The wee hours of the 15^th of April, 2013, did not quite usher in a prosperous Bengali New Year.  Instead, a Financial Crisis made its mark on the calendar of West Bengal. The recent collapse of the Saradha Group (incorporated in 2008), exposed a financial “scam” with an estimated loss of INR 20K -30K crores. This Saradha group of companies had various collective schemes of investment in Eastern India. This entity promised to deliver to its clients astronomically high returns, while convincing them that their deposits would be invested in credible projects. Local youths, recruited to work as agents, collected funds mainly from the poor living in villages and small towns. The agents were promised commissions on deposits collected, ranging from 25% to 40%. What they promoted as “Chit Funds” were, in reality, fraudulent, deposit schemes based on a  “pyramid” structure that inevitably collapsed.

When the company began failing to repay the maturity amount, it led to a total crisis with agents and depositors who realized that they had been cheated/duped. On the 17^th of April, agents went to the headquarters of the ruling political party-Trinamul Congress and demanded government intervention.

This episode of crisis highlights the dangerous consequences of continued financial exclusion. West Bengal lacks basic banking facilities. In the ‘80’s and ‘90’s, mobilization of savings from the rural sector had been restricted mainly to Post Office deposits that yielded very low returns. This led to the growth of informal money lending activities as well as several ‘Ponzi’, or ‘Pyramid Schemes’.  There have been other instances of such scandals in West Bengal before. Sanchaita Investments, Verona Commercial Credit & Investments Co. and Sanchayani Savings Investments Co. were responsible for wiping out investor wealth of almost 1000 crores.  Unfortunately, history did not teach a critical lesson. Once again, the people of Eastern India fell prey to vicious cycle of financial scams.

Many agree that decreasing rates of interest in the small savings model, low financial awareness/literacy, high political patronage and the absence of a broader regulatory framework led to the mushrooming of companies that operate according to a model of fraud. The impact of such players in the marketplace will again have a ripple effect on the overall macroeconomic scenario of the state.

To elevate public awareness and knowledge, Ujjivan has taken a step forward to educate our customers through various initiatives:

• We have developed informative & educational promotional materials (from print to video) that are shared with customers at disbursement time and at center meetings.

• The Ujjivan CRS staff is trained to inform all customers & potential clients that we are not a deposit-taking company.  We refer our customers only to Banks and Post Offices for such activity.

• We have proactively sent posters to our branches that clearly define the difference between Ujjivan & “Money Market”/ “Chit Fund” companies.

• An MFIN official advertorial has run in the leading newspapers and other publishers, like the Business Standard, have re-purposed the message, contributing to greater understanding of NBFC-MFI companies.

• We have already launched a program on Financial Literacy - “Diksha” - for our customers. On successful completion of the program customers are “certified” and Ujjivan helps them with the process of opening bank savings accounts.

As a precautionary measure, Ujjivan has not been giving loans to potential customers who have worked as agents for any Money Market/ Chit Fund company, nor to anyone whose spouse has been involved in any kind of dubious financial activity. On each platform of company activity, Ujjivan is committed to integrity, transparency and the well being of our customers.

We are proud to issue the 100^th Ujjivan Monthly Update!  Launched in 2005, Ujjivan has quickly reached a pace in momentum that few companies achieve.  We celebrate this month, in year number nine, by reflecting on the unique journey of growth and development.  Ujjivan has evolved into a respected brand that produces tangible impact.   We applaud the entire staff for contributing to performance improvements in areas including employee engagement, customer relations, governance, service quality, business strategy, product portfolio, credit, leadership quality, operations efficiency, risk management, profitability, IT innovation, social development programs, financial literacy programs, debt & equity funding, et al.  We also thank and give much credit to our investors and customers.

By providing quality financial services to the poor to better their lives, Ujjivan will stay the course en route to full financial inclusion. Here’s a look at the exciting Ujjivan journey thus far:

Customer Relations

Keeping The Customer in The “Spotlight”

Perhaps the most consistent highlight for staff members at Ujjivan is the living, breathing focus of our business, the inspiration for our daily dedication - THE CUSTOMER.  Ujjivan passed the 1 million mark in 2011, when achieving engagement with 1,128,550 customers.  Launched in the October, 2012 Update, the “Customer Spotlight” series introduces us each month to one of our enterprising, hard-working clients.  Stay tuned as we continue to introduce you to more bright, talented customers like Shanti, Shamina, Savitri, Janki, Kalpana, Rangamma, and Shankari.  Here’s what Product Manager Praneeta Kanchinadam had to say about the power of contact with our customers:

“A Center meeting is just a 20-minute chat with all 20 customers. But for a story, I spent half a day with Rangamma and her family and it was worth every minute. It was a great learning experience which gave me a better understanding on how Rangamma saw past her troubles and became an entrepreneur, as well as a wonderful mentor to her son. An in- depth understanding of a customer’s life is a great asset for any Product Manager!”

