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Samridhi ties up with IDBI Fortis for its Insurance needs
Samridhi has entered into an agreement with IDBI Fortis Life Insurance Co Ltd. Amongst the fastest growing private life insurance companies, IDBI Fortis, will provide affordable life insurance coverage to Samridhi‟s entire clientele. The product is titled „Microsurance‟. Samridhi Financial Services (SFS) will be amongst the first few to benefit from the new product. The rates being charged are amongst the most competitive in the industry and a win- win deal for all the stakeholders involved.

Samridhi selected for RBS Foundation/ MicroSave Technical Assistance Programme
Samridhi has been selected as one of the partner in the RBS Foundation/MicroSave Technical Assistance Programme based on the Rapid Institutional Assessment (RIA) conducted by the MicroSave in January. This is going to be an intensive partnership for one year starting from April and a 'slowed down' partnership for next six months subsequently. To start with an exposure visit has been planned in March to see a reputed mid sized MFI. The idea of the exposure is to see how commercial microfinance operations are run professionally and in the process take back any learning gleaned through the exposure. For the month of April, the event is Mini AMI. Mini-Applied Microfinance Institute is specially tailored for the smaller MFIs and will have components on Process Mapping, HR, Finance and Accounts.



Indian Microfinance: what holds back the “Game Changers”?
Till the start of the 18th century, India constituted over 35% of the world trade. Today with over 400 million people coming under the BPL, India alone constitutes over 35% of the world‟s poverty. Thanks to our colonial past which rendered the otherwise working classes useless and in most of the cases wage labourers. The objective of the entire British education system propagated by Macaulay was to produce clerks for British Administration which they successfully achieved. Scientific temperament which was Indian psyche‟s mainstay was pushed back. The new system discouraged the very notion of thinking which resulted in no major scientific breakthrough from India during that period. There have been aberrations but those had been far and between. Proof of that is so little number of patents issued to Indian compared to tiny countries like Taiwan and Japan. We are yet to come out that phase as have not thought it worth while to change ur education system and 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 direction but it‟s too little too late. The entire system needs to be restructured to bring the innovative minds at work. Putting aside the entire blame on theory, any classical economist would tell that rational human being or entity performs according to the incentive system. So we need to go into the rationale behind low level of innovations.

"Perfection is achieved, not when there is nothing left to add, but when there is nothing left to remove." – Antoine de Saint-Exupery

Indian Microfinance
Though the SHG Model of Microfinance was started in India, the various constraints involved with it have limited its growth or replication in other parts of world. This left the case open for Indian Entrepreneurs to replicating others models of microfinance which had two prevalent models in world Latin American Model – branch based banking/

individual lending Grameen Bank Model – JLG based lending

replicating the model. Though there have been innovations on the delivery side like working only with women and working strictly with the groups but very few innovations on the products and customer service.

It comes as no surprise that India chose the second model because it suited the cultural environment and sensibilities. But what comes as a sur- So let‟s see what are the costs prise that it took almost involved in innovating? 14 years before any Indian entrepreneur thought of replicating the model. entrepreneur thought of

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So as is clear at any given point of time there is decision to be made that what are costs involved vis-a-vis what are the rewards that can be achieved through the innovation. This can be understood with the help of the graph which draws a relationship between the lifecycle of the organization and costs involved in innovations. Few points which emerge Intuitively it is clear that if some organisation is starting then it makes no sense in innovating as there is no scale and fruits will be visible only once the organisation reaches number of clients where it is profitable to implement the change. But there is need to provide support to the organisations in this stage to promote them to innovate. The task is cut-out for different stakeholders to provide support in this stage. This is

quite clearly from this discussion is are as following  Cost of innovations will be quite high for the organizations which are bigger and it keeps increasing with the size of the organisation.  Being large does not give enough flexibility for such large organisations to make swift movements. This leaves the net expected reward net off from the cost lower comparing with smaller players.  Also there is nothing which stops the other smaller players in mar-

ket from copying the innovation. So as to say there is no such entry barrier for other smaller players. As is clear from the graph that it makes most sense to the organizations to involve in innovations when they are in midsize category (5,000 – 50,000 Clients)

where technical service providers and PE funds can collaborate to give a long rope to players who are innovative when it comes to providing maximum value to the customers.

prism of level of competition in the market. As any economist would tell that it does not make sense to innovate in a seller‟s market as with economies of scale the organisation can enjoy periods of abnormal profits. This esFor large organisations sentially discourages the organisations from engaging in innovation. though the unit cost can be very low but overall cost is huge. Lack of innovations can also be understood from

There can be four different stages in the competitive scenarios.
In state of monopoly/ oligopoly which is comparable to no competition/low level of competition there are abnormal profits to be booked which does not lead to innovations and the strategy of the organisations is to enter new areas and create monopoly for whatever period of time. some other players to take their share in this pie leading to mid level competition. Prevalent strategy in this stage is to improve upon customer service.

on product development. The most conducive environment for innovation is when there is fierce competition in the market which is otherwise known as perfect competition. That is when there are no abnormal profits to be made and the margin is very little. At this time the larger players will try to find their own segments and they would defend 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.

When the competition intensifies further then the organisations try becoming more accommodative of the client requirements hence This state would continue leading to greater emphasis for some time till there are

If any player wants to enter such markets then the best way to enter the market is with the existing products and after reaching a sizeable size, the organisation should start innovating to create a niche for itself.

There are still large territories in India which incentives the large organisations to enter places where they don‟t have to innovate.

As has been explained in the graph that over a period of time when the market matures, it gives impetus to companies which can be classified as “Game Changers” to target segments which have very specific requirements. At the same time it gives opportunities for the new entrants to enter the market and provide „good enough” solutions to the clients who are not looking for such high-end services. It‟s still a few years away in India, before we start seeing companies involved in such kind of innovations.

Are there some lessons to induce innovations – case of Apple:
As a company “Apple” is known to be very innovative. We can draw a few lessons from their strategies: 1. Never be afraid of cannibalization: this is major fear which keeps the companies in check from innovating as they start fearing cannibalisation of their existing product line. Be the first to cannibalize your own product line rather than waiting for some other firm to do so. 2. Delegate the innovation to smaller team: it is very difficult to achieve something innovative in larger teams. Delegate the task of innovations to small teams. 3. Keep communication lines open: new idea can come from anywhere, so don‟t be close to new ideas coming from below the ranks.

What does the future behold?
Here are some of the factors that might affect the sector’s innovating capability:  The opening up of the banking sector and the entry of new investors, an increase in the flow of funds should help the sector in a positive way.  Having NABARD as a regulator will keep a focus on reducing the cost of funds to the poor, which in turn will lead the companies to innovations in the delivery models side.  The usage of mobile phones as a remittance tool will also add a new dimension to the growth in the sector.  The entry of P2P model in Microfinance is already fast catching up. With growing competition Indian microfinance field is expected to see more and more of innovations in the coming years. It will make the survival for the new entrants next to impossible if they don’t innovate. The time is ripe for the “Game Changers”.

Dreams surely are difficult, confusing, and not everything in them is brought to pass for mankind. For fleeting dreams have two gates: one is fashioned of horn and one of ivory. Those which pass through the one of sawn ivory are deceptive, bringing tidings which come to nought, but those which issue from the one of polished horn bring true results when a mortal sees them. Homer (800 BC - 700 BC), The Odyssey