Suppose you have a few guests over at your house, they stay for a couple of days and leave and once they leave, what you see is that they have slowly but completely messed up your home and left it in a condition unfit for habitation. This is exactly what is happening to our planet. We did not own anything in this planet, money and power are our creations and so is everything that we have acquired in this planet and we all must leave this planet once. But we, like the unpleasant guests, do as much damage as we can making this planet less suitable for habitation.
Long before humans arrived, this planet was alive and by the looks of it we will bring about its end. Is this right? What right do we have other than selfishness, greed and self-assumed power to destroy this world. Those who endanger this planet are those with asbolutely no morals, sacrificing planets survival for making it big until we can suck this planet dry. It is not going to be an alien invasion that raises the threat of annihilation, but our own actions. We are not enjoying the fruits of our efforts but the fruits born from seeds sown by our forefathers and so we have the moral obligation to preserve for our children what we inherited. If we cannot sow the seeds of prosperity and a better world for them, atleast lets not leave a barren wasteland filled with seeds of death for them.
Monday, October 25, 2010
Microfinance Institutions
SKS Microfinance, started by Vikram Akula in 1997 definitely pioneered the concept of Microfinance in India. But recently, his company went public and after a highly succesful, there is some confusion as to what exactly is happening as their CEU Suresh Gurumani was asked to leave on Oct4 and the reply to SEBI's query on this issue has received an unsatisfactory reply.
Microfinance helps because the requirement is not need lakhs of rupees for long term, but merely few thousands of rupees for less than a year, mostly for purchase of inventory for retailers and for buying seeds, fertilizers etc for farmers or for an emergency. What trapped them were the moneylenders who charged exorbitant rates and ultimately ended up taking over the collateral land or property, not to mention the harassment that preceded. Microfinance was a revolutionary concept (Mohammed Yunus and his Grameen Bank was given the Nobel Peace Prize) and it provided loans to women who were seen as more responsible towards the family and society and also spend the money wisely. The return rates for these loans were 99% and Vikram Akula had aworked with Yunus, but Yunus himself has criticised Akula for going public because the debate arises between preserving the interests of the people who have taken loans and the investors and shareholders.
Microfinance is a tool for social change, rural development, self employment and fight against poverty. It is a social need and so any business that engages in this activity must also be aware of the social impact it has and also must keep in mind the interest of the customers. By going public, this aspect is getting diluted. One might argue that the purpose of an enterprise is to create profit, but a microfinance institution is different for its purpose is not profit but all those social needs I mentioned at the beginning of this para. But if the intention of the organisation was infact profit, there is nothing to differentiate it from any other financier, except perhaps in the scale of money given, but it is fast becoming just that- another moneylender.
Instances of harassment for money recovery (payments are to be made within a week), exploitation of the self help group as the other members of the group are also harassed who in turn have staged dharnas infront of the defaulters home and boycotting this individual has also happened along with extremely high interest rates on loan. Vikram Akula claims that 24% interest rate just about breaks even for them, but then how has SKS registered its high growth rates just by breaking even. He is also opposing a cap on interest rates but this is an important way of regulating a system which could revolutionise our rural areas, but one which is losing direction now.
If the company cannot find a commercial solution that works, it better not function. It is as simple as that, but simply to protect investor's interest, the government cannot and should not turn a blind eye to unrestricted working of this institution. Reducing operating costs by going local and hiring local, decentralisation of operations and inspite of claims to the opposite by Vikram Akula- small scale institutions with deep roots in the local area can operate better. This is the path that Microfinance institutions should follow. There should also be relaxation of loan acquiring procedures and restrictions and also a much stronger relation between the bank and the customer which will promote healthier loans. Ensuring that the loan is given to the right and not siphoned off from that individual and false documentations do not happen is also essential.
Around 33 people have committed suicide as microfinance institutions, for collection of money, have resorted to strongarm tactics which is exactly why there must be regulation.
The government must introduce an interest cap, introduce legislation on these institutions like those that exist for banks, start its own microfinance programme through post offices- we have the worlds biggest postal network and there are plans to promote postal banking in an even bigger way and microfinance should surely be a part of that. There is immense investor excitement in this field and also this is a tool for rural empowerment and powerty alleviation which makes it essential this budding idea is allowed to developed in the right way and not go wayward and collapse under its own greed.