Read Customer Spotlight on Rangamma here: Rangamma Story

Read more Customer Spotlights:

Art Innovation Story (Shanti, Tamil Nadu)

Burqa Maker Exporter Story (Shamina, Gujarat)

Mumbai Dream (Janki, Maharashtra)

Pattachitra (Kalpana, Orisaa)

Milestones

Reflecting not only the achievement of scale, but powerful customer retention, Ujjivan, in March 2013, surpassed the 1-MILLION-BORROWERS mark, with 1,006,052 active customers!   The first Ujjivan branch opened its doors In Koramangala, Bangalore in November of 2005.  Soon after, on the 17^th of January 2006, the very first loans were disbursed there by Ujjivan.  It was noted that “we are the first MFI in India to disburse loans without a paisa of grants and donations.”  That month’s Update expressed:  “We are behind in our projected customers and loans…We plan to catch up.”  Neither Ujjivan nor its loyal customers have looked back since!  Click here for the January, 2006 Monthly Update #15:

Click here for the January, 2006 Monthly Update #15

Competitive Growth

Vision

While Carol Furtado (Chief Operating Office-South) admits she was “skeptical” in the early days, you can still find her today in the Ujjivan Head Office, eight years later.  Her doubt was assuaged when the “BIG plans and projections” actually came to pass.  The reasons noted by Carol for Ujjivan’s success include “thoughtful” vision and “long-term” planning.  In 2005, very in-depth research on the urban market was conducted and analyzed carefully before moving forward with launch.  And with each regional expansion, as well as extension into the “semi-urban” market, the same contemplative approach was followed. 

The following chart represents Ujjivan’s impressive growth trajectory:

Milestones

Ujjivan as a social business has always tried to maintain the right balance between its profits and social obligations and thus generating value for all stakeholders concerned: customers, employees and investors. With cumulatively breaking-even in FY09-10, Ujjivan has remained profitable for all years since then. Riding on economies of scale and improved operational efficiencies, Ujjivan has been able to generate profits of ~45+ crore in the last FY, thus creating higher resources with the organization to take up projects of community welfare of larger magnitude.  Investors and employees will also benefit.  Even through the industry crisis, Ujjivan, like few others, stayed profitable. And this past financial year shows exciting momentum forward. Ujjivan is now a Rs. 1000+ Crores outstanding loan MFI.  Per Samit Ghosh, Founder & Managing Director of Ujjivan, a loan book like this “positions us among the Big Boys”.

The following chart represents Ujjivan’s profitability trend:

The Ujjivan Team

Loyalty

When asked what differentiates Ujjivan from the competition, Carol spoke about the unique staff experience.  Ujjivan as an employer respects both its customers and its employees.  Compared to other MFIs, Ujjivan promotes a healthy work schedule and a “balanced life”.  Ujjivan has never delayed in disbursing salaries, even during the industry crisis. 

Carol is not the only Ujjivan veteran.  Premkumar G. reminds us that Saadiq Pasha joined Ujjivan back in December of 2005 as a CRS.  He has worked his way through the roles of Cashier, CRM, PM & ABM.  Stationed in Mumbai today Saadiq’s title is Vigilance Manager.  Premkumar has also shared the fact that he is Ujjivan’s 100^th employee. Completing seven years in September, Prem feels it is “just too much of a coincidence” that he, #100, heads the Vigilance department in a country where the Police hotline is 100.  The Ujjivan team’s loyalty reflects their firm belief (and resolve) in the potential to eradicate poverty through for-profit business models that incorporate a social bottom line.

