Field Staff Compensation at Indian MFIs: A New Perspective on the Crisis in Andhra Pradesh

Analyzing the relationship between compensation paid to field staff of MFIs and their performance
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This paper investigates whether Indian field staff compensation levels and practices shed light on the allegations of unethical lending and collection at certain Indian MFIs. This is done by reviewing recent research on field staff compensation at MFIs in India and combining it with MIX data on staff incentive structures. The paper also illustrates that field staff are paid at the rates comparable to many other industries in India. However, their compensation is lower than that of staffs in traditional finance, a significant portion of their compensation is tied to an incentive scheme prioritizing actively seeking new clients and collecting payments on time. The following sections are covered in detail:

  • Base pay and overall compensation of staff members with a focus on compensation in subsistence term and the structure of incentives provided;
  • Comparison of microfinance field staff compensation with that of traditional finance workers and with other sectors in India;
  • Future research implications such as determinants of field staff pay, possible consequences of paying them more, and the likely effect of raising compensation on the costs of clients.

About this Publication

By Krell, M.W. , Pistelli, M.