policy makers and academics, contend that financial inclusion mitigates socioeconomic disparities by incorporating the poor into more efficient and hence income-generating markets (Banerjee and Duflo 2011; Collins et al. 2009; Robinson 2001). Others have argued that even more than providing economic benefits, microfinance helps produce social capital, which in turn promotes women’s empowerment in other domains, such as the domestic sphere (Moodie 2008; Sanyal 2009; Woolcock 1998). Yet as critics have pointed out, there are numerous problems in microfinance practices, including the creation of overindebtedness, unsustainable debt cycles among borrowers, reinforcement of gendered codes of shame, and extreme levels of peer pressure among group members (Brett 2006; Elyachar 2005b; Karim 2011; Lazar 2004; Rahman 1999; Rankin 2001, 2002; Schuster 2015; Stoll 2013).
In Kolkata, the outcomes of microfinance are ambiguous: it does not transform women into successful, financially independent entrepreneurs through access to credit; yet women continuously seek out these loans as a way to make ends meet in a situation of constant lack. Rather than mark it as unequivocally good or bad, it is perhaps more helpful to understand microfinance as a kind of working-class credit.6 As noted earlier, debt itself is not new for poor and working-class borrowers, who have always been given loans from informal moneylenders, kin, friends, and neighbors. At the same time, what is new with commercial microfinance is the way in which this debt enfolds the formerly excluded into globalized financial networks. These financialized debts have come to reshape lives of both borrowers and lenders of microfinance, particularly through categories of financial risk and its management.
THE FINANCIAL FRONTIER
On August 16, 2010, five poor women, dressed in brightly colored saris, rang the gong to usher in the day’s trading at the heart of India’s financial world: the Bombay Stock Exchange (BSE). They were there to mark SKS Microfinance’s (since renamed Bharat Financial Inclusion) public listing and initial public offering (IPO). Like Shipra and Poornima, the women were all poor microfinance borrowers, and they were there as invited representatives of SKS’s borrower groups from around the country. Though the IPO offered hefty returns to its investors, it also demonstrated the extent to which finance capital had penetrated the everyday lives of the poor. In subsequent months, SKS and the microfinance sector as a whole in India experienced a crisis, partly triggered by the success of this IPO. As a result of the crisis, commercial banks that provided capital to MFIs became reluctant to extend further loans to the sector, creating a liquidity crunch for MFIs. Starved of cash, MFIs had to roll back their loans to the poor borrowers, many of whom now struggled to find alternative sources of credit. Through microfinance, poor borrowers have been enfolded into financial markets with systemic consequences in the larger economy.
Yet the eulogies for the Indian commercial microfinance sector came too soon. Though the crisis changed the situation for Indian microfinance, it had not dismantled it. By 2014, the industry had bounced back from the crisis (Kazmin 2014). On April 2, 2014, the Reserve Bank of India (RBI), the country’s central bank, announced that it had granted approval for the first time in ten years for two institutions to set up new private banks: IDFC Limited, an infrastructure finance company, and Bandhan Microfinance. The Kolkata-based Bandhan Microfinance beat out politically connected corporate heavyweights for the coveted licenses. In 2015, the RBI offered eight additional MFIs small finance bank licenses, a new type of bank enabling MFIs to offer multiple financial products (Kazmin 2015). Investments in the sector have also kept apace, with Indian MFIs raising around US$470 million from investors such as Morgan Stanley Private Equity and Citi Venture Capital International. Even the crisis-hit SKS Micro finance has bounced back, with foreign investors appearing bullish on its stocks, raising their stakes from 36.9 percent in September 2013 to 44 percent in September 2014 (PTI 2014a). In fact, it seems that microfinance has become part of the boom-and-bust cycles of financial crisis (see Kar 2017b).
Ethnographic examinations of microfinance have provided key insight into the local relationships between borrowers and lenders, including the creation of unequal patron-client relationships (see, e.g., Ito 2003; Karim 2011; Rahman 1999). Yet the growth and development of commercial microfinance has extended far beyond the dyadic relationship between a borrower and a local nongovernmental organization (NGO). Microfinance’s popularity over the past two decades reflects its inherent coherence with neoliberal modes of governance, relying not only on freer capital flows but also on the promotion of self-reliance rather than welfare, and private-rather than public-sector involvement (Ananya Roy 2010; H. Weber 2004). With the growth of for-profit microfinance, commercial bank lending, private equity, securities, bonds, securitized debts, and investment vehicles have all flooded the sector. DENA, for instance, raised capital not only through commercial debt from banks but also through investments from a Dutch pension fund and, more recently, a 10 percent ownership by a commercial bank. Far from the simple transaction between the borrower and lender, microfinance has become an intricate network of financial flows (see Figure I.1). This process of financialization has significant consequences not only for the MFI but also for borrowers, who suddenly find themselves tied into much wider networks of finance with limited ability to understand or influence them.
FIGURE I.1 Financial flows in commercial Indian microfinanceFinancial markets have expanded rapidly across the world since the 1970s, as profit-making activities have increasingly focused on financial channels rather than production (Krippner 2011). In India, for instance, the BSE index, the S&P BSE SENSEX, went from closing at 3,055 points in 1997 to closing at 26,626 points in 2016. At the heart of this expansive financial system has been credit.7 From consumer credit (e.g., credit card, home loans, education loans) to debt capital (i.e., loans taken out by businesses), credit is a key source of capital for the functioning of the financial markets. It is not surprising that, according to the RBI, the outstanding credit in the Indian economy also expanded to ten times the amount between 1991 and 2006, and credit to GDP ratio increased from 34 percent in 1991 to 54 percent in 2006 (RBI 2011).