Edit on December 10,2010
In light of the recent issues surrounding microfinance, which aim only at completely discrediting the concept rather focus on the actual problems in implementation, I would like to justify the concept.
The poor need start-up money for their work just like Google or Yahoo needed initial start-up money. They used to get that from money-lenders who imposed sky-high rates of interest, there were no extensions of deadlines and their property were seized without any sympathy. The other options are co-operative societies or government bank loans but recently, more agricultural loans have been given in Urban areas than in Rural areas (http://www.thehindu.com/opinion/op-ed/article566888.ece).
Farmers and small scale traders do not need huge investments, but money in a few thousands. Microfinance is a concept which can work if implemented properly and in a regulated market. The current imbroglio clearly shows what happens when greed and market forces are allowed to interfere with social change and upliftment.
Microfinance helps because the requirement is not need lakhs of rupees for long term, but merely few thousands of rupees for less than a year, mostly for purchase of inventory for retailers and for buying seeds, fertilizers etc for farmers or for an emergency. What trapped them were the moneylenders who charged exorbitant rates and ultimately ended up taking over the collateral land or property, not to mention the harassment that preceded. Microfinance was a revolutionary concept (Mohammed Yunus and his Grameen Bank was given the Nobel Peace Prize) and it provided loans to women who were seen as more responsible towards the family and society and also spend the money wisely. The return rates for these loans were 99% and Vikram Akula had aworked with Yunus, but Yunus himself has criticised Akula for going public because the debate arises between preserving the interests of the people who have taken loans and the investors and shareholders.
Microfinance is a tool for social change, rural development, self employment and fight against poverty. It is a social need and so any business that engages in this activity must also be aware of the social impact it has and also must keep in mind the interest of the customers. By going public, this aspect is getting diluted. One might argue that the purpose of an enterprise is to create profit, but a microfinance institution is different for its purpose is not profit but all those social needs I mentioned at the beginning of this para. But if the intention of the organisation was infact profit, there is nothing to differentiate it from any other financier, except perhaps in the scale of money given, but it is fast becoming just that- another moneylender.
Instances of harassment for money recovery (payments are to be made within a week), exploitation of the self help group as the other members of the group are also harassed who in turn have staged dharnas infront of the defaulters home and boycotting this individual has also happened along with extremely high interest rates on loan. Vikram Akula claims that 24% interest rate just about breaks even for them, but then how has SKS registered its high growth rates just by breaking even. He is also opposing a cap on interest rates but this is an important way of regulating a system which could revolutionise our rural areas, but one which is losing direction now.
If the company cannot find a commercial solution that works, it better not function. It is as simple as that, but simply to protect investor's interest, the government cannot and should not turn a blind eye to unrestricted working of this institution. Reducing operating costs by going local and hiring local, decentralisation of operations and inspite of claims to the opposite by Vikram Akula- small scale institutions with deep roots in the local area can operate better. This is the path that Microfinance institutions should follow. There should also be relaxation of loan acquiring procedures and restrictions and also a much stronger relation between the bank and the customer which will promote healthier loans. Ensuring that the loan is given to the right and not siphoned off from that individual and false documentations do not happen is also essential.
Around 33 people have committed suicide as microfinance institutions, for collection of money, have resorted to strongarm tactics which is exactly why there must be regulation.
The government must introduce an interest cap, introduce legislation on these institutions like those that exist for banks, start its own microfinance programme through post offices- we have the worlds biggest postal network and there are plans to promote postal banking in an even bigger way and microfinance should surely be a part of that. There is immense investor excitement in this field and also this is a tool for rural empowerment and powerty alleviation which makes it essential this budding idea is allowed to developed in the right way and not go wayward and collapse under its own greed.
Edit on December 10,2010
In light of the recent issues surrounding microfinance, which aim only at completely discrediting the concept rather focus on the actual problems in implementation, I would like to justify the concept.
The poor need start-up money for their work just like Google or Yahoo needed initial start-up money. They used to get that from money-lenders who imposed sky-high rates of interest, there were no extensions of deadlines and their property were seized without any sympathy. The other options are co-operative societies or government bank loans but recently, more agricultural loans have been given in Urban areas than in Rural areas (http://www.thehindu.com/opinion/op-ed/article566888.ece).
Farmers and small scale traders do not need huge investments, but money in a few thousands. Microfinance is a concept which can work if implemented properly and in a regulated market. The current imbroglio clearly shows what happens when greed and market forces are allowed to interfere with social change and upliftment.