Milestones

In line with those sentiments shared by Carol, Ujjivan’s HR department was ranked #2 this year among all companies in India for Best Rewards & Recognition practices.  In this competition, initiated by the Great Places to Work Institute, Ujjivan stands in good company, including 1^st place Intel & 4^th place American Express.    Read more:

More Recognition for Ujjivan

Service Quality

Milestones

Ujjivan is one of the world’s first MFI`s to be certified (January, 2013) by The Smart Campaign, a global initiative to promote customer protection (from The Center for Financial Inclusion at Accion).  Honored as a Client Protection Certified institution reflects Ujjivan’s commitment to keeping clients “at the heart” of its work.  Such behavior, according to The Smart Campaign, will result in a more responsible and stable Microfinance sector.  This is a very important and gratifying achievement for Ujjivan.  Always at the core of the company’s mission are high standards for quality in both products and service to the valued customers.  The Ujjivan team is very committed to both the The Client Protection Principles of the Smart Campaign, as well as the Fair Practices Code of RBI (Reserve Bank of India).  Read more:

Smart Campaign Certifies Ujjivan Client Protection

Awards

Milestones

Ujjivan has been honored with numerous awards reflecting growing impact and achievements in several areas. Ujjivan has consistently been chosen as one of the Top 25 Best Companies To Work For, ranking #1 in the Microfinance industry in both 2009 & 2011.  ACCESS & HSBC recognized Ujjivan in 2011 as the Microfinance Organization of the Year!  Read more here:

Microfinance Organization of the Year Award

Leadership

A very active leader in the industry, Samit Ghosh sits on the Board of Women’s World Banking and is Vice President of MFIN. He is also part of the Smart Campaign Steering Committee.

Further reading: MFIN Board ; WWB Board

Samit was the first ever recipient of the “Unitus Inspiring Leader Award”!  Read the original Ujjivan announcement from October 2009:

Samit Ghosh Wins the Unitus Inspiring Leader Award

Congratulations to Sudha Suresh, Ujjivan Chief Financial Officer, for being honoured this year with the “Winning Edge in Risk Management” Award (presented by the CFO Institute & CFO India Magazine).  Sudha, who is part of the CFO 100 Roll of Honour, reflects Ujjivan’s dedication to recruiting top talent as well as developing young recruits.  Sudha is a strong leader both outside & inside the doors of Ujjivan.  The industry recognizes her as a “rising star” among India’s CFOs, while, internally, employees see her value as a great mentor.  Here is Sudha’s response when asked to reflect on her recent honor & Ujjivan:

“This award means tremendously to me personally. It signifies the recognition of firm commitment and dedication in managing risks during crisis by Team Ujjivan under the leadership of Mr. Ghosh. I am proud to be a part of Ujjivan.”

Read more…

Sudha Suresh Wins CFO-100 Risk Management Award

Product Portfolio

Diversification

Determined to keep the brand’s portfolio relevant & valuable, Ujjivan launched 2 Micro-Pension products in 2013.  This diversification was the result of a strategic partnership with IIMPS (Invest India Micro-Pension Services).  Staying close to the industry/market pulse while listening to customers keeps Ujjivan informed and educated.  This puts the company in the best position to make thoughtful and successful decisions regarding product offerings. Thinking outside the box, Ujjivan reached out & formed the type of creative partnership required to innovate its product portfolio. 

Read more:Ujjivan and IIMPS Launch Micropension Scheme for Women

Ujjivan believes in taking action to educate their customers on financial literacy and debt management. Without doing so, both customers and MFIs will be vulnerable.  Ujjivan’s strategic NGO partner, Parinaam Foundation, developed the Diksha Financial Literacy Program, now in its second year.  Through Diksha training and educational sessions, Ujjivan customers learn how to manage their incomes and expenditures.  They are also encouraged to open savings account with banks and are helped through that process.  As part of the classes, customers view a 30-minute film called “Sankalp” (The Resolution), presented by Lok Foundation, Unitus & Ujjivan Financial Services.  The film exposes the dangers of ghost lending and multiple borrowings, while promoting the importance of the Credit Bureau.  The Diksha Financial Literacy initiative has received much attention and praise.  The RBI approached Parinaam to develop a similar financial literacy program to be delivered through their banks.  There is no doubt that the expansion of the Diksha program will elevate the impact of Ujjivan financial loans on those caught in the cycle of poverty.  Elaine Marie Ghosh, Executive Director of Parinaam, expressed her enthusiasm for this collaborative effort.  Regarding the anticipated launch she commented, “What a joy it was to see the “Diksha” come to life.”   Elaine calls the collaboration with RBI and the resulting awareness for Diksha “a big achievement for us!”`