Financial markets inform not just corporate decisions but also fiscal and monetary policy and affect individuals through systems of credit, pensions, and savings (Knorr Cetina and Preda 2005). Our every day lives are increasingly suffused with financial technologies, from the securitization of debt to the creation of increasingly more complex derivatives. Finance is no longer relegated to stock exchanges and investment banks but informs and shapes everyday life and finds cultural expression in popular culture and media.8 The expanding process of financialization requires “the capitalization of almost everything” (Leyshon and Thrift 2007) with the constant search for new assets that can be mined for financial circulation.
Social scientists have also begun to explore the impact of this complex phenomenon of financialization. Research into the social studies of finance has examined the performative nature of finance: that is, how economists and finance theorists “contribute toward enacting the realities they describe” (Callon 2007, 315).9 The social studies of finance demonstrates the ways in which seemingly abstract theories and technologies come to shape the very objects they are supposed to describe.10 An emerging body of literature on the anthropology of finance, meanwhile, has demonstrated not only the social embeddedness of banking and finance but also the ways in which it is suffused with power relations, ideology, and faith and shaped through language and practice.11 Contesting the ways in which finance has been taken to be a “natural reality,” these works show that financial discourses are “historically contingent, and dependent on cultural practices of valuation” (De Goede 2005, xv; Poovey 2008). The universalizing abstractions of financial tools and products often belie their social and cultural constructions.
While providing critical insight into the process of financialization, these ethnographic studies tend to remain concentrated on the experiences of finance practitioners in the global North. Financialization is, however, a global phenomenon, often radically transforming the lives of people in the global South. Indeed, financialization has further deepened inequalities, with speculative raiding by major financial institutions at the cutting edge of what David Harvey terms “accumulation by dispossession” (2003, 147).12 As capitalist social relations are increasingly mediated by speculation and risk rather than labor, people come to experience the crises of capitalism more acutely in everyday life.13 This “hypertrophy of ‘fictitious’ financial capital” (Lutz and Nonini 1999, 93; Marx 1993a) has often violently marginalized and dispossessed populations. Financialized credit to the poor has frequently served the interests of investors rather than borrowers. The “frontiers of capitalism” (Tsing 2005, 27) include the populations that remain outside the mainstream of finance, the financially excluded.
The 2008 crisis and subsequent turmoil in the global economy have revealed both the dominance of and fractures in the current financial system. Backlash against the bailout of banks at the expense of citizens and growing inequality in a financialized economy inspired the transnational Occupy movement, politicizing what has long been the depoliticized arenas of finance and economics.14 For some, the crisis signifies the end of American financial hegemony and a shift toward a multipolar world with emerging economies such as those of China, India, and Brazil at its core (Duménil and Lévy 2011). As finance is normalized in the global South, their discourses and practices have to be understood and analyzed within the context of these shifts in the global political economy. Microfinance is an example of the way in which the lives of those at the periphery are incorporated and shaped through finance capital. It is not, however, a simple story of top-down imposition; rather, there are multiple negotiations at various levels through which financialization is experienced, accepted, and contested.
THE LABOR OF DEBT
While credit to the poor in India has become a new pool of abstract finance capital, it is nevertheless always mediated by individuals. This book examines how such abstracted notions of creditworthiness and financial risk are constructed and negotiated in the everyday interactions between loan officers and borrowers and how they are informed by existing local social and cultural beliefs and practices. Though emergent forms of capitalism have increasingly profited from speculation and abstraction, labor has not disappeared. Poor women have absorbed the work of seeking out and repaying credit into existing regimes of domestic labor. Meanwhile, MFI staff labor to produce and alienate debt relations with borrowers to sustain the circulation of capital. Before it can be speculated on, there is the labor of both borrowers and lenders that sustains the extraction and circulation of capital.
On the one hand, usury, or lending on interest, has negative connotations historically and cross-culturally. Lending on interest and the profit motive represent the point at which money both begets money and “short-circuit[s] the networks of reciprocity” (Henaff 2010, 66). On the other hand, anthropologists have consistently shown the relationality inherent to debt and the ways in which debt binds people across time and space in obligations of reciprocity.15 The proliferation of credit markets has been one of the cornerstones of financialization, but it has required increasing abstractions and social distance of debt relationships (Shipton 2010). Given this expansion of formal credit, what happens to the inherently relational nature of debt?
The emergence of financial technologies such as complex derivatives reflects the increasing abstractions in the market. Money, however, in both its physical sense and its abstractions, remains socially constructed and interpreted. While recognizing how new financial forms transform societies, market and monetary relations remain socially embedded.16 Challenging the reductionism of scholarship on finance to quantification and mathematical modeling, anthropologists have demonstrated how nonquantifiable elements (e.g., social relations, ethics) continue to define money and finance and not just “traditional” economies.17 Tracing the genealogical development of ideas about money, Jonathan Parry and Maurice Bloch argue that in its representation as an abstraction that destroys sociality, money is in “nearly as much danger of being fetishised by scholars as by stockbrokers” (1989, 3). What is needed is closer scrutiny of money in the entire transactional system and within the context of the local cultural matrix. Indeed, the ethnographic inquiry into money and monetary forms has complicated the picture of the “great transformation” and the perceived loss of sociality in economic relations in modernity (Maurer 2006).18 In the era of financialization, where money is increasingly abstract, it is hard to locate the relational aspects. Yet finance, too, requires the labor of various actors, not just in the spaces of high finance but also in the everyday interactions of loan officers and borrowers in Kolkata.
