Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.
I was invited to give one of the closing keynote addresses to the Sa-Dhan conference, something I had been preparing for at least since I travelled to India in early July to work on an upcoming book about the latest trends in microfinance. I had intended to arrive in time for the inaugural session on August 7, but travel delays prevented that. (Word to the wise: when travelling to India on the non-stop flights from Newark, plan to arrive in Newark long before your onward flight is due to depart.)
Upon arrival, I was told that the conference’s mood on the first day alternated between “somber” and “angry.” Just a few days earlier, the Reserve Bank of India (RBI) had announced new regulations affecting microfinance. Though these policies rolled back some harmful policies announced a few months back and helpfully clarified others, they also introduced a controversial new rule saying that microfinance institutions over a certain size would be subject to smaller margins than they were currently allowed between the rates they borrowed and lent at. The whipsaw nature of Indian microfinance policy at the national level, coming on the heels of the debilitating and draconian law passed in the state of Andhra Pradesh in late 2010, had justifiably enraged many of the practitioners in attendance – particularly as there had been no warning or explanation for many of the policies announced over the last 12 months.
The second day did not get off to a good start. Sa-Dhan executive director Mathew Titus announced that a senior government official had canceled his opening address. However, as the day got going, the overall mood improved. Royston Braganza, CEO of Grameen Capital India, organized and moderated an excellent panel on “Overcoming the Barriers to Resource Flows” to the sector. (Grameen Capital India is a joint venture between Grameen Foundation and affiliates of two major banks operating in India.)
I attended Royston’s panel and then caught the end of a concurrent panel on “business correspondent” (BC) models for MFIs working in partnership with, and essentially as agents of, fully licensed banks. Though some recent policies about the BC model have cast doubt on the viability of MFIs being able to work effectively with banks, it was an invigorating discussion. Mukul Jaisal, Managing Director of Indian microfinance institution (MFI) Cashpor, talked about his experience pioneering this model for providing savings services (which the MFI has been able to implement with support from Grameen Foundation).