##gating its tragic final outcome into sub components of devices employed, each such sub component teaches us a valuable lesson. these lessons, when viewed from a centric point, boil down to two important aspects of microfinance : the governance structure which microfinance institutions have to adopt and the self - discipline which microfinance beneficiaries should cultivate. both these important elements in microfinance should not be mere eye - washes to satisfy someone who demands of such behaviour by the respective parties. they should be faithfully and vigorously followed in order to prevent the microfinance industry from meeting with an untimely death. what normally happens in sakvithi - style investment schemes? sakvithi episode is a classic example of the ability of shrewd persons to exploit society ’ s desire for accumulating quick wealth by skipping the hard path which it should normally take. hence, it is also an exploitation of people ’ s desire to become rich. this desire is embedded equally in both the poor and the rich : the poor to get out of poverty quickly and the rich to become richer and more influential. hence, the schemes of quick high returns are craftily designed to satisfy this psychological desire. many schemers who pose as micro - financiers too resort to this tactic and the poor unknowingly fall victim to their schemes. the modus operandi of such schemers has been the same. they would form a microfinance institution because it is in high vogue today and the society is ready to accept it as social responsibility which one should perform for community ’ s benefit. this explicit social legitimacy allows them to operate under the umbrella of microfinance which is artificially boosted by appropriate marketing and fitting propaganda. in this manner, savings are mobilised from the poor and funds are raised from the donors. eventually, the end - use of resources is not for helping the poor, but for siphoning for other activities. when such activities do not generate a continuous income sufficient to meet the obligations to depositors, the micro - financier is not left with a choice, but to default the savers who had placed their trust in him. the end result is the deep suspicion which the poor would have about the entire microfinance industry. the authorities too would view microfinance as a destabilising and fraudulent element in the financial system. this leads to a credibility issue and a reputation risk in microfinance industry. once the

industry loses its reputation, it is difficult to regain the same irrespective of whatever is being done by some genuine microfinance practitioners. the damage to the industry is done by some “ black sheep ” who are not controllable by other genuine performers. in this manner, the quick returns are earned by “ ill - willed ” practitioners, but the social cost has to be borne by the entire industry. hence, the major challenge faced by microfinance industry today is to save itself from the spurious micro - financiers. who is a poor person? the poor are normally defined by reference to income level or calorie intake or the level of opportunities available. all these definitions represent some aspects of the poor which are important. yet, they do not accurately depict the real nature of the poor. a poor person is a person who is unable to assess the risks faced by him and take the required mitigating measures to avoid them. the risk factor is more suitable to identify the poor, because the poor have to operate in a market which is full of risks. if he can successfully wade through the risks, he could succeed in the market as well. if he fails, he would remain a poor forever having to depend on outside help. greed is the killer not many in a society would be able to correctly assess the risks faced by them. if they are unable to assess the risks, then, they cannot expect to take risk mitigating measures as well. many reasons can be adduced to this general failure of individuals to assess risks appropriately. they may not have been taught to assess risks. or, their risks would have been assumed by others, chiefly the government, and as a result, the moral hazard behaviour would have prompted them to take unnecessary risks. even when they are educated and there are no opportunities for moral hazard practices, they may still take risks purely guided by their extreme greed. when the greed overtakes the rational mind, the individual may be blind to what he would get if the scheme fails. people belonging to both rich and poor categories fall into this last category. it is these people who normally fall easy prey to cunning tricksters who are planning to strip them of their wealth by making false promises. all that is necessary is to arouse, by means of a well - orchestrated marketing plan, their greed. the spurious micro - financiers use person to person contact method to outreach potential victims and lure them to leave their