Access to microfinance loans requires work on the part of borrowers: women have to seek out and maintain neighborly relations to belong to a borrower group; they have to ensure they have the right documents; they have to attend each of the weekly group meetings for the MFIs from which they have a loan. Over time these tasks have become everyday forms of domestic labor. Loan officers, meanwhile, have to navigate the complicated demands of ethical practice and financial sustainability. Constantly trying to create distance from the reviled cultural figure of the moneylender, loan officers have to sustain high levels of financial return for the MFI as well as their sense of an “ethical selfhood” (Pandian 2008, 16). The loan is therefore not a singular financial transaction but one that has to be sustained through various forms of sociality. Moving beyond just looking at high rates of loan recovery, this ethnographic project recognizes these forms of labor and sociality as being at the heart of financialization and emergent processes of capitalist accumulation.
SYSTEMIC ENFOLDING
The discourse of financial inclusion and development occludes the ways in which certain groups are still not deemed valuable or profitable as customers. MFIs spend significant time and effort to mitigate the risks of lending to the poor. For financial institutions this is not surprising; it is encouraged and desirable for sustainability, as extensive lending to high-risk borrowers could destabilize the financial system and lead to crisis. Practices of reducing risk include implementing methods such as house verifications to assess the creditworthiness or to require borrowers to buy mandatory life insurance with their loans.
These measures of assessing and managing financial risk are not without consequence for borrowers. First, categories of risk are shaped by the judgment of MFI staff, who bring their own worldviews of class, caste, religion, and gender into their assessment. Practices of due diligence can ultimately bolster unequal social structures rather than challenge existing hierarchies. Everyday practices reinforce these differences between groups of people, creating mundane forms of oppression or violence.19 In Kolkata, women, Muslims, and non-Bengali migrants are all subject to forms of structural inequality, whether through patriarchal norms or through discrimination against minorities and migrants. These everyday forms of inequality are reproduced and reinscribed when some are deemed less creditworthy than others, not on a financial basis but on existing social and cultural evaluations of worth.
Second, the bundling of life insurance with credit produces a complicated relationship between precarious life and insured death. In the absence of material collateral, life insurance collateralizes life itself, becoming the last resort for MFIs to recover loans from borrowers with higher rates of mortality. While countering risk on the part of lenders, life insurance tends to obscure the uncertainties of everyday life, where health and work can be precarious. Thus, even though loans are protected, there is little attention to the difficulties of everyday life at the margins. Finally, the use of life insurance in microfinance has also led to the proliferation of even more financial technologies into the lives of the poor.
MFIs engage in risk management not only because of their interest in maintaining good returns but also because of the increasing incorporation of microfinance into the global financial networks and systemic risk. Systemic risk is an economic concept where “a trigger event, such as an economic shock or institutional failure, causes a chain of bad economic consequences—sometimes referred to as a domino effect” (Schwarcz 2008, 198). Because of the interlinkages between financial institutions, an adverse event can lead to a systemic crisis. The 2008 subprime crisis in the United States demonstrates how systemic crises can not only bring down financial institutions (e.g., Lehman Brothers) but also drastically trigger a wider economic downturn, affecting the lives and livelihoods of millions worldwide.
In India, the 2010 microfinance crisis revealed the extent to which credit bound together the lives of the urban poor with banks and financial regulators in new and unprecedented ways. Even as borrowers found it harder to get new loans, the effect was not simply in the financial “downstream” of borrowers.20 For example, in 2008, L&T Finance—a subsidiary of the Indian engineering and construction corporation Larsen and Toubro—entered the microfinance sector, and by 2011, microfinance accounted for 5 percent of its total loan book (Economic Times 2011d). In 2011 L&T Finance repeatedly delayed its IPO because of instability in the stock market, including the effects of the microfinance crisis. In other words, a crisis in lending to the poor had systemic consequences for a large financial institution. The extent to which microfinance constitutes a systemic risk is still debated by the Indian central bank.21 Nevertheless, as more and more people are incorporated into the formal financial sector through a process I call “systemic enfolding,” they are tied into these concerns over systemic risk.
If inclusion—the formal policy—suggests incorporation into a formal financial system, enfolding marks the way in which financialization captures everyday life. Poor microfinance borrowers are offered new financial services that are increasingly necessary to the systemic expansion of finance. Conditions of poverty produce the demand for credit, and it is this demand that allows financial institutions to further capitalize on poverty.
Like systemic risk, structural inequality also depends on the systemwide interlinkages that perpetuate hierarchies. In other words, systemic risk and structural inequality both maintain an existing system. To avoid an adverse event, systemic risk management requires adherence to a certain status quo, whether it is the exclusion of people deemed high risk or the constant threat that systemic crisis will wreak havoc in our social world. In effect, the entrenchment of existing ideologies is often sustained by the fear that a collapse of such a system will lead to crisis. Systemic risk is a powerful argument for maintaining stability in the financial system. However, it is perhaps also a powerful argument for maintaining an unequal status quo.