Click here for the “Sankalp” trailer

Social Development

The Ujjivan Social Development Program was launched in 2010 and grows in both creativity and impact each year.  The dedication of both national and local teams was recognized when Ujjivan was honored with the MIX Gold Award for Social Performance Reporting in both 2010 and 2011.  The company “walks the talk”, as it truly believes cross-sector collaboration will lead us to lasting solutions.  Primarily at the branch level, you can see employees and customers working together to create community service projects, funded by Ujjivan.  Initiatives include those enhancing child welfare as well as community infrastructure.  Read more about Ujjivan being the sole MFI to receive the highest award for Social performance:

Ujjivan the sole Indian MFI to receive the Highest Award for Social Performance

Memorable Moments!

My conversation with Carol Furtado ended with her sharing her most memorable Ujjivan moments.  She described feeling much “joy” when Ujjivan received the 2011 Microfinance Organization of the Year Award at the Microfinance India Summit in Delhi.

Ujjivan has hosted many guests since its launch.  For one, Michael Dell has never been a stranger to Ujjivan.  On the 6^th of December 2011 the Ujjivan head office was honored with a visit by the World Bank Managing Director, Mr. Mahmoud Mohieldin.  The objective of his visit was to see the successful models of Microfinance at work.  Perhaps one of the most memorable visits was the arrival of HM Queen Beatrix and the Royal Family of The Netherlands in the Fall of 2007.  My sources tell me we can thank the Queen for the asphalt job on Jakkasandra Extension.  It seems that The Dutch Royal Family visit was greeted with pride by the city of Bangalore. 

Scan the following Updates & articles for a bit of nostalgia:

Ujjivan Update_Oct 2007 Featuring Queen Beatrix Visit

World Bank Managing Director Visit

Thank you to all who are part of the Ujjivan circle and the Ujjivan successes (may they continue).  We look forward to publishing the next 100 issues …

- Linda Reddington, Communications Manager, Ujjivan

Results reflect a major turnaround year for Ujjivan as we close with a loan book of Rs. 1126 Crores – 63% growth over previous year.  A profit before taxes of Rs. 49 Crores shows a new day has arrived after an almost break-even situation in 2011-2012.

• Financial year 2012-13 has been a major turnaround year for Ujjivan closing with a loan book of Rs. 1126 Crores (63% growth over previous year) and a profit before taxes of Rs. 49 Crores compared to an almost break-even situation in 2011-12 as an aftermath of the Industry crisis.

• Significantly Ujjivan has undertaken since 2010 a number of business process re-engineering programs, consolidation of branches, upgrading technology, rationalizing products, improving the efficiency of field staff and maximizing economies of scale to reduce Operating Expense Ratio from over 17.4% in 2010-11 to 10.6% in March 2013 to remain a viable business in the regime of interest & margin caps.

• Ujjivan now serves over a million active borrowers spread over 20 states (Ujjivan did not have any operations in Andhra Pradesh) through a network of 301 branches down from over 350 prior to the crisis.

• All through the crisis Ujjivan maintained a healthy portfolio quality through prudent risk management techniques. The repayment rates have moved up to 99.73% as of March 31^st, 2013.

• Ujjivan enjoyed healthy liquidity through the support of banks & financial institutions in the last three years. Ujjivan has diversified source of funding from term loans from banks & financial institutions to Non Convertible Debenture. Amount of funds raised during last year was Rs. 716Crores (53% increase over last year) without resorting to any asset sale or securitization.

• Even during the crisis period Ujjivan was able raise capital twice through private placements of Rs. 127.9 Crores in January and Rs. 47.2 Crores in September 2012.  The capital raise was not only subscribed by existing investors but inducted new investors like IFC, FMO and Wolfenshon. During this period Ujjivan facilitated the exit of two of the earliest investor: Bellwether (July 2012) and Michael & Susan Dell Foundation (September 2012).We are pleased to note that even during that difficult period the investments in Ujjivan were able to generate a health IRR of 20-24% per annum.

     Sudha Suresh,                                                               Samit Ghosh,

     Chief Financial Officer                                                     Managing Director

     May 21, 2013.

“Which way to go for Mahendri’s house?’’….. “You go straight, take a right and the first house on left is her house”. My enquiry was answered by a child playing on the street.

