Microfinance Focus, Oct. 28, 2009: Agatha Sangma, Indian Minister of State for Rural Development, said on Wednesday that NREGA would soon transform from its current wage-based program to facilitate self-employment among the rural population.

Releasing the “State of India’s Livelihoods (SOIL) Report 2009″, the second in series prepared by ACCESS Development Services, the minister underscore the need for sustainable progress in rural sector.
Ms Sangma, the youngest member of the Indian council of ministers, also pointed out the need for providing market access to the rural population and sought the private sector to take lead in it.

Keeping aside her prepared speech, Ms Sangma said the government’s popular rural employment guarantee program NREGA has seen increasing criticism but assured to make it more effective and transparent soon. Further, she said NREGA will eventually be transformed from its current wage-based employment program to self-employment program for the rural people.
To achieve this objective, the government has been holding Saras Melas every year providing platform to rural artisans and farmers to exhibit and sell their articles or produce. But these are short term programs and invited the private sector, especially practioners in the field to facilitate rural employment on sustainable basis.
The SOIL report weighed both positive and negative trends in the sector especially from the NREGA program last year and noted major concerns in the light of global crisis as well.

The report said the NREGA with sufficient cash inflow succeeded to cap migration of rural population but nonetheless, it was beset with reports of corrpution and transparency during implementation.

Microfinance Focus, Oct. 27, 2009: Will the business correspondent model work to bring the poor in remote areas of the country into the ambit of financial inclusion?

First, the experiment with the no-frills accounts which the country’s central bank RBI has pushed ahead faced failure.
Now the BC model, which has the ability to serve the poor in rural and remote areas, has no inherent demerits but the implementation mechanism requires openness, according to speakers at the microfinance India Summit 2009 being held in New Delhi.

“There is no fundamental problem per se but operating and upgrading IT infrastructure is more important,” said Manohara Raj, head of Microfinance at HDFC Bank.

Bankers have expressed concerns over legal requirements which may slow down the pace while telecom representatives were confident to implement the model with less legal requirements like opening banks and then carry out cashless transactions.

Finally, the shot came from Vikram Akula, SKS Microfinance chairman, who was clearly against the RBI’s restrictive policies. “Allow MFI/NBFCs to be BC agents. If RBI is intellectually honest, it should allow us to be business correspondent agents. It will reduce risks involved in cash transactions in rural areas,” he added.

Microfinance Focus, Oct. 26, 2009: India’s microfinance icon Vijay Mahajan, who had just finished an arduous moderation of heated discussion at a session of the Microfinance India Summit 209 on Monday was in for a surprise when he entered the other room where the awards were to be announced. He was selected for the award for his lifetime contribution to the microfinance sector. The jury has also given a special award to late mentor Sitaram Rao for his contribution to the sector.
The institutional category award was given to Bandhan which has created history in less than  a decade since its birth. Bandhan CEO Chandra Shekhar Ghosh received the award on behalf of Bandhan.

VIJAY MAHAJAN, AN ICON

Born on Oct.1, 1954, Vijay Mahajan graduated from the Indian Institute of Technology, Delhi and  joined Philips as a marketing executive. After a four-year stint, he joined the Indian Institute of Management, Ahmedabad. After graduating from IIM-A in 1981, he started working in the rural development field in Bihar, the poorest state of eastern India. In 1983, he established an NGO, PRADAN which works with over 120,000 poor households, promoting livelihoods and community institutions.

In 1996, Mr Mahajan set up BASIX as a “new generation livelihood promotion institution”. Till March 2008, BASIX had helped support the livelihoods of over a million poor households in the agriculture, allied and non-farm sectors by extending micro-credit worth over Rs 1,200 crore (US$300 million). BASIX goes well beyond micro-credit to offer a “triad” of livelihood promotion services including savings and insurance services, agricultural/business development services and institutional development services to rural producers and their
groups.

Mr Mahajan was a member of the Raghuram Rajan Committee on Financial Sector Reforms and the Rangarajan Committee on Financial Inclusion. He is a member of the Insurance Regulatory and Development Authority (IRDA) and the Rajasthan Mission on Livelihoods. He serves on the Boards of ASSEFA, Gram Vikas, ARAVALI, DSC and the Institute of Rural Management, Anand (IRMA), and on the Executive Committee of the
Consultative Group to Assist the Poor (CGAP), a global microfinance body.
In 2002, he was selected as one of the 60 “Outstanding Social Entrepreneurs” at the World Economic Forum (WEF), Davos. In 2003, he was conferred the Distinguished Alumnus Award by the IIT, Delhi.
In 2008, Mr. Mahajan was elected as a Member of the Ashoka Fellowship, a global association of leading social entrepreneurs. Vijay was also selected in India’s 50 Most Powerful People 2009 by the Business Week.