With systemic enfolding drawing in more and more of the world, is there now a system that is “too big to fail”? As Janet Roitman argues, “Systemic risk is now cited as a primordial agent in contemporary crisis accounts” (2014, 72).22 Yet the very discourse of crisis becomes a limiting terrain of what is possible. Kath Weston (2013) has observed that metaphors that compare the financial system to the circulatory system of the body demand that this body be saved, particularly at times of crisis.23 An alternative economic system seems unimaginable. Likewise, managing risk means containing the unexpected or the uncertain, or “conceptually translat[ing] uncertainty from being an open-ended field of unpredicted possibilities into a bounded set of possible consequences” (Boholm 2003, 160). François Ewald has argued that the management and even avoidance of risk becomes “an exhaustion in innovation and therefore to a revolutionary change in society with even more unfortunate consequences” (2002, 299). More radical change is foreclosed on by what is known and knowable through practices of risk analysis and avoidance of systemic crisis. As more and more people are enfolded into the networks of finance, its risk management necessarily stabilizes an unequal system. The systemic nature of finance and the structural form of inequality then call for rethinking risk management.
As financial inclusion is pushed forward as development policy, banks and financial intermediaries such as MFIs manage the risks of lending to the poor. They do so by continuing to exclude those deemed unworthy of credit and through the proliferation of other financial products, including securitized debt and insurance. With attention to risk, bottom-of-the-pyramid finance becomes more a strategy for capitalizing on poverty and less one for social change. For borrowers, however, credit does not resolve the problem of lack; rather, it displaces it temporally. In the everyday struggles to make ends meet, access to credit can fill gaps in income, but it is only a temporary solution and one that both accrues monetary interest and accumulates social obligations, often adding to the burden. Microfinance rarely fills the income gaps, the gaps in adequate employment, or the gaps in paying for increasingly costly bills and fees under inflationary conditions.
This is not to advocate a banking system without regulatory oversight or risky lending that can lead to crises; indeed, due-diligence measures are necessary to avoid predatory lending to the poor. Rather, it is an argument to rethink microfinance as primarily a form of working-class credit. It is an argument to demand less of microfinance as a tool of development and to regulate it with the same considerations as other financial institutions, perhaps with greater attention to the fact that this is high-interest credit extended to those who are least able to afford it. Ultimately, it is an argument that the state has to be the one to take the risk of including those who otherwise are excluded by practices of risk management. This can be achieved only through policies of redistribution and by continuing to provide forms of welfare and social support that do not depend on market forces.
SETTING THE SCENE: KOLKATA
The city of Kolkata (formerly Calcutta), the capital of West Bengal, sprawls from north to south on the eastern bank of the Hoogly River. In 2001 the city’s name was officially changed from the anglicized Calcutta to the Bengali Kolkata. I use Kolkata in contemporary usage but refer to Calcutta in the historical context. Despite its centrality under colonial rule, since independence the city has been described in terms of its decline, decay, and poverty (Fruzzetti and Ostör 2003; Hutnyk 1996; Ananya Roy 2003; Thomas 1996). While some dispute its origins, the general consensus is that Calcutta was established as a port, including fortifications, in 1690 when Job Charnock of the East India Company leased three villages from the Mughal emperor. However, as territorial claims of the English traders expanded, they came into conflict with local rulers. The defeat of the ruling Nawab Siraj-ud-daullah in the 1757 Battle of Plassey turned control of Bengal to the East India Company. Calcutta remained the “second city of the British empire” (Chakravorty 2000, 61) and a thriving center of cultural, political, and economic life until the capital was moved to Delhi in 1911.24
Industrial growth began with the establishment of jute mills in Calcutta in 1855. By 1919, there were seventy-six operating jute mills there, which recruited migrant labor from the north, what are now the states of Bihar and Uttar Pradesh (Chakrabarty 1989; L. Fernandes 1997).25 Many of the migrant laborers resided in slum settlements (bustees) that formed around the mills. Jute remained a mainstay of the city’s industry into independence, but demand for jute was in decline globally. Partition in 1947 effectively cordoned off the jute-producing region (in East Pakistan, now Bangladesh) from the mills in Calcutta. Moreover, postindependence economic policy was driven by import-substitution industries, often based in smaller cities. Core cities such as Calcutta served as “centers of regional and/or national administration (with increasingly large bureaucracies in the public sector, and expanding offices of the private sector), trade and commerce, small scale industry, and services in general” (Chakravorty 2000, 62). The hinterland outside Calcutta remained unindustrialized; thus, industry stagnated in the city, providing few employment opportunities for the city’s expanding working class.
Kolkata has also had a unique political situation in India: the Communist Party of India (Marxist) (CPM) has been in power with a leftist coalition (Left Front) for thirty-four consecutive years from 1977 to 2011. The success of the Communist Party depended in part on growing labor militancy in the jute industry in the 1960s and 1970s. Although the CPM came into power in 1977, by the early 1980s the labor movement was facing a backlash from mill owners, who threatened closure and forced workers to accept whatever terms they dictated, including the increasing casualization of labor. Rather than defend workers’ rights, trade unions “appeared to be more and more complicit with employers and as mere appendages of political parties” (Gooptu 2007, 1925), ensuring electoral success for the CPM.
The industrial sector in West Bengal has been in decline since independence because of partition, national policies such as import substitution, pricing policies, the labor movement that discouraged private investment, and the CPM’s prioritization of rural areas.26 Moreover, while brought to victory by the labor movement, the party soon moved to temper its radicalism to attract industrial investment to the state. Liberalization of the Indian economy in 1991 further impacted the stagnating industrial growth in West Bengal. The reforms also led to “the rise of ‘competition States’ within India’s federal democracy” (Corbridge and Harriss 2000, 158). With the demise of the central state-led development model, individual states tried to attract investment in competition with each other. The political response was a move to what Ananya Roy calls “New Communism,” which sought to be “as comfortable with global capital as with the sons of the soil” (2003, 10). A number of high-profile cases of the state’s accommodation of industry in Nandigram and Singur highlight this tension between private investment and populist demands for redistribution.27 These conflicts culminated in the defeat of the CPM by the populist Trinamool Congress Party in the state assembly elections in May 2011.