Now Mahendri is famous in Kamalpur area of Meerut city, for her football manufacturing business as she is known as an entrepreneur who manages 5 fulltime laborers and 5-6 part time laborers at a time. Importantly she is also helping her neighbors to find employment; as the part time laborers are her neighbors only.

Entrepreneur – Mahendri and Rambeer

Mahendri was unknown to this ‘Football making art’ before she was married to Rambeer. After 10 years of marriage Rambeer taught this art to her wife.

Rambeer learnt this art from his father, and then worked as a laborer in a sports factory for around 10 years because the workshop owned by his father, was handed over to his brother. Rambeer and Mahendri planned to start something of their own after working as a laborer for a long time.

Self owned business was suitable for them because they knew the technicality and they also had some market linkages (courtesy his father’s business).

After being in business for one year, they planned to escalate their business and in order to do so , bought an electric run machine of Rs.72,000, which could make cut outs for football ( raw material for 40 football in one day). This also added efficiency and can be further used to increase business. This machine was bought from 10k loan of Ujjivan (1^st loan with Ujjivan) and their savings. It has been 3 years that she is associated with Ujjivan and availed Rs 30,000 Individual loan last year for working capital.

Initially, for first 2 years, only the couple was involved in the business and later on as they scaled up they employed laborers as well.

Work Flow

Understanding the Economics

Raw Material:

1. Leather sheet is bought from the market on credit/cash. One leather sheet costs around Rs 1200 .From which around 11/12 footballs can be made.
2. Bladder used in the football making, costs Rs 24/piece.

Labor Cost:

Each laborer is paid Rs 50 for each piece stitched. Full time laborers are also paid a lump sum amount (Rs 5,000-6,000) as an advance when they are hired. The amount is paid to them for their retention, if any of them wants to quit the work; they need to submit the amount back to the owner of business. They can take additional amount in between also in case they have some emergency.

Margin:

On an average one ball is sold in market for Rs. 250 – 300. So the margin on each ball for the business owner is Rs.75-125/ball. From which they have to manage the cost of dye, glue, thread, needle, stamps, workshop maintenance, travelling expenses to market, luggage charges to carry the assignments apart from their household expenses.

Challenges:

1. The cost of leather when bought in credit is higher than when bought in cash.
2. Power cut is very frequent in the area, so they have to manage the use of electrical machine according to power supply and cut the leather sheet pieces in advance only
3. In rainy season they face problems because the leather sheet retains moisture and does not stick to the cloth properly.
4. The competition is relatively high in the area so the buyer party usually bargains for the price, so many a times they even have to cut down the selling price in order to retain their regular parties.

Undying aspirations:

They plan to name their workshop as “Mahendri Sports” and make it as brand name.

1. Mahendri has never been to school and Rambeer is a high school dropout but they want their 5 children to be educated, to a decent level before they are involved in business. The eldest girl child is pursuing her BA course and they want her also to focus on studies only.
2. They have applied for Rs 75,000 IBL this year to scale up the business.
3. They also plan to hire some agents to sell their products to open market outside Meerut city.

Words by Mahendri:

“When I took loan from Ujjivan for the first time we were in suspicion that whether we will be able to repay the loan or not but now we are confident to pay loan up to Rs 2 Lakhs. With the loan provided by Ujjivan we were able to increase our business, buy household assets and a land in outskirts of Meerut”

I am not sleeping well at nights.

I belong to the post Independence generation and spent four decades of my professional life in financial services.  I am relieved that famine has been eradicated from India. I spent last week in Kolkata and was traumatized by a different kind of famine overshadowing the city.  It was reminiscent of the starving millions who descended on the city during the last major famine of 1943 from the rural areas & towns.

One of the fascinating success stories from was when a few years ago the sex workers in one the world’s largest red light area located in Sonagachi, Kolkata had formed a co-operative bank largely to keep their hard earned savings safe. I was sad to read a report in Hindu recently, that apparently Crores of these savings were diverted by agents and customers of this bank to Sharada’s investment schemes. Now these poor women have lost their life savings and are in dire straits.

The cause is different the results are the same. In the last couple of decades numerous dubious finance companies have mushroomed in West Bengal, who prey on the poor & the less affluent living mainly in villages and towns. They collect deposits offering astronomical returns through an army of agents using pyramid commission schemes.  After the commissions are paid, vast amounts are spent on promoting these ‘fraudulent schemes’, buying endorsement of politicians & celebrities (movie stars, sportsmen etc.) and the extravagant life style of the promoters – Mercedes, SUVs, Rolls Royce- Phantom, BMW -7 Series etc.