Mr Mahajan has been an advisor to the Planning Commission, Government of India, the state governments of Andhra Pradesh, Karnataka, Madhya Pradesh, Rajasthan and Sikkim, and to the RBI and NABARD. Vijay has co-authored a book “The Forgotten Sector” on rural, non-farm sector in India. He has published over 50 articles on rural livelihood, development and micro-finance in international journals.

Mr Mahajan was a member of the Raghuram Rajan Committee on Financial Sector Reforms, chaired by Raghuram Rajan and also of the Rangarajan Committee on Financial Inclusion.Vijay serves on the Insurance Regulatory and Development Authority, the Micro Finance Development and Equity Fund. He is the Principal Advisor to the Government of Rajasthan on Livelihoods. He serves on the Boards of Association for Sarva Seva Farms (ASSEFA), Gram Vikas, ARAVALI, Development Support Centre (DSC) and on the Executive Committee of the CGAP, a global consortium on microfinance.

BANDHAN MICROFINANCE

Kolkata-based microfinance institution Bandhan has many credits to its name. Apart from diversifying its microfinance loans into every possible stream, it hit headlines recently with its new product for the unemployed youth called “Employing the Unemployed”.
In less than eight years, Bandhan has emerged as one of the the largest microfinance institution in India and was ranked second in the world by Forbes magazine in its first ever listing of the world’s top 50 microfinance institutions (MFIs).  Bandhan’s steep rise in volume and reach is often attributed to its variety of products within the microfinance sphere.
Last year, it launched free schools in villages for underprivileged children up to the age of 14 years, who couldn’t ever go to school or had to drop out because their parents couldn’t afford to educate them.
Bandhan – meaning “togetherness” – offers microfinance services to poor women in the state of West Bengal. Founded by Mr. Chandra Shekhar Ghosh in November 2000, Bandhan started operations in 2002 and is currently registered with the Reserve Bank of India (RBI) as a non-banking finance company (NBFC).

Microfinance Focus, Oct. 26, 2009: African workers send home more than $40 billion to the region each year but restrictive laws and costly fees hamper the power of remittances to lift people out of poverty, according to a new report by the UN’s rural development agency, the International Fund for Agricultural Development (IFAD), stated a press release.
Remittances are sources of income for poor families, particularly in Africa and the Latin American and Caribbean regions. With the majority of poor not having access to banking facilities the potential of microsavings facilities for increasing financial stability by enabling them to plan and save for their future. Microfinance institutions (MFIs) in some countries are offering these services, but legislation in many countries does not permit MFIs to collect savings. Collecting savings can also benefit MFIs by expanding their capital base and reducing their dependence on external sources for funding.
“Sending Money Home to Africa” report was presented at the Global Forum on Remittances 2009, organized by IFAD and the African Development Bank (AfDB) in Tunis, Tunisia, on Oct. 22-23.
Globally remittances top $300 billion per year, outstripping foreign direct investment and development assistance combined. But while transfer costs have declined significantly in Latin America and in Asia, sending money home to Africa is still expensive as it costs as much as 25% of the money sent.
Access is also limited, with the number of locations where remittances can be collected for the entire African continent are the same as Mexico, which has only a tenth of Africa’s population. Furthermore, Between 30 and 40 per cent of all remittances to Africa are sent to rural areas, often requiring recipients to travel long distances.
The report finds that simply by expanding the institutions for remittance services to include microfinance institutions and post offices, the number of payment points would more than double.
The IFAD report highlights how new technologies, such as cellphones, and existing infrastructure like post offices or small retail outlets could increase the reach of remittance services. Algeria, where 95% of remittances are paid through post offices, could be a model for other African countries.
“Supporting this people-to-people money flow to rural areas of Africa is especially vital now because of the recession” noted IFAD Assistant President, Kevin Cleaver. “The power of remittances can be catalysed by easing restrictions and making it less costly for African families to collect this money.”
Most money sent home by migrants is spent on daily consumption but research shows linking remittances to financial services for the unbanked – savings accounts, loans and insurance – allows even the very poor to save and potentially invest in the development of their community.
The Global Forum on Remittances 2009 is hosted by IFAD in partnership with the Africa Development Bank (AfDB) and in collaboration with the Inter-American Dialogue. The 2009 Forum has tried to asses trends in remittances to Africa, amid the financial crisis, and identify policy solutions.
The International Fund for Agricultural Development (IFAD) is an international financial institution and a specialized UN agency based in Rome – the UN’s food and agricultural hub. It is a partnership of 165 members from the Organization of the Petroleum Exporting Countries (OPEC), other developing countries and the Organisation for Economic Co-operation and Development (OECD). Since 1978, IFAD has invested $11 billion in grants and low-interest loans to developing countries, empowering some 340 million people to break out of poverty.