Just read this on NYT:

How does it affect UP and are you concerned about it?

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Hi Sverre,


We are working on several initiatives. Being the end of the year and a holiday period things are a bit slow. I should have an update on when loans will be available by the 2nd  week of January.


Best Regards



http://www.rangde.org/home.htm#searchborrowers  still have loans online.


Any possiblity for UP to partner up with MFI,s in other parts of india?





We have reached out to other MFis and several banks as well but bank lending has pretty much frozen. They are waiting for the Malegam committee report before deciding on the next steps.

Rangde lends to MFIs so they are able to have loans on their site.


We have contacted several organizations are working on several projects. Also see the discussion on - http://unitedprosperity.ning.com/forum/topics/prosperity-1?commentI...


Please see Prof. Yunus's commentary on the crisis -http://www.thedailystar.net/newDesign/news-details.php?nid=169263
I think the businesses are skewed towards increasing the sales, profit margins, share prices that too on quarterly basis and perhaps nobody realizes when the line is actually crossed because its not defined. As Prof Yunus rightly said - 'Poverty should be eradicated, not seen as a money-making opportunity.'

"Poverty should be eradicated, not seen as a money-making opportunity."  That is a pretty clear, black and white statement, with which it is difficult to disagree.


Before I write more, I just want to declare that I am a financial analyst, so this might explain any bias that I might express.


I am 100% sure, that there are people from the finance industry who out of pure greed want to make money out of micro-finance and that this no doubt has contributed to the tragic situation in India. However, I am also aware that there is a growing number of finance professionals - asset owners as well as asset managers - as well as mum and dad investors, who are genuinely interested in so called "responsible investment" - i.e. they are concerned about the sustainability of their investments over the long term.


At least part of this industry is considering micro-finance and the good it can do and are looking for ways how they can invest in it. From their perspective, they might say that "OK, we might not be able to invest all our client's money in not for profit micro-finance (as we would go out of business), but if we can invest say 5% of our portfolio in micro-finance and generate returns that are above inflation, then it is a win-win situation for all involved. Our returns will still allow us to attract new clients, our investors will get slightly lower, but still reasonable returns and might feel good about also fighting poverty, and the entrepreneurs will get access to funds which otherwise they would not"


Now obviously, if Professor Yunus is right and for profit microfinance just does not work then so be it. The only thing is, if there were ways to make it work, over time it could unlock vast amounts of money - possibly much more than you can garner from philanthropic lenders or guarantors.


My personal preference is obviously the not for profit way, but I do not want to dismiss the for profit option, unless I am 100% sure that it simply does not work and I am aware that the interest for the entrepreneurs even under the not for profit micro-lending is not all that low.



Well in principle I am not against the For Profit world, because it has led the growth, innovation and is employing more than 50% of the world population.


But unfortunately with the motives of maximizing the profits/increasing share prices etc, I think unintentionally or due to series of events the policies, the business models tend to start deviating from the original intent.


Many more similar unfortunate events round the globe have happened in the past -http://www.nytimes.com/2010/04/14/world/14microfinance.html?pagewan...


I feel the microfinance as a concept/industry is still in early stages as compared to banking, so definitely a lot more will happen in terms of regulation, innovation, efficiencies and eventually to help people get rid of poverty.It will definitely take time and its absolutely possible that some innovative for profit model can be developed which is equally effective but for that to happen I believe we will need more stricter regulation and policy reforms.


In most cases we can observe that microfinance is needed where government or civic society has failed to do its part that too miserably and over a sustained period of time. So where governments have failed, can a nonprofit organization succeed purely on its own, I dont think so because even the nonprofits needs money to at least run the operations which usually is provided by the for profit world - angels/ societies BUT Professor Yunus model was different, it was self sustaining and it succeeded for a long enough time period.


So with Malegam report out - the cap on interest rate is 24%




And in parallel the SKS stock soared by 13% within few minutes of this announcement. Now if SKS wants to give even higher returns to its investors/shareholders it will have to work on improving its efficiencies so as to keep improving bottom line QoQ/YoY OR else it might start charing processing fee/ administration fee/application fee etc etc OR else it will have to come up with really innovative solutions and indeed it can do all of this simultaneously. 



I am sharing a recent clip from PBS -


They have interviewed Vijay Mahajan ( often referred to as the father of microfinance in India ) and Ela Bhatt of Sewa Bank ( Sewa is actually a cooperative not a non-profit.The interviewer got it wrong). Ela Bhatt is highly respected for setting up Sewa bank and for growing microfinance all over the world through Women's World Banking which she helped setup.( http://en.wikipedia.org/wiki/Ela_Bhatt)


Also interviewed is Reddy Subramanyam who was the officer in the Andhra Pradesh government who drafted the Andhra Pradesh ordinance. From what I hear he is one of the most fearless and upright officers who will not buckle to any political pressure.


While there are merits to commercialization, one of the things which seems to have  gone wrong is appointment of formal and informal agents by MFIs to reduce costs and give high investor returns. I think some of these agents resorted to coercive loan recovery techniques. This seems  to be have done mostly by MFIs who raised private equity. Ramesh Arunachalam has covered these aspects in his blog - http://microfinance-in-india.blogspot.com/




Any news about when the the loans will come online ?
We are working  on the project in Rajasthan. The bank is working on getting the internal approvals. We should have clarity on the timelines, next week. Once the approvals at the bank come through we should be able to get started quickly.
I just spoke to the bank today. It is taking some more time. I will have an update later this week.


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