Yes the economic bug has smitten me again. The last time i have written something in this genre had to do with the downfall of neo petroleum economies. And as usual the prediction has gone wrong and the oil rich kingdoms are back to their comfort zones. So why should you take me seriously with this regard ?
Banking is a daily necessity like the air we breath or the food we eat. You could beg to differ and i can keep on arguing on my opinion. But the fact is that it is one think that has been influencing our actions, decisions and even our destiny. So changes in the banking system can evidently bring about changes in our lives.
I have been reading the biography of the Nobel Prize winner Mr. Muhammed Yunus, and i have got an entirely new perspective towards persistence and social entrepreneurship. For the uninitiated he is the father of Micro Finance. He has showed with evident results that we can change the social structure of bonded labour and the destitute through credit. ( the book is a must read, will write a review once iam done through it)
So what is Micro Finance, in a layman's word or through the eyes of the Mango People it can be defined as institutional credit of small amounts without physical collateral and collected back in small negligible installments (Daily, Weekly etc.). It is an anti thesis to conventional banking, where minute loans are detested with the argument that the proposition wont even cover the documentation cost involved, Where you have to prove that you are rich enough to not need a loan to avail the facility you need and Where the reality of the society is totally neglected to service the so called socially and economical advanced class.
This is the true form of banking the society needs, to make a difference to the social structure yet remain profitable and financially viable. The process of raising a loan is a more emotional task than the cumbersome paper works. In the grameen model the proposer has to form a group of five people who act as mutual guarantees instead of the collateral model and the group ha to prove their credit worthiness step by step to ensure that the entire team is eligible for the credit.
The grameen people has been instrumental in elevating poverty, social stigma, improving living conditions and even empowering its customers. Another matter of difference is that the majority of customers of the grameen model are women. This is because women are better to lend (yes) because of their credibility, social conscience and responsible nature.
So what can we learn from the model the poor can be trusted than rich industrialist faking non favorable conditions for defaulting humongous amounts of money. The recovery rate is 98 % compared to some disturbing statistics provided by banks established to promote industry, agriculture and society. We need more Muhammed Yunus in the world to alleviate poverty, bring about social change.
In new developments the opportunistic entrepreneurs have evolved micro finance into more commercial models manipulating the need of the people. They sell anything under the sun through the micro finance model, some are good like offering the rural folks with drip irrigation systems, solar lanterns etc. But some have gone one step ahead and disguised to form a new avatar of money lenders promoting materialistic behaviour in the unexplored rural market.