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The Indian microfinance institutes (MFI) crisis has spawned several debates on the MFI movement. What is sorely missing are the perspectives of the clients. Using the financial diary methodology in a study of 90 poor households in Ramanagaram town, in the district of Ramanagaram, Karnataka, India, this article analyses how household cash flows are impacted by the presence or absence of MFI loans. During the study period (September 2008-July 2009), an informal ban on MFI repayments was called which offered a rare opportunity to collect data from the same households in the presence and absence of MFI loan repayments. An analysis of their expenditures points to the genesis of the crisis, namely that MFI loan repayments led to impoverishment since these were made at the cost of basic household consumption, like food staples. The authors use the Ramanagaram financial diaries to provide a counter narrative to the dominant Yunusian Grameen narratives on microfinance and poverty alleviation by not looking at microfinance loans in isolation but by situating them in the context of the totality of consumption, cash inflows and debt that govern the lives of the poor.We wish to thank the erstwhile Microfinance Group of the Indian Institute of Management Bangalore and Professor R. Srinivasan for making this study possible. We are grateful to our field workers Rathna, Sudhamani and Umarani for their support throughout. We especially wish to thank the anonymous referees of this journal for their insightful comments on the initial versions of this manuscript. Lastly, this study would not have been possible without our diary writers, the gutsy women of Hajinagar and Ambedkarnagar in Ramanagaram, Karnataka, India. The usual disclaimer applies. Development and Change 47(1): 130-156.

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Using three months of data from fi nancial diaries tracking daily cash fl ows of a group of microfi nance borrowers in two urban slums in Karnataka, India, we show that the burgeoning microfi nance sector faces a number of constraints. These households are borrowing from multiple sources, specifically multiple MFIs. Secondly, a large fraction of each household's budget is spent servicing loans with the two largest components of budget being loan repayment and food expenditure. Finally, households are observed to recycle their debts with over 27 per cent of fresh borrowings being spent on existing debts. These households in the urban slums of Ramanagaram are organizing their lives around multiple MFI memberships, multiple group meetings in a week and numerous repayment schedules. Apart from the stress to MFI clients of managing debts of small amounts from various MFIs, the Indian MFI sector will have to learn to grapple with the fallout of multiple memberships.MICROFINANCE INSTITUTIONS ARE ESTABLISHED to fulfi l a mission -of reaching fi nancial services to the poor who are otherwise not reached by commercial banks and insurance companies, with the eventual goal of empowering the poor in a fi nancially sustainable manner (Mahajan, 2008). Three key problems face microfi nance institutions today: ensuring their own fi nancial sustainability, increasing outreach, and improving the impact of their loans on the livelihoods of the borrowers. This 'critical triangle of microfi nance', a term coined by Zeller (2002), drives the institutional rigidities in the micro-credit models that these organizations follow. These rigidities are seen in terms of limits on the size of loans, the frequency of repayments and the rates of interest that are charged. One of the ways in which MFIs have successfully learnt to maintain fi nancial sustainability is by keeping a check on the default rates among their borrowers. This is done by ensuring Rajalaxmi Kamath (email: rajalaxmik@iimb.ernet.in), Arnab Mukherji, and Smita Ramanathan are with the Indian Institute of Management Bangalore, Karnataka, India. The authors gratefully acknowledge research assistance by Ms S. Rathna and are indebted to the women of Hajinagar and Ambedkarnagar at Ramanagaram for sharing their time with us. The usual disclaimer applies.

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The success and growth of Indian information technology (IT) service firms over the last decade has been built on the 'linearity' model of operation, wherein revenue expansion implied a proportionate increase in human resources. While the linear business model has served companies well in the past, its long-term sustainability is now being questioned on the grounds of organisation size, manageability, and rising costs. Zyme Solutions Inc (Zyme), a fully outsourced hosted data intelligence service provider to the high-tech vertical market, has enjoyed spectacular growth over the last few years by building its business around a non-linear business model. Prof D V R Seshadri spoke to Chandran Sankaran, who founded Zyme in 2004, about how the Zyme business model was conceptualised and grown. Sankaran's previous experience in consulting and enterprise software enabled him to see that it was possible to build a business by encapsulating deep domain knowledge in a software platform. Simultaneously he was attracted by the business model of outsourcing, realising that the traditional model of enterprise softwaredfirst building a software application and then trying to educate customers on how to use itdwas not working. Zyme combines the standardised platform aspect of a software business with the end-to-end business process value of a services company. Zyme helps customers derive benefits such as incentive cost optimisation, in channel inventory management, revenue accounting and audit risk compliance. While in theory the model may appear easy to replicate, Sankaran is confident of his company's first-mover advantage in the domain and the market space. The shift to a non-linear model, according to Sankaran, would require ITES companies to change their mindset fundamentally, from focusing on the pool of people to the market problem, and defining, building, and selling the solution footprint.

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