"The Hindu" editorial on Micro-finance

This was published in The Hindu on March 14, 2005. The link is here.

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SELF-HELP GROUPS AND MICRO-FINANCE

The slew of measures announced in the Union budget will go a considerable way in bolstering the system of dispensing credit by micro-finance institutions (MFIs) in conjunction with self-help groups (SHGs) and non-governmental organisations (NGOs). There is a welcome recognition in the Finance Minister's speech of the role MFIs have played in catering to the credit needs of the poorer sections of rural society. This is a function mainline banks in India and most other countries have been unable to do on their own. Since February 2000 when the Reserve Bank of India gave priority sector status to loans provided by banks to the MFIs, the activity has been mainstream. Experience of operating a micro-credit model pioneered by the National Bank for Agriculture and Rural Development (NABARD) during 1991-92 has shown that establishing a linkage between an SHG and a bank is the best method for bringing SHGs into the ambit of formal banking especially because it infuses a degree of professionalism into the services offered to the rural poor.

The budget has ambitious plans to extend the target of credit linking for 2005-06 from 200,000 self-help groups to 250,000. The Government hopes to enhance the beneficial role of the MFIs as an intermediary between banks and rural borrowers. Commercial banks will be allowed to appoint MFIs as their "banking correspondents" for providing a variety of services on their behalf. That will vastly increase their reach and remove some of the intractable rigidities that have stood in the way of the spread of rural banking. Close to 70 per cent of the rural poor do not have a bank account and 87 per cent do not have access to credit from a formal source. The proposal to appoint MFIs as agents for micro-insurance products will help spread the insurance habit and enable them to earn a fee income. Another significant proposal is to let the eligible MFIs seek equity support from the redesignated Micro Finance Development and Equity Fund, which has a corpus of Rs. 200 crore.

Originally confined to the southern States, micro-finance is fast spreading to the rest of India. For the banking system, the SHG linkage has been a winning proposition. It has resulted in lower transaction costs, negligible defaults, and the generation of enormous goodwill. The MFIs have been adept at providing customised solutions based on their understanding of local conditions. However, a number of weaknesses remain. Banks have not yet standardised their approach towards micro-lending. A lack of infrastructure and design facilities and also worthwhile distribution channels for marketing the products has constrained growth. A number of initiatives are needed to keep the micro-finance system on track. The goal is to make it a dispenser not just of credit but of a variety of social goods and services to the rural poor.

A stirring in the heart

I was walking slowly under the hot sun. Not many people were around. Leaves were too bright in the light. My feet could feel the heat of the earth on the footwear. My footwear could feel the heat below and the weight above. I saw a playground. There was a school next to it. The school was small. It was not a convent. Though boys and girls were in school uniform, one could immediately sense their financial background. Small boys and girls were sitting in different groups under the shadow of the trees that were lined up by the side. Some were talking aloud. Some were silently having lunch. Some were playing. Very noisy but not a disturbing one. The sky was very clear. There was only one group of thin clouds, very far, moving slowly like me. They were looking for cool shades to rest. A single crow moved very swiftly from one tree to the next one. Some leaves fluttered because of this. Someone might have disturbed its rest there.

It was a hot lazy afternoon.

I was just walking. Suddenly I noticed that I was not thinking anything. My thoughts were also taking rest. Heart was also, like a calm river, flowing from inside to outside spreading itself all over. I was walking effortlessly. I saw two school girls walking in front of me. Our walking pace was almost uniform that the distance was same. It was close enough that I could overhear them. They were walking without speaking to each other. Looked like it would be like that forever. One of them turned back to see something or someone. Her face was round and she had very expressive eyes. I thought her eyes were more mature than her face. But why did those eyes have few drops of tears? There was a slight disturbance in that calm river. Small ripples were formed by the fall of those small drops of tears. Tears borne out of pain were getting dissolved in that river. Heart was taking everything in its flow. Suddenly, the girl said to her friend,"My father beat my mother yesterday."

There was a silence. A meaningful silence.

The girl now asked,"Have you seen your father beating your mother?"

The other girl with a heavy heart said,"mm..I have seen."

"I feel like crying when I think of my mother."

"me too."

"must be painful for her?"

"mm.."

Ripples grew into huge waves. Nothing was calm anymore. Why these small innocent girls had to discuss such things? What a hurt these young hearts were burdened with!

At a distance, one flower was falling. All of us noticed that.

One girl said to the other,"I will catch that."

But the other said,"No, I will catch. It's for me."

I saw them running ahead. The flower was moving down spiralling its way. Both of them tried to catch it. But the flower did not yield to their efforts and fell on the ground majestically. Did it smile at us? The girls laughed heartily for their failure. My heart, like a calm river, rejoiced in their laughter.

New feature

"Listen to the clipping" is added. I will hopefully be able to update it regularly. You can now listen to a small clipping from M.S. Subbulakshmi's rendition. Please see inside the 'listen' window for details of the clipping.

Microcredit and Microfinance

In continuation of the previous post, I would like to add these:
For further readings:

• You will find here the documents and resources on microfinance in India
• Frequently asked questions on microfinance (You will find here the difference of microcredit and microfinance)

In the General Budget 2005-2006 presented today, Government of India has proposed to increase the Microfinance development fund to Rs.200 crores.

