Assembling Accounts

In my previous post on microfinance in Sri Lanka, I described how rural villages have been reorganized into hierarchies, harnessing the personal relationships of women and turning them into collateral for their loans.

Now we’ll look at how the interest from those microloans is aggregated, making microfinance so profitable for the banks. This is the last of the three tactics that Chandana, Dan and I identified by which microfinance has been established in Sri Lanka.

Pay to play

The process of aggregation starts at the individual level, before a loan is even issued. Remember that each woman must save for three months before she can be approved for a loan by the rest of her small group, who will be responsible for the loan if she defaults. It’s like a microfinance version of pay-to-play.

Each woman must track her own savings performance using a savings passbook. This documents the regularity and the amount of her deposits. Each woman keeps this passbook herself as a record in which she can see her own progress and demonstrate it to others.

Close-up of hand-written entries in a bank account passbook.

Close-up of hand-written entries in a bank account passbook.

The animator of the group, the man who represents the bank and encourages the women to adopt the behaviours needed for microfinance to succeed, coaches the group treasurer to record each deposit in the group savings account book. At each group meeting, the balance and cash flows from this group account are read aloud and reconciled with the individual passbook entries. This draws attention to individual behaviours while making visible the group’s collective behaviour.

While each woman is responsible for making a minimum deposit, she can also make additional voluntary contributions. This is considered “above average” performance, and it is applauded by the group as if they were all Amway reps and the woman had exceeded her sales quota.

No group member can withdraw her deposited money until at least a year has passed. This would be different than taking a loan. It would just be withdrawing the woman’s own savings. However, any withdrawals must be approved by the members of the group.

Loan accounts

So far we’ve only looked at the record keeping for savings. Loans have an entire parallel system of records.

When a woman is approved for a loan, a loan account is set up to record her repayments. As with savings, a loan account book is used by the woman to self-monitor and to display to the group her financial discipline. Obtaining a further loan, once this one is paid off, will depend upon the regularity of entries in the loan account. It’s not just about repaying the loan. It’s about demonstrating disciplined behaviour.

Collective responsibility?

The account books are how microaccountability is harnessed by the microfinance system. The savings and loan accounts are not just kept in private by the individual women, but are ritually “performed” at each meeting through recitation and aggregation into the group account books. Each woman’s financial behaviours are made visible to the group, who will know her struggle to meet the financial obligations the group incurred on her behalf.

The women meet to discuss their problems and empathize with each other. But despite the fact that they have assumed collective responsibility for the loans, none of them is actually willing to lift the burden of repayment off their friends and neighbours. For they all feel the same weight:

“If bank gentlemen come and say to us that there is a possibility of difficulty in [someone] paying their loan,” said one woman, “then we get angry and urge her to do something about it because we cannot think of paying on her behalf at all.”

“We discuss the problems,” said another woman, “but we are not collective for payments. Individuals must take responsibility. Last week, my friend wanted me to help her make her payment. I said I can’t. Because I cannot think of this with all my own payment commitments. I said to her I will try to help her next month – just to keep the relationship. In the microfinance meeting, we all share these personal troubles but nobody can help. We have to help ourselves.”

What this suggests is that the bonds that previously led women to work for each other for free, knowing the gift of labour would be repaid, have to some extent been severed. The women are no longer able to help each other in times of need, even if they wanted to. The best they can do for each other is help someone negotiate an extension to a loan repayment schedule. So they make promises to each other that they know they cannot keep, in order to maintain their friendships.

Business plans and budgets

The savings and loan accounts are supplemented by other accounting information, such as business plans and budgets that must accompany every loan application. The women are taught how to produce these, and how to maintain a simple set of accounts for their microbusinesses, consisting of a cash book and an expense and income record. While these accounts provide sufficient detail for a woman to measure her profit on a cash basis, it is the regular recording of transactions that reinforces the discipline that microfinance depends on:

“It is not a big thing,” said one woman, “just writing down every payment I make and all the money I receive properly in a couple of school exercise books. But they tell me where all my money has gone. At the end of the day, it helps me to keep an eye on my spending so that I can make sure I have enough to put in the bank.”

These accounts, when brought to life in the small group discussions, provide the women with a mirror through which they can reflect upon their activities, linking their cash flows to their life choices.

We ourselves are the mighty power.
— A microborrower

The engine of microfinance

This is not simply about the production of conformity and financial docility. The women are aware of their own power in relation to the microfinance industry. They see themselves not as the recipients of microfinance, but as the engine:

We now have realized how to live without someone’s help. We have come to know that we ourselves are the mighty power in gaining advantages of these programs and government help. Their help is not useful if we have not prepared to get them. We cannot get them if we have not been determined to organize ourselves.

Despite the efforts of the microfinance industry to turn them into individual entrepreneurs, the women who once knitted rural life together through friendship and kinship are still able to see themselves as a powerful “we.” Collective work has largely ceased, but collective self-understanding remains, grounded in mutual respect and care. The women are not victims, but neither are they unchanged. They sense their own power and purpose within the prescriptive structures of microborrowing groups and village hierarchies.

Backlit image of a dog standing in a doorway

The macro level

The accounts kept by these women are aggregated up to the village and national levels, connecting their daily activities to broader programs for managing the population. Their accounts feed assessments of microfinance as a strategy for managing poverty, aimed at a political readership interested in rural development.

The aggregated accounts also surface at the international level, in the annual reports of development organizations such as the World Bank, who recirculate them back into policy discourse through their web sites, newsletters, and policy analysis. Abstracted from the minutia of daily life, the women’s intimate decisions about which schoolbooks to buy and how much to set aside for savings deposits and loan payments are translated into a representation of global finance as the humane and empowering solution to global poverty.

The entire edifice of microfinance thus rests on the production of aggregated financial numbers in which the women who produced them would no longer be able see themselves. As Judith Butler argued, it is a fundamental paradox of accountability that we cannot own the account we are asked to give. In the case of microfinance, this leaves considerable room for interpretation at both ends—for the women to dissociate themselves to whatever degree necessary for their own cognitive health, and for the bankers to construct their own story of success.

This would all still be true if the recipients of microfinance were men. So the question remains, why always women? Why does microfinance always end up exploiting the gender inequity of poor societies at the same time as it tries to fix it?

The next and final post in this series takes up this and other questions, as we try to sum up what we have learned about microfinance.

Photos © 2012-2013 Wickramasinghe. The village dog haunted the microborrowing group meetings like the spectre of capitalism. (I mistakenly dated the photos as 2007 when this was first posted, having misread the timestamp information.).


Alawattage, C., Graham, C., & Wickramasinghe, D. (2018). Microaccountability and biopolitics: Microfinance in a Sri Lankan village. Accounting, Organizations and Society.