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Special Coverage : Sa-Dhan's National conference 2009 `

Unveiling the New Microfinance Ecosystem (Highlights)

Highlights of Inaugural Speeches

Rakesh Rewari (Deputy Managing Director, SIDBI)

Ela Bhat (Founder, SEWA Bank) The effectiveness of microfinance is not in growth, but in the long term relationship of microfinance with clients and the community. Banking, after all, is a relationship of trust and not mere finance. Banking with the poor is a resource mobilization

Reaching the Unreached is important. SIDBI’s microfinance services offer assistance packages to the under-reached areas (like the North East). Ela Bhatt (Founder, SEWA Bank)

opportunity for bankers. Bankers need to invest more in the Self employed women’s associations typically utilize

microfinance sector.

loans in3 phases: R. M. Malla (CMD, SIDBI) 1)Loans used to repay existing debts MFIs should have improved governance by inducting independent directors onto their boards. The rate of interest

2) Further credit used to purchase tools and material

(pricing) will be in the green light so long as it remains within

3) Third phase of loans for working capital

10% over commercial interest rates. SIDBI has started offering long term finds to MFIs apart from thee hitherto facilities of

Professor Mohammed Yunus (Nobel Laureate; Founder, Grameen Bank)

short term funds.

In Bangladesh, microfinance has reached 80% of the poor. In

Professor Yunus (Nobel Laureate & Founder, Grameen Bank)

the coming years, it will be possible to reach the remainder. The recent financial crisis affects only the MFIs which depend

However, in India just 20% of the poor has been reached

on foreign money. Micro credit cannot go anywhere unless the

through microfinance. There will be several detractors and

money problem is solved. The solution is creating a separate

critics; as long as you know that you are in the right and that

microfinance bank. Microfinance banks should be owned by

this is good work, keep going and don’t hesitate. Social busi-

the borrowers themselves. Even the regulators can permit

ness has a different list of objectives without personal gain.

microfinance banks on an experimental basis; on achieving

It is focused on no loss and no dividend. However, costs are

certain performance standards, they may be approved. Micro

covered. Social business can make a profit, although it does

credit is not to gain personal money but to bring people out of

not go to the company or owners. Grameen Bank has been

poverty. Keep the mission alive. Many NGOs do not disclose

promoting social business to address water problems, mal-

the effective interest rate structure in full. 12.5% flat is close

nourishment of children and energy. Grameen Bank gives

to 25% on a reducing balance over one year. When the repay-

loans to children for the purpose of higher education.

ment is reduced to 40 weeks, the rate rises above 25%. MFIs need to disclose interest rates on an annualized standard rate. Change in Banking Law: The present banking law is not appro-

Amitabh Verma (Joint Secretary - Banking, Ministry of Fi-


priate for microfinance. It is like a super tanker, which can sail

Learn to work with government institutions. While fed-

only in the ocean, in deep waters. Microfinance is like a small

erating, it is important to learn lessons from the coop-

boat which can sail in shallow waters for short distances.

eratives so as not to run into the same obstacles.

Hence, we should have separate banking laws for microfi-

Microfinance Focus [ April 2009 ] 38

Microfinance Focus April issue 2009  

A Global Magazine on Microfinance and Sustainable Development

Microfinance Focus April issue 2009  

A Global Magazine on Microfinance and Sustainable Development