They are classic conmen. Though the investment products they sell are called ‘Chit Fund’ and ‘Money Market Funds’ they are neither.  They are deposit schemes (Collective Investment Schemes in SEBI’s terminology) offering to double the investment in 2-3 years. The residual amount after expenses & siphoning off by promoters of the original deposit collected is invested in land deals, movies, real estate etc. mostly high risk – high return ventures. These deposit schemes are not viable propositions. The servicing of matured deposits is entirely based on the company’s ability to continue to raise fresh deposits. Once this cycle of raising deposits & servicing the maturing ones breaks down, which is bound to happen, the whole scheme collapses.

A unique feature of the current crop of fraudsters is that they are all armed with a battery of media vehicles: TV stations, newspapers & magazines to help them gain credibility, promote their schemes and also to help the politicians to reach out to the masses to win elections.  There are no reliable statistics but reportedly, 70-80 such companies have collected an estimated over Rs. 20, 000 Crores of deposits from the poor and less affluent, mainly in the rural & semi-urban areas.

One medium sized finance company – Sharada Group - dramatically collapsed last week, the depositors confidence evaporated in the panic and now the whole fraudulent deposit taking industry is on the verge of collapse like a pack of cards. The depositors are viciously chasing the agents who in turn are running away from home and demonstrating in Kolkata for the State Government to save them from violent retribution.

What is the impact of Rs. 20, 000 Crores of savings and financial security of the poor evaporating into thin air? There is not one word from the Minister of Finance in West Bengal. I hope he is sleeping well. We pride ourselves on having a strong and well protected financial system that can withstand the shocks of the various, recent international financial crises.  Yet simple conmen are allowed to operate with impunity and wipe out the savings and financial security of millions of poor. Are you sleeping well sirs: Singh, Chidambaram, Subbarao, Reddy and Rajan?

What can be done to protect the poor and the financially disenfranchised in the future? The crisis is of the dimension & urgency that a comprehensive and coordinated action needs to be taken by the Ministry of Finance both at national & state levels, SEBI, RBI and our Judiciary. This cannot be resolved by one party alone.  It is imperative that measures are taken not just to douse the present flames but to ensure it is not repeated in the future.

1. For the present lot of depositors of these schemes the West Bengal Chief Minister said ‘What is gone is gone,’ which may be the sad truth.  She then plans to raise a distress relief fund by raising taxes on tobacco. We don’t know how much relief that will be able to generate. A better source would be the ‘unclaimed deposits’ in the affected states such as West Bengal, Assam, Tripura, Bihar & Jharkhand which are held by banks & the Reserve Bank of India to be used to provide relief at least to the poor duped depositors up to Rs. 25, 000 under these schemes.

2. There are sufficient legal & regulatory deterrents already present which can stop such fraudulent schemes. SEBI, as a regulator, has been issuing orders to stop these schemes and return the money to the depositors.  But such orders get mired in long court battles and become ineffective. Financial frauds of this dimension must be handled by fast track courts. SEBI must be empowered and their orders must be immediately enforced and these companies must be wound up. The State Government of Jharkhand has pro-actively already closed down the branches of such companies. The penalties should be heavy and severe. These should not only cover the promoters and top management but also politicians and celebrities who endorse and support such companies. Ministers and Members of Parliament or Assembly who have been hand in glove with such fraudulent finance companies should be held accountable and not be permitted to continue their public roles.

3. There should be stricter licensing regulations in order to prevent people of dubious background to own and operate powerful media vehicles like TV stations.

4. Finally, the disenfranchised poor keep falling prey to such schemes at regular intervals as they do not have an institution where they can save safely. Banks are not interested in them and schemes like “no frill accounts” or other savings accounts with such restrictions that customers cannot freely save in them.  It would be fool hardy to expect new commercial banks to suddenly find it lucrative to serve these customers.   It is time that the Reserve Bank of India permit the well governed and managed NBFC-MFIs who already serve this customer segment to offer deposits which are insured and monitored by the RBI. This will prevent recurrences in the future or conmen will always find a way to reach out to the poor & vulnerable masses.

