Thanks for sharing this clip Vikas.
It is interesting that the Hon. Minister, when referring to ‘Microfinance’ in the initial part of his speech, is talking about commercial or institutional microfinance, and only later talks about the Indian Self-Help Group (SHG) model that is more community based and members owned model.
It is also interesting that he compares the two approaches and refers to MFIs that were responsible for the crisis on one hand; but on the other, can deliver a wider range of financial products and services as compared to the SHG-Bank linkage approach, which delivers only one product. This is an appropriate critique of the loan product offered by Banks to the SHGs. Despite 22 years of linkage program experience, there has been hardly any innovation in the basic loan product that Bank delivers to the SHG, which is highly limited in both its scope and utility. Unfortunately, even SHG 2 version launched recently seem to fall short on many counts - perhaps an indicator of Banker’s continued scepticism or unwillingness (or both) to partner with SHG movement and seeing it as a compulsion rather than a business potential.
Having said that, Hon Minister does not elaborate on the fact that unlike MFIs, in the SHG approach, its members define and design the products (in theory), and hence, are able to save as they want, fix interest as they want, take loans for the purpose and at the time when they want; but all limited by the capital available to them. By the way, it is worth mentioning that far greater number of SHGs have savings accounts in banks than those that have loans from Banks (NABARD 2012 figures).
Another point that is noticeable in his speech is the future emphasis on States like UP, Bihar, Rajasthan, Odisa, Chhattisgarh, Jharkhand, Assam; which ironically are also important for Congress led UPA government. But one can’t insinuate too much; it is indeed true that these States have lagged behind. Developments in the next 12-18 months in the microfinance sector in India, especially vis-à-vis delivery of State’s social security subsidies programs, loans to SHGs, and agriculture credit through Rural Banks - will be worth watching closely! Whoever thought that development and politics can be separated?! But then, what is good for development is good for politics (though vice versa is seldom true).
Interesting speech overall to gauge the mood of Indian government on microfinance sector!
Anuj
From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of vikash kumar
Sent: Thursday, November 29, 2012 3:09 PM
To: microfinancepractice
Subject: [MFP] A Must Listen Speech
A Must Listen Speech| “Microfinance has promised much more than it has actually delivered….” Said Mr. Jairam Ramesh, Union Minister for Rural Development, Government of India during Valedictory Address at Microfinance India Summit 2012
Link of the Video: https://www.facebook.com/photo.php?v=10151274701719728
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