Prof. Muhammad Yunus

One does not always need to have large money to help people. The poor but skilled people need very small money to help themselves come out of deprivation. They might not possess anything for collateral. Banks do not give loans to them. Local moneylenders squeeze these people. The scene seems to be very familiar. Professor Yunus, the economist, happened to meet such people. When he met Sufia Begum way back in 1974, he never knew it would change his life and that of others. Professor was on his visit to a local village in a famine gripped Bangladesh. Begum would weave bamboo stools from morning to evening to earn fifty paise profit in each stool. Professor also learnt that the moneylenders had not allowed Begum to increase the selling price as a part of her repayment of loans. Then he made a list of people who needed a small amount of money and found out they needed only 1500 Bangladesh Taka (roughly Rs.1100/-). He was shocked. People normally talk of investing millions and millions of Takas for economic development. But these people needed only a little. He lent that money to them and asked them to repay whenever they could afford. He also realized that this was just an emotional and personal response but what these people needed was an institutional mechanism. Grameen Bank, banking for the poor, was born. The implementation of micro-credit was also born.

For Further Readings:

• Read his interview here
• Website of Grameen Bank
• Paul Sinclair's article on Prof.Yunus
• His book: Banker to the Poor - Micro-Lending and the Battle Against World Poverty
• An article on micro-credit by Prof.Yunus

Lilavati

Bhaskara II was born in 1114 or 1115 and died around 1185. His famous work Lilavati is said to be named after his daughter, to console her for an astrological forecast that went wrong.

The story goes that Bhaskara used his knowledge to choose the most propitious date and time for his daughter's wedding. As the time approached, one of her pearls fell into the water clock as she leaned over it, stopping the outflow of water. Before anyone noticed, however, the critical time passed and the wedding had to be called off. The hapless Lilavati never married, and now she is remembered only through the book that bears the name.
(From Mathematics and Its History by John Stillwell)
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I have also read somewhere about a legend which says that the wedding indeed took place but her husband died soon after.

M.S. Subbulakshmi - 009

(from an article by Dr.Gowri Ramnarayan)

"We walked 30 miles to hear you today but arrived only at the very end. We waited in the hope of offering our respects to you before returning to our village."

The speakers were a dust-streaked couple in crumpled sari and dhoti in remote Ayalur in Tamil Nadu's Thanjavur district - where Carnatic vocalist M.S. Subbulakshmi had given a concert as the finale of a week-long temple festival. Her name had drawn from villages miles around, thousands who were at that time returning with no thought or word beyond the exhilaration her vocal music had wrought.

Drained by the two-and-a-half hour performance and passage through the adulation of the packed crowds, the (then) 70-year- old musician had no thought but of rest for the early journey of the next day. But she would not, could not, send the couple away disappointed. "Let us sing at least one song for them." The younger accompanist to whom she said this asked, "Do you know it is midnight now?" With a smile MS began to sing with the same earnestness and attention she had shown earlier on the stage.

Ilaiyaraja's Thiruvasakam

(Click here for The Hindu report. The following is from www.chennaionline.com )

The much-awaited musical work of 'Thiruvasakam by Ilaiyaraja', a symphony based on Manikavasagar's Tamil verses, is now complete, the renowned music director disclosed in Chennai. It will be released in Chennai on April 14 - Tamil New Year's Day. The music director said his aim was not to provide a new dimension to the Tamil epic or to try and display his talents as a musician. He wanted to take such treasures like Thiruvasakam to the younger generation, and make them aware of the rich traditions and culture in Tamil Nadu. "We have a responsibility to tell the youth in a way they can understand about the greatness of literary and religious masterpieces like Thiruvasakam. I have merely attempted to take this to the youth," said an emotional Ilaiyaraja. "There will always be people who will question why these verses have been rendered in the album this way. However, I am not trying to say that this is the only way to sing them or that this is the way to sing them. I have done something to make the youth aware of the treasures that we have, that are lying unused and unsung right in front of us," he added. The album has witnessed excellent performances by the Budapest Symphony Orchestra in Hungary (140 players), by Stephen Schwatz, the celebrated American playwright; by Richard King, the five-time Grammy award-winning sound engineer of Sony Music in New York, and more than 200 vocalists and instrumentalists from Mumbai, Chennai, Bangalore, Thiruvananthapuram, Budapest and New York. The producer of this album is Tamil Maiyam, a non-profit organisation based in Chennai.

M.S. Subbulakshmi - 008

It is said that after a concert while MS was still in her teens, Dakshinamurti Pillai addressed the vidwans present and said,"Why do you indulge in acrobatics? Observe the way this little girl sings, and learn the art of simplicity from her." MS had the greatest admiration for him and claimed to have been influenced by him in her formative years.

(from Great Masters of Carnatic Music:1930-1965 by Indira Menon)

Pudukottai Dakshinamurthi Pillai (1875-1937)

Dakshinamurti Pillai was an awe-inspiring musician of those times. He played mridangam, ghatam, and kanjira. He learnt mridangam under Tanjore Narayanaswami Appa and became the student of Manppondia Pillai, a wizard, at the age of twenty-five. He then joined Balamani Ammal's troupe as percussionist. He was a colossus; a familiar figure - respected and admired. A percussion combination that was considered to be memorable and was thought to raise the standards of the concert was, Palghat Mani Iyer and Palani Subramanyam Pillai on the mridangam, and Dakshinamurti Pillai on the kanjira. He was an eternal source of encouragement to the young and an inspiration to great masters like Karaikudi Sambasiva Iyer and Konerirajapuram Vaidyanatha Iyer.