Conclusion: The frightening aspect of this lack of financial inclusion disaster is that these types of ponzi schemes and pyramid marketing with large commissions are spread all across the country. We recently discovered such schemes in Mumbai. The widespread prevalence of such schemes by major players in the northern states like U.P., Bihar, M.P., Chattisgarh etc. is well known. The unorganized deposit-taking/investment business is also massive and produces extraordinary profits. Powerful businessmen, politicians, bureaucrats, celebrities and media organizations are involved in these businesses.  As one followed what transpired during the collapse of the Sharada Group of Companies in West Bengal, this fact become immediately apparent. The tentacles of these types of businesses reach right across India and at a much larger scale than what is visible. The Parliamentary Sub-Committee on Finance under Mr. Yashwant Sinha did meet to review the impact of such financial disasters which impact the most vulnerable, but we have not seen any concrete steps to taken by the government & RBI. Real financial inclusion covering all aspects of financial needs especially a safe & convenient place to save is not something which can be overlooked or postponed any longer.

Samit Ghosh,

Founder & Managing Director of Ujjivan Financial Services & Vice President Microfinance Institutions Network.

June 6, 2013

Our goal for the Diksha Financial Literacy Program is to inspire customers/beneficiaries to both manage and  save their money. We are witnessing positive changes in customers’ behavior and wonderful results.  This month we’d like to share the story of Satnam from Baridih (East).

Satnam Kaur joined Ujjivan Financial Services 3 years ago. She previously had a bank savings account, but had not used it with any frequency. The account therefore became ‘dormant’ and was closed.

Satnam became a participant in the Diksha Training program, developed and conducted by Parinaam Foundation for Ujjivan microfinance customers. Here she came to know the benefits of operating a savings account at a commercial bank, while she acquired tools for managing her income and debts. Along with providing Satnam with training sessions, we also helped her return to her bank to re-open her account.

Disksha motivated Satnam and she soon started to save regularly in her bank account, once she met her business and domestic expenses.  As instructed, she maintains a personal diary to record the details of her financial activity, which helps her keep record of her income and expenditures.  She can now plan accordingly, and effectively, to save. With her new savings, Satnam was able to buy an additional sewing machine, a Picko machine. This increased her business income and in turn she increased her savings account balance. She now wants to purchase yet another machine while also expanding her business by opening a training center for other women who wish to become self-reliant like her. For this ambitious endeavor, Satnam does not have to ask anyone for help. She can do this with the help of her own savings account, the one she has nurtured with her new discipline of frequent deposits.

The story of Satnam is a great example of how one can use a savings account for future needs.  Through new knowledge and habits, a woman like Satnam can attain financial freedom, thereby enjoying life without depending on others for help.  Through the Diksha program on ‘how to use savings in both domestic and business life’ she is now empowered by the prosperity she sees from her own work and progress.

“My family is very happy now. Thanks to Parinaam Foundation and Ujjivan.” – Satnam Kaur

In an effort to bring our customers into the banking system while offering a convenient new service, Ujjivan has implemented “Cashless Disbursements”.  Customers may now choose to have loans credited directly into their bank accounts. Following a successful pilot in the East region (2nd Quarter 2012) Ujjivan branches in the South, West and North are also experiencing strong demand for cashless disbursements.  As of April- May 2013, 26% of our national monthly disbursements are being facilitated through direct account transfers.

In addition to adding convenience to the transaction process, Cashless Disbursements eliminate the potential risks of cash handling. The loan amount is credited after deducting loan processing charges; hence the customer need not carry any cash to or from the branch during loan disbursement.

The new Cashless Disbursement method also serves as a vehicle for promoting savings and the opening of savings accounts.  We have leveraged our current field process to communicate the importance of having a bank account and the advantages of subscribing to other banking services like ATMs and SMS alerts. As an incentive, customers opting for Cashless Disbursement will be approved for an additional Rs.2000 on their current loan. Each customer is also encouraged to link her bank account to her Aadhaar* number, taking advantage of the recent direct benefit transfer. Aligning with one of Ujjivan’s core goals, this initiative is structured to educate the customers on banking systems while primarily focusing on the critical nature of savings.

East Showcase: The Evolution of Cashless Disbursement

(Thank you to contributors Chitra Sriraman & Aditi Biswas)

Initially the thought of cashless disbursement did not necessarily signify direct transfer to customer bank accounts. As transfer to customer bank accounts may involve risk, we initially planned to provide customers with account payee cheques. But “Ujjivanites”, as always, strive to make processes as simple and convenient as possible for customers.  We realized that account payee cheques would lead to delayed credit into a customer’s account.  In an effort to make transactions simple and technologically viable, we decided to implement direct account transfer of the loan amount through a basic fund transfer.