In addition to ongoing rural-urban migration from the hinterlands, Calcutta encountered two waves of mass migration: first at partition and the creation of East Pakistan; and second in 1971 during the Bangladesh Liberation War. In this “city of refugees and migrants” (Ray and Qayum 2009, 36), an estimated 4.2 million people entered West Bengal as refugees between 1946 and the mid-1970s, mostly settling in the urban center of Calcutta. Both forms of migration have provided a steady stream of labor to the city. The 2011 national census recorded 14.1 million people in the Kolkata urban agglomeration, with a decadal growth rate from 2001 of 7 percent.28 As the city expands, the influx of migrants has intensified Kolkata’s urban problems, including the provision of housing and sanitation, potable water, and employment (Figure I.2).
In Kolkata, as in much of India, there is also growing middle-class activism toward creating a “world-class” city, demanding beautification projects that pit the middle class against those who live in slums and work in the informal economy (e.g., as sidewalk hawkers).29 This bourgeois idea of the postindustrial city, developed in the West, argues Partha Chatterjee, “is driven not by manufacturing but by finance and a host of producer services” (2004, 142). The landscape of Kolkata has been shaped by these new financial flows, with the development of areas in the northeast of the city to attract investment and create hubs for IT and financial services. While such sectors provide employment for the middle class, there are fewer new jobs for the working class, with the exception of construction labor. The political cost of this new model of urbanity is that it does not offer opportunities to the working class and that “unlike the middle class produced by state-led industrialization is unlikely to produce an expanding middle class” (ibid., 144). In the absence of such formal-sector work, the informal sector remains central to Kolkata’s working class.
FIGURE I.2 Neighborhood in eastern periphery of KolkataThe particularities of local culture and society are also reflected in the city. In Kolkata, the hegemony of the Bengali upper- and middle-income bhadralok class has shaped the city’s identity.30 By the nineteenth century, the British, followed by the Marwari community from Rajasthan, controlled much of the city’s commerce. The Bengali upper- and middle-income groups came to fill the administrative sector but also controlled much of the city’s intellectual and cultural life, dominating Bengali gender and work ideologies. These social, cultural, political, and economic conditions have continued to shape Kolkata’s urban development today, including its relationship to the urban poor).
ON URBAN MICROFINANCE
While there are numerous studies on microfinance in rural India (e.g., Karmakar 1999; Moodie 2008; Sanyal 2009, 2014), the effects on the urban sector remain understudied. In microfinance and financial inclusion more broadly, the focus has largely been on the rural sector due to the government’s focus on agriculture, creating a “rural bias” in credit to the poor (Nair 2009). As identified in the National Bank for Agriculture and Development’s (NABARD) report on financial inclusion, “There are no clear estimates of the number of people in urban areas with no access to organized financial services. This may be attributed, in part at least, to the migratory nature of the urban poor, comprising mostly of migrants from the rural areas. Even money lenders often shy away from lending to urban poor” (Rangarajan 2008, 17).
Since the 2000s, however, urbanization has increased rapidly in India, bucking the slowdown of urban growth in the 1980s and 1990s (Bhagat 2011). As projected by the consulting firm McKinsey, with 40 percent of the Indian population living in cities by 2030 and expected to account for around 70 percent of gross domestic product (GDP), the urban sector has also attracted private-sector investment.31 Given the growing importance of India’s cities in size and economic influence, both the government and private sector have focused on urban policies and markets, particularly as they relate to the urbanization of poverty. In 2005, for example, the central government announced the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) targeted at improving urban infrastructure and basic services to the urban poor and at reforming urban governance.
As a category, the urban poor encompass a wide range of socioeconomic groups. In 2014, for instance, the Indian government designated the poverty line to be Rs 1,407 (around US$22) monthly expenditure in urban areas and Rs 972 (around US$15) in rural areas (Press Information Bureau 2014). People with expenditures lower than this amount are categorized as below the poverty line (BPL), and those above, as above the poverty line (APL). MFI staff at DENA explained that they typically targeted APL families for lending, while other MFIs such as Bandhan have the “Hard-Core Poor” program for rural BPL households.32 Microfinance borrowers, however, encompass a diverse range of urban poor, from daily wage laborers and women who roll bidis (cigarettes), to owners of small informal factories and schoolteachers. Further, MFIs such as DENA distinguish between neighborhoods based on economic capacity, and borrowers also identify variously with class categories.
While the urban poor are not homogeneous, urban microfinance poses its own set of problems. This book emphasizes these urban concerns, particularly given the overdetermined nature of microfinance geared toward rural areas. Existing models of microfinance can fail to address the particular needs of the urban poor. For example, in the crowded slum settlements, there is often little space to conduct group meetings that lead to positive impact of social capital. Further, uniform regulatory caps on household income for microfinance loans in rural and urban areas do not account for the fact that urban households may have higher incomes but also higher expenditures. Finally, urban poor populations are also seen as higher risk because many are migrants or simply as less deserving than the rural poor.