Wednesday, October 20, 2010
Choice
We cant walk on two different paths at the same time, we cant follow the spiritual and the material at the same time and not expect some conflict and confusion for they are parallel tracks that will never meet. There is a constant conflict between idealism and reality too- about what we can implement in our lives and all that we can only follow only if we are break away from everything that we know, consider normal, everything that holds us down to this earth.
There is a conflict between freedom and earthly commitments, idealism and reality, what we believe and what we can do about it. There is no right or wrong choice and even if it exists, I do not know how to choose and how to measure the success in each of them for success in one might mean total disaster on the other front.
Byron, Wilde, Che Guevera and even our own Changampuzha- all were social misfits and viewed as rebels and at times irresponsible to their family. To an extent even Siddhartha before he came Budha, was also irresponsible towards his family as he left them in the middle of the night after he realised the truth about disease, death and grief and he discovered a path that very few others have been able to follow.
I do not say they should have shackled themselves to their families or even society's perception of right and wrong for if everyone had done that we would still have believed that the earth was flat and the sun and other planets revolved around the earth which is at the centre of the universe.
I do not know what to do and I am confused. Man is born free and yet everywhere he is in chains, although Rousseu was talking about the chains of the ruling class, I am talking about the chains of relations and society, of obligations and commitments and also of the favour bank (in simple words-if someone does you a favor, you owe them a favor in return that must be repaid whenever the favor is called in).
School, College, Job, Marriage, Family, Sustain the family and then cycle repeats for your progeny. That is the end of one story and also the beginning of another and although one could ask what is wrong in it, I do not think that is the right question. I do not see anything in this life although I do admit that life in itself is a challenge when we do something different, it is frowned upon. When we choose to stay away from the normal, it is criticised. I do not have much experience in the defiance going away from norms thingy but whenever I have tried it, it has been difficult, fraught with uncertainty and also vehement opposition from all sides.
I can barely imagine the sort of opposition that those who really went against popular opinion faced in their time. Swimming upstream if it is the right path is made easy by the knowledge that it is the right way but what if there is no right way or we do not know which is the right way or perhaps lack confidence?
If it was to me, I would follow my heart and do what I want to do although this might just be wishful thinking and when it comes to the fork in the road, I may very well take the easy, safe road that is used by the crowd. All I hope is that when I reach that place, I have the courage to take the road that will lead me to happiness and fulfillment.
There is a conflict between freedom and earthly commitments, idealism and reality, what we believe and what we can do about it. There is no right or wrong choice and even if it exists, I do not know how to choose and how to measure the success in each of them for success in one might mean total disaster on the other front.
Byron, Wilde, Che Guevera and even our own Changampuzha- all were social misfits and viewed as rebels and at times irresponsible to their family. To an extent even Siddhartha before he came Budha, was also irresponsible towards his family as he left them in the middle of the night after he realised the truth about disease, death and grief and he discovered a path that very few others have been able to follow.
I do not say they should have shackled themselves to their families or even society's perception of right and wrong for if everyone had done that we would still have believed that the earth was flat and the sun and other planets revolved around the earth which is at the centre of the universe.
I do not know what to do and I am confused. Man is born free and yet everywhere he is in chains, although Rousseu was talking about the chains of the ruling class, I am talking about the chains of relations and society, of obligations and commitments and also of the favour bank (in simple words-if someone does you a favor, you owe them a favor in return that must be repaid whenever the favor is called in).
School, College, Job, Marriage, Family, Sustain the family and then cycle repeats for your progeny. That is the end of one story and also the beginning of another and although one could ask what is wrong in it, I do not think that is the right question. I do not see anything in this life although I do admit that life in itself is a challenge when we do something different, it is frowned upon. When we choose to stay away from the normal, it is criticised. I do not have much experience in the defiance going away from norms thingy but whenever I have tried it, it has been difficult, fraught with uncertainty and also vehement opposition from all sides.
I can barely imagine the sort of opposition that those who really went against popular opinion faced in their time. Swimming upstream if it is the right path is made easy by the knowledge that it is the right way but what if there is no right way or we do not know which is the right way or perhaps lack confidence?
If it was to me, I would follow my heart and do what I want to do although this might just be wishful thinking and when it comes to the fork in the road, I may very well take the easy, safe road that is used by the crowd. All I hope is that when I reach that place, I have the courage to take the road that will lead me to happiness and fulfillment.
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