Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
Indian Microfinance: what holds back the “Game Changers”?

Indian Microfinance: what holds back the “Game Changers”?

Ratings: (0)|Views: 95 |Likes:
Published by siddhart.misra3428

More info:

Published by: siddhart.misra3428 on Mar 04, 2009
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less





Samridhi has entered into an agreement with IDBI For-tis Life Insurance Co Ltd. Amongst the fastest growingprivate life insurance companies, IDBI Fortis, will pro-
vide affordable life insurance coverage to Samridhi‟sentire clientele. The product is titled „Microsurance‟.
Samridhi Financial Services (SFS) will be amongst thefirst few to benefit from the new product. The ratesbeing charged are amongst the most competitive in theindustry and a win- win deal for all the stakeholdersinvolved.Samridhi has been selected as one of the partner in the RBS Foun-dation/MicroSave Technical Assistance Programme based on theRapid Institutional Assessment (RIA) conducted by the MicroSave in January. This is going to be an intensive partnership for one yearstarting from April and a 'slowed down' partnership for next sixmonths subsequently.To start with an exposure visit has been planned in March to see areputed mid sized MFI. The idea of the exposure is to see howcommercial microfinance operations are run professionally and inthe process take back any learning gleaned through the exposure.For the month of April, the event is Mini AMI. Mini-Applied Microfi-nance Institute is specially tailored for the smaller MFIs and willhave components on Process Mapping, HR, Finance and Accounts.
Samridhi ties up with IDBI Fortis for itsInsurance needsSamridhi selected for RBS Foundation/MicroSave Technical Assistance Programme
Indian Microfinance
Indian Microfinance: what holds back the
“Game Changers”?
Till the start of the 18
century, India con-stituted over 35% of the world trade. To-day with over 400 million people comingunder the BPL, India alone constitutes over
35% of the world‟s poverty. Thanks to our
colonial past which rendered the otherwiseworking classes useless and in most of thecases wage labourers.The objective of the entire British educationsystem propagated by Macaulay was to pro-duce clerks for British Administration whichthey successfully achieved. Scientific tem-
perament which was Indian psyche‟s main-
stay was pushed back. The new system dis-couraged the very notion of thinking whichresulted in no major scientific breakthroughfrom India during that period. There havebeen aberrations but those had been far andbetween. Proof of that is so little number of patents issued to Indian compared to tinycountries like Taiwan and Japan. We are yetto come out that phase as have not thought itworth while to change ur education systemand bring back the glorious past. The so
called temples of Modern India, (IIT‟s and the
IIMs) are some of the efforts in the right di-
rection but it‟s too little too late. The entire
system needs to be restructured to bring theinnovative minds at work.Putting aside the entire blame on theory, anyclassical economist would tell that rationalhuman being or entity performs according tothe incentive system. So we need to go intothe rationale behind low level of innovations.
text.Microsoft Publisher includesthousands of clip art imagesfrom which you can chooseand import into your newslet-ter. There are also severaltools you can use to drawshapes and symbols.Once you have chosen animage, place it close to thearticle. Be sure to place theThis story can fit 75-125words.Selecting pictures or graphicsis an important part of addingcontent to your newsletter.Think about your article andask yourself if the picturesupports or enhances the
message you‟re trying to con-
vey. Avoid selecting imagesthat appear to be out of con-caption of the image near theimage.
individual lendingGrameen Bank Model
  JLG based lendingIt comes as no surprisethat India chose the sec-ond model because itsuited the cultural envi-ronment and sensibilities.But what comes as a sur-prise that it took almost14 years before any Indianentrepreneur thought of replicating the model.entrepreneur thought of replicating the model.Though there have been inno-vations on the delivery sidelike working only with womenand working strictly with thegroups but very few innova-tions on the products and cus-tomer service.
So let‟s see what are the costs
involved in innovating?Though the SHG Model of Microfinance was started inIndia, the various constraintsinvolved with it have limitedits growth or replication inother parts of world. This leftthe case open for Indian En-trepreneurs to replicatingothers models of microfi-nance which had two preva-lent models in worldLatin American Model
 branch based banking/
"Perfection is achieved,not when there is nothing left to add, but whenthere is nothing left toremove."
Antoine deSaint-Exupery 
So as is clear at any givenpoint of time there is decisionto be made that what arecosts involved vis-a-vis whatare the rewards that can beachieved through the innova-tion.This can be understood withthe help of the graph whichdraws a relationship betweenthe lifecycle of the organiza-tion and costs involved in in-novations.Few points which emergequite clearly from this discussion isare as following
Cost of innovations will be quitehigh for the organizations whichare bigger and it keeps increasingwith the size of the organisation.
Being large does not give enoughflexibility for such large organisa-tions to make swift movements.This leaves the net expected re-ward net off from the cost lowercomparing with smaller players.
Also there is nothing which stopsthe other smaller players in mar-ket from copying the innovation. So asto say there is no such entry barrierfor other smaller players.As is clear from the graph that it makesmost sense to the organizations to in-volve in innovations when they are inmidsize category (5,000
50,000 Clients)someother players to take theirshare in this pie leading tomid level competition.Prevalent strategy in thisstage is to improve uponcustomer service.When the competition in-tensifies further then theorganisations try becomingmore accommodative of theclient requirements henceleading to greater emphasisIn state of monopoly/oligopoly which is compara-ble to no competition/lowlevel of competition thereare abnormal profits to bebooked which does not leadto innovations and thestrategy of the organisationsis to enter new areas andcreate monopoly for what-ever period of time.This state would continuefor some time till there areon product development.The most conducive environment for innovation iswhen there is fierce competition in the market whichis otherwise known as perfect competition. That iswhen there are no abnormal profits to be made andthe margin is very little. At this time the larger playerswill try to find their own segments and they would de-fend their territories fiercely. This time is most apt for
“Game Changers” as most of the bigger players would
be too busy in defending their turfs.where technical serviceproviders and PE funds cancollaborate to give a longrope to players who areinnovative when it comes toproviding maximum value tothe customers.For large organisationsthough the unitcost can be verylow but overallcost is huge.Lack of innova-tions can also beunderstood fromprism of level of competition in the market. As any economist wouldtell that it does not make sense to innovate in a
seller‟s market as with economies of scale the organi-
sation can enjoy periods of abnormal profits. This es-sentially discourages the organisations from engagingin innovation.Intuitively it is clear that if some organisation is start-ing then it makes no sensein innovating as there is noscale and fruits will be visi-ble only once the organisa-tion reaches number of cli-ents where it is profitableto implement the change.But there is need to pro-vide support to the organi-sations in this stage to pro-mote them to innovate. Thetask is cut-out for differentstakeholders to providesupport in this stage. This is
There can be four different stages inthe competitive scenarios.

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->