METHODOLOGY
Financializing Poverty takes credit as a “site of encounter” (Faier 2009) between global finance, state and institutional norms and regulations, and the situated everyday practices of people whose social worlds would not otherwise intersect. It examines the ways in which both borrowers and lenders of microfinance negotiate the often-divergent ethics of financial sustainability and the demands of everyday social obligations. The book draws primarily on fourteen months of ethnographic fieldwork in Kolkata, India, between 2009 and 2011. I conducted two months of fieldwork in the summer of 2009 and twelve consecutive months of fieldwork between August 2010 and July 2011.
The majority of the fieldwork was conducted working with a Kolkata-based MFI that I call DENA. Accompanying MFI staff on their daily rounds, I attended the weekly meeting of borrower groups as a participant-observer. The borrower groups are the units through which MFIs operate: Individual women belong to groups consisting of ten to thirty borrowers. Each group has a leader, secretary, and cashier. These group officers (which can rotate among members) assist the loan officer in the weekly collections. Each group meets once a week in the morning during which loan officers collect weekly loan repayments. To gain a comparative perspective, I visited three different branch offices of this particular MFI in different parts of city, spending about three months at each.
The branch offices were not chosen randomly or based on my own choice but in consultation with the head office, which granted permission for my fieldwork. One loan officer mentioned during the course of my visits that the MFI had selected the better branch offices (i.e., ones with lower rates of overdue loans). Two of the branch offices were located on the eastern peripheries of the city, which contain a mix of old and new slum settlements. One branch was located in the heart of North Kolkata, which consists of mostly older settlements. The three branch offices also provided variance in the staff: one (A) had a female branch manager, with mixed-gender loan officers, while the other two (B and C) had male branch officers. However, while B had all male loan officers, A and C had mixed-gender loan officers. All required loan officers to work in the branch office six days a week.
Through DENA, I visited ninety-two different groups, some repeatedly. Participant observation during these meetings provided important insight into the everyday practices of microfinance (e.g., the technicalities of what actually happens during the meetings), the social networks (e.g., husbands, children, parents, in-laws, neighbors) on which women rely and navigate to maintain current and ensure future loans, and the problems associated with maintaining creditworthiness. These interactions with the borrowers also provided opportunities to interview borrowers and learn more about their experience of micro-finance. Interviews with borrowers in Bengali were often conducted on the side during the meetings. Although the meetings were an institutional space, borrowers often expressed their grievances about micro-finance during these conversations and asked me to express their concerns to the MFI head office.
I also accompanied MFI staff—a total of fourteen loan officers and four branch managers—during loan applications and house verifications. Attending to these practices helped elucidate the process of determining creditworthiness of urban poor borrowers. For example, in addition to the formal application in which the borrower states her gross and net income and the intended purpose, the potential borrower is judged by a two-step house verification—one by the loan officer and one by the branch manager—as well as confirmation from existing group members. This second process includes informal assessment of a person’s creditability that is not immediately apparent in the formal application form. I also conducted in-depth interviews with loan officers and branch managers, often in between meetings and verifications.
I also visited head offices, branch offices, and group meetings of two other MFIs in Kolkata. Additionally, I spent some time with a nonprofit organization that provides microfinance as a self-help group (SHG). The SHG model is the alternative to the for-profit MFI and is also subsidized by the Indian government, and investigation of this model provided comparative insights. For example, while the MFIs are able to offer lower interest rates through scale, they rarely offer alternative forms of support such as livelihood training or women’s rights advocacy.
Over the course of the year, I attended workshops and a national conference in New Delhi organized by Sa-Dhan, the largest industry association for microfinance in India. In addition to being a way to meet various people associated with microfinance, these meetings provided important insight into the major concerns faced by the micro-finance industry. Through this participation, I was also able to interact with scholars who work with the association and speak with them and share some aspects of my research. Alongside continued monitoring of news, including the release of a number of key reports, I conducted interviews with MFI staff, policy makers, and representatives from commercial banks that lend to MFIs. These interviews helped develop the background for understanding microfinance in India and the linkages that connect urban poor borrowers in Kolkata to the financial flows of global capital through banking.
CHAPTER OVERVIEW
The first two chapters examine the political economic context and historical legacy under which commercial microfinance has grown in India. In Chapter 1, I examine microfinance in the context of an emergent form of capitalism. Given the popularization of “social businesses” and “bottom of the pyramid” as a viable market opportunity, this chapter traces the development of what is considered a more ethical form of capitalism. Social entrepreneurs, such as the founders of MFIs, who serve a double bottom line of financial profit and social welfare, are celebrated as the future of development. However, even as the poor are encouraged to become entrepreneurs themselves, work in the informal economy remains precarious. While the culture of entrepreneurship encourages the poor to become increasingly self-sufficient, it simultaneously ignores the desire of many to attain more secure forms of livelihood and access to social services.
Chapter 2 traces the history and politics of microfinance in India. Microfinance and financial inclusion more broadly have to be situated within a longer history of banking practices in India rather than simply with the origins of the Grameen Bank in Bangladesh. 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, including the SHG movement, the commercial MFIs, and new business correspondent (BC) model, with different political stakes. It concludes with an analysis of the 2010 microfinance crisis in India, which highlights the intersecting political interests and commercial expansion of MFIs.
Chapters 3 and 4 turn to the labor of debt, demonstrating how abstractions of finance are caught up in the everyday lives of borrowers and lenders. Chapter 3 shows how MFI staff, particularly loan officers and branch managers who interact with borrowers regularly, collect repayment and determine creditworthiness. Loan officers try to distinguish themselves from the culturally negatively marked but socially embedded moneylender as employees of the formal banking sector. However, as “proxy creditors,” they must produce and alienate debt relationships to create abstracted loan products. Because debt is inherently relational, loan officers navigate and negotiate the ethical demands of such relationships by enacting forms of care and desiring respect. As microfinance becomes increasingly financialized, including through processes of securitization, loan officers must make sense of the traces of relationality that remain even when the debt is passed on as a loan product.
