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Fundingthepoor:Notabadideaatall
Iwasteachinginoneoftheuniversitieswhilethecountrywassufferingfromaseverefamine.People weredyingofhungerandIfeltveryhelpless.Asaneconomist,Ihadnotoolinmytoolboxtofixthatkind ofsituation.So,hewentoutandmadeoneandthatswhytheworldknowsMuhammadYunustoday.He didnotlaythemattertorestwithaphilosophicalstatementheproposedmicrocreditinstead.Intherough andtumbleworldofcapitalism,moneyisusuallymadeonlybythosewhohaveitalready.Thepoorare lefttopickupthescrapsafterthefeasthasalreadybeeneaten.ThemicrocreditrevolutionbegunbyYunus inspiredRamakrishnaM.K.,asoftwareconsultantlivingintheUK.HeandhiswifeSmitaweresurethat onedaytheywouldcomehometoIndiaandtaketheplungeintothesocialspace.Therootcauseofevery bitofsocialworkinthecountryispoverty,saysRamakrishna.Wewereveryinterestedinchildlabour. Wewantedtocreateanonlineengagementplatformwherebusinessesofallkindscouldcertifythatthey werecompletelychildfriendly.CreatingjobswasanotheroptionandsocialmediatohighlightIndias issueswasathird.Microfinancelayatthebottomofthelist.RamandSmitarealisedthatattheheartof everysocialcauseinIndiaandthereareplentyliesthemostdauntingogreofall:poverty.When MuhammadYunuswontheNobelPrizein2007,theanswerdawned:microcredit.Microcreditisnot aboutmakingmoneyitsaboutmakingsurethatthepoorarentpooranymore,saysRamakrishna. HavinglearnedfromthejourneyofYunussGrameenBank,RangDe,theirmicrofinanceinstitution, focusedmainlyonwomenandwomenselfhelpgroupsinparticular.Whentheyfirstsatdowntodosome research,theystumbledacrossanarticlepublishedin2004thattalkedabouthowborrowersfromamicro financeinstitutewerecommittingsuicide.Theinterestrateswereskyhigh,saysRamakrishna.Those peoplehadtheirloanswaived,buttheypaidbackanywaybecausetheyweresoafraidofnotgettingloans fromotherplaces.InAndhraPradesh,whichhadenthusiasticallyembracedthemicrocreditrevolution, themountingdefaults,suicidesandgovernmentintervention,madesurethatmicrofinancinginthestate cametoascreechinghalt.ThisdidnotdeterthefoundersofRangDe.Theywentaheadwiththeirplanto lendmoneytothepoorwithoutcollateral.Tokeepthissystemasriskfreeaspossible,RangDerequiresall borrowerstobepartofagroup,likeawomensselfhelpgroup.Theleaderofthegroupsignsas guarantortheonlycollateralwehaveiswhatthemembersofthegroupgiveeachother,saysSmita.They boastofa98.7%repaymentrateandhavedisbursedloanstothetuneofRs7.2croreacross13states,to about15,000entrepreneurs.Wehavehaddefaultsbuttheywerealwaysduetogenuinereasons,explains Smita.Floods,issuesinthefamilythosewerethekindsofreasons,butthepercentageofdefaultshas remainedverylow.AfterthefloodsinOrissa,borrowerstookarepaymentholidayanddidntpayfor aboutthreeorfourmonths,butitusuallydoesntgetmuchworsethanthat.Wehaveaverythorough screeningprocess.OurfieldpartnerisanNGOwhoalsoputstheborrowersthroughlevelsofscreening beforegivingtheloans,explainsSmita.RangDecantakecreditforprovidingfundsforabout250 businesses,fromtailoringunitsandlivestockrearing,tovocationsasoutofthewayasbirdcagemaking. IthasworkedwondersinIndia,remarksRamakrishna.Theyarelookingatworkingmorecloselywith

theirfieldpartnerandextendingtheirreachtootherpartsofthecountry.Thisstatementmightsound radical,butifeverybodyhasenoughtoliveondecently,theworldjustmightfinditselfahappierplace. SourceURL:http://www.deccanchronicle.com/channels/cities/bengaluru/fundingpoornotbadideaall 888