Higher ground of lending

THINK Micro Finance (MFI) and Grameen bank of Bangladesh comes to mind. Heard of SKS? Well they have replicated the same in India and are currently making an IPO to take this concept to the Upwardly mobile Urban Indian home.

There is a lot of debate on how to justify the concept of profit in a process that is basically one arising out of philanthropy. But is it really that simplistic a view?

Let us look at the social change being re engineered here:

1. Professional lenders against moneylenders

2. RBI oversight against none for moneylenders - makes it easier for NGO's to take up cudgels against unfair lending practices something which is non existent with the money lender.

3. Chance for the rural local entrepreneur to come out of generations of poverty and maybe just maybe take a fair shot at the emerging Indian dream.

4. Avoidance of exploitation - cases of money lenders taking people as bonded labour, human trafficking, child abuse etc was common practice - this should reduce over the next decade as companies like SKS spread their wings.

Personally I do not buy IPO's but this is one issue that needs support so go out there and subscribe. India's deliverance is not in the hands of the politicians but in the people's hands and the people have spoken by making micro finance a success story till date.

What is the support that is required from the RBI/ Govt?

1. Dont interfere other than what exists in the regulations currently for oversight.

2. Keep out the blood suckers like GS/ MS/ JPM etc by not allowing recourse to refinance for these MFI's other than Federal Govt agencies like NABARD, HUDCO etc and of course the RBI.

3. A separate ombudsman in each state who will liaise through the district collector so that the MFI's are not tempted to be become the new "moneylenders"

All in all I think the financial revolution in India is starting just about now. Jai Ho..