Chapter 4 discusses how microfinance practices have been enfolded into the everyday domestic labor of poor women. Proponents of micro-finance have often pointed 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 the labor of women who must not only build and maintain these networks but also manage the time taken by weekly meetings with other forms of domestic labor. Moreover, I argue that this perspective undervalues the power of the hegemonic Bengali middle-class ideology that encourages women to be good wives and mothers. Thus, despite the promise of addressing gender inequality, microfinance can create conservative outcomes as loans are enfolded into existing social and cultural norms of middle-class patriarchy.
The next two chapters explore how MFIs manage the risk of lending to the poor through credit risk assessments and life insurance and the consequences of these practices. Chapter 5 argues that the conservative outcome of microfinance is also tied to the need to minimize risk for the creditor. Beyond the financial reasoning, loan officers also rely on the 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, language, and religion. Even as MFIs turn to more formal credit risk management systems such as credit bureaus, I show that these data are always already produced through these existing and exclusionary forms of social and cultural knowledge.
Chapter 6 traces the intimate link between debt and death. Analyzing the requirement for microfinance borrowers to buy life insurance, I argue that MFIs are able to collateralize the loans against the lives of borrowers. While higher mortality rates are used as justification for requiring life insurance, this system of risk management can have unexpected outcomes for borrowers. In particular, as borrowers face enormous pressure to repay their loans, death—including suicide—can become perceived as the only way to escape debt. However, the discourse of debt-related suicide in India is often overdetermined by the farmer-suicide problem. While recognizing the tragedy inherent in debt-related suicide, I argue that the political and media focus on death obscures the reality of living in increasing conditions of precarity. One such area is the increasing costs of health care. Many borrowers have loans to pay for health care or find that sudden medical expenses can impede the ability to repay existing loans. These events and expenses require attention not at the moment of death but throughout the everyday struggles in which people attempt to make ends meet. The Epilogue considers microfinance in light of emerging trends in financial inclusion in India and its potential impact on poverty alleviation and development.
Notes
1. Names have been changed to maintain anonymity, unless otherwise indicated.
2. Didi (elder sister) is a Bengali honorific and was used to refer to all borrowers by MFI staff, regardless of age.
3. While it was estimated that around 60 percent of the Indian population did not have access to formal financial services, in 2014 the Modi government introduced the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme to push for 100 percent financial inclusion in India. This has meant requiring banks to open zero-balance accounts with minimal know-your-customer (KYC) requirements.
4. In 2005, Tufts University announced the Omidyar-Tufts Microfinance Fund. Omidyar gave US$100 million to Tufts University to be invested in a microfinance initiative, with 50 percent of returns to be used by the university and the remaining 50 percent to be reinvested in microfinance (Arenson 2005). In 2009, the Bill and Melinda Gates Foundation (2009) awarded US$700,000 to the Microcredit Summit Campaign to measure the campaign’s progress in alleviating poverty. In 2010, the Gates Foundation (2010) announced US$38 million in new grants for microfinance institutions.
5. In 2010, the New York Times reported that with less availability of credit cards since the recession and the declining value of real estate against which borrowers could get credit, small businesses have turned to MFIs to access loans, typically less than US$35,000 with an interest rate ranging from 5 to 18 percent (Shevory 2010).
6. For instance, Sean O’Connell (2009), Avram Taylor (2002), and Melanie Tebbutt (1983) have all written about the ways in the working class make do through various sources of credit in the UK context.
7. The financial system, as defined by Karin Knorr Cetina and Alex Preda, is what “controls and manages credit” (2005, 1). While the end users of capital rely on investors to provide funds, investors seek profits at a later time through the transfer of money as shares, bonds, or derivatives in the financial system.
8. Frederic Jameson (1997) argues that new forms of abstraction emerge from the logics of finance capital and come to shape cultural production. For example, with the intensified competition in the film industry for viewership, previews now encompass the entirety of the film, reflecting the increasingly fragmentary nature of cultural production. Or as Randy Martin argues, finance has emerged from behind the closed doors of banks to the ticker tape showing stock prices on twenty-four-hour news channels “as if the modulations of equity prices were an EKG to the global body” (2009, 118). See also Martin (2002) and Spivak (1999).
9. In other words, social scientific knowledge is performative in the sense that J. L. Austin (1975) formulated certain phrases to have illocutionary force. For example, a phrase such as “I now pronounce you” not only describes the act but also “performs” the act in its statement. In a parallel manner, while economic theory describes the market, in its articulation it also actively shapes it. As Donald MacKenzie (2007) shows in his analysis of the Black-Scholes-Merton model for options pricing, prices followed the model in part because of its very existence.
10. See, for example, Beunza and Stark (2004), Garcia-Parpet (2007), and MacKenzie (2007) on the performativity of finance. However, as critics of economic performativity such as Daniel Miller argue, this perspective ends up producing “a defence of the economists’ view of the world and a rejection of the evidence of how actual economies operate as available to anthropologists and sociologists” (2002, 219). Performativity of finance effectively brackets out power and the ideological foundations of the economic theories he studies and accepts the easy translation of theory into reality.
11. See, for instance, Fisher (2012) on gender and finance; Fisher and Downey (2006), Ho (2009), Lepinay (2011), Maurer (2002), Miyazaki (2013), Riles (2011) and Zaloom (2006) on ideologies and practices of financial actors; and Holmes (2014) and Lee and LiPuma (2004) on linguistics and banking.
12. Ankie Hoogvelt (1997) similarly refers to the process of growing global inequalities as one of financial deepening.
13. In Capital: Volume III, Marx notes that in interest-bearing capital, which is at the heart of finance, “we have the irrational form of capital, the misrepresentation and objectification of the relations of production, in its highest power . . . the capital mystification in the most flagrant form” (1993a, 516). See also Comaroff and Comaroff (2001) on millennial capitalism and the rise of speculation.
14. See De Goede (2005) on the depoliticization of finance. See Graeber (2011b) and Ho (2012) on finance and the politics of the Occupy movements.
15. Ethnographic studies of debt relationships include Bourdieu (1977); Elyachar (2005b); Han (2012); James (2015); Langford (2009); Malinowski (2002); Munn (1992); Roitman (2005); Schuster (2015); and Shipton (2010). Theoretical and historical overviews of debt and anthropology include Graeber (2011a); Mauss (2000); and Peebles (2010).
16. See Granovetter (1985) and Polanyi (1957) on the embeddedness of the economy. See also Krippner’s (2001) critique on what it means to analyze economic embeddedness.
17. For instance, see Maurer (2005a) on qualitative forms of assessment in due diligence. Similarly, Julia Elyachar (2005b) argues that it is not simply that “traditional” economies are embedded, while those in the “modern” economy are not. Rather, there is a concerted effort to conceptually transform embedded relationships into a new kind of resource.
18. See Maurer’s review of the anthropology of money (2006). Moreover, people earmark money differently, signifying not equal value but different kinds of social and moral values (Zelizer 1994). Jessica Cattelino (2008), meanwhile, argues that “popular and scholarly theories of money’s abstracting and deculturalizing force blind us to the ways that people undertake political acts of valuation in the course of exploiting money’s fungibility” (2008, 3).
19. Whether expressed in terms of economic inequality or class distinction, structural inequality highlights what Pierre Bourdieu terms the “race in which, after a series of bursts in which various runners forge ahead or catch up, the initial gaps are maintained” (1984, 160–161). Structural inequality can also be identified in terms of other forms of social difference, including race or ethnicity (Balibar and Wallerstein 1991). See also Farmer (2004) on structural violence.
20. See Poon (2009) on “downstream” effects of credit risk analysis.
21. In the draft 2011 Microfinance Bill introduced in the lower house of Parliament (Lok Sabha), microfinance was designated to have systemic importance. However, the 2012 bill that was finally tabled had excluded the provision for the microfinance sector to be monitored in terms of systemic risk.
22. Roitman argues that the term “crisis” “establishes the conditions of possible histories” (2014, 11). Rather than deny crisis, it becomes necessary to “take note of the effects of the claim to crisis, to be attentive to the effects of our very accession to that judgment” (2014, 12; emphasis in original).
23. As Weston argues, there are never corpses, funerals, or cadavers in discussions of economic ill health. Rather, “the body of the economy-as-patient is always alive, though perhaps just hanging on. It is a body awaiting a cure, and so, of course, its policy physicians” (2013, S35).
24. Calcutta was the center of the nineteenth-century movement known as the Bengal Renaissance, which included social reform movements, literary and artistic work, and nationalist activities.
25. See Chakrabarty (1989) and L. Fernandes (1997) on the working class and the jute industry in West Bengal.
26. See Kohli’s discussion of social-democratic politics in West Bengal (2012, 206).
27. In 2007, fourteen people were killed by state violence in the village of Nandigram over the creation of a Special Economic Zone for an Indonesian chemical plant. The same year, popular protests mobilized against land acquisition for the Tata car factory led to the closure of the factory for the world’s cheapest car and its transfer to a different state. See Banerjee et al. (2007); Chandra (2008); and Patnaik (2007).
28. According to the Census of India (2011), an urban agglomeration is defined as “a continuous urban spread constituting a town and its adjoining outgrowths, or two or more physically contiguous towns together with or without outgrowths of such towns.” Further, it identifies a mega city as an urban agglomeration of more than 10 million. Mumbai (18.4 million) and Delhi (16.3 million) are the two other mega cities in India.
29. See Ghertner’s (2011) discussion on governance of Indian cities under the aesthetic notion of “world class.” In Kolkata, there have been a number of city “beautification” projects that include the demolition of street vendor stalls (Partha Chatterjee 2004; Ananya Roy 2003). These movements reflect what Arvind Rajagopal describes as “the confrontation between the majority, who dwell and make their livelihood on the street, and the minority, who view the streets as but the circuitry of the formal economy in which they themselves work” (2001, 92). See also Anjaria (2011) on the contested urban spaces.
30. As Tithi Bhattacharya argues, “‘Bhadralok’ as a historical term expresses [a] legacy of theoretical disagreements in its definitions” (2001, 162). There is an extensive literature on the constitution, historical legacy, and contemporary role of this group in shaping Kolkata. See, for example, Partha Chatterjee (1993, 2004); Donner (2008); Ghosh (2004); Karlekar (1986); Kaviraj (1997); Ray and Qayum (2009); and Sarkar (1992).
31. See McKinsey’s report India’s Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth (Shirish Sankhe et al. 2010).
32. The Hard-Core Poor program at Bandhan is a grant-based program that offers beneficiaries training and asset transfer (e.g., livestock) to set up a small business. Once successful, the beneficiaries are expected to graduate into borrowers.