Initial Challenges:

1. Getting the various stakeholders involved in the process on-board :

-Our customers would have to understand the concept & functionality of this new service well before truly trusting, accepting & using it

-Our CRSs needed to be well-trained, effective mouthpieces for this new initiative

-Our CCRs needed to be excited to participate as helping hands while educating our customers on how to operate a bank account

- Our Cash Group, Operations and IT teams needed to believe in the new service in order to build an efficient back-end process

2.  Too Many Man Hours Spent on Rejection & Recall Cases

-The field staff is facing a great challenge in the constant need to confirm and update customers’ correct bank details.  One solution to this is to encourage customers to open savings accounts in their first cycle

Introduction of New Service to The Customers:

Upon introducing the Cashless Disbursement service at one Kolkata center meeting comprised of 20 customers, 10 customers reported having bank accounts.  When the benefits  of utilizing the bank accounts more were explained, there were positive responses. But there was also apprehension shared …“ I don’t know how to withdraw money from my bank account”; “ Bank people are not that friendly and we are more comfortable going to the Ujjivan branch”; “I have a non-operative bank account since 2 years”; Will bank people allow us to actually go and withdraw money?”…..and so on and so forth…

Benefits Highlighted for Customers:

1. Tomorrow when your children will send money to you from outside, it will be of great convenience to have an operative bank account.
2. Tomorrow government benefits and subsidies will start being transferred directly to bank accounts.  It is best that you learn now how to operate this type of service.
3. Tomorrow if you go on a holiday or need to go out to buy materials for your business, you will not need not carry large sums of money.  Instead, you can walk into an ATM and withdraw the money close to your destination.  This will be much safer for you.
4. Today, banks provide interest on a daily basis on money that you deposit in a savings account.  For the days or months that you do not touch your money, and leave it in the account, the bank will be paying you– this will help you earn a few bucks!
5. When customers choose the Cashless method with Ujjivan, they receive access to Rs. 2000 more on their approved loan amount

When that same Kolkata group of women was later contacted, we found that 8 of the customers had already taken loans via the cashless model.  They reported that they were happy to now have the ability to withdraw disbursements from the bank account.

Many Positive Results:

• As of April-May 2013, Cashless Disbursements have risen to 26% of Ujjivan’s total disbursements.
• This initiative has helped the Ujjivan Operations team establish rapport with different bank officials.  There were initial hiccups, such as obtaining the correct IFSC code, transferring data, etc. Now that we are a year past launch, our individual database and relationships with bank contacts facilitates much faster information sharing  and error resolution.
• Today credit is also being given to our customers who have bank accounts in the rural/co- operative banks.
• Many bank accounts are getting re-activated as our customers have started visiting banks with KYC documents
• The process of engaging with bank officials on behalf of our customers has resulted in more confident CRSs. This is a trickle-down benefit and helps us in capacity building our existing workforce.
• Earlier, customers needed to carry cash in packets or solicit their husbands/male members of the family to accompany them to Ujjivan offices.  Today, our customers share their feeling of empowerment they have when they withdraw money through an ATM.  They do this on their own and hand it over to their male counterparts only in times of need.
• With direct transfer to bank accounts, customers are also getting into the habit of some forced savings as they are not withdrawing the total amount at one shot.

After 1 full year since launch, Ujjivan is experiencing promising acceptance and adoption of the Cashless Disbursement service.  Both Ujjivan staff and clients are spreading the word at center meetings regarding information as well as benefits.  We believe that reducing security risks by offering an alternative to carrying  cash has been a big factor in winning over the customers.   Increased demand among the customers combined with Diksha soon entering Phase 3, is the perfect formula to realize the full potential of Cashless Disbursement service.  Assisting our customers in both financial literacy and engagement with banking institutions brings us critical steps closer to full financial inclusion for the poor.

*Aaadhaar: 

In the past year, the government of India, under the planning commission, initiated a unique ID program for the entire population. The premise was to transfer subsidies/ pensions/ daily wages from the government schemes to the low income population. The UID is also referred to as Aadhaar which means support or foundation. http://uidai.gov.in/

Parinaam Foundation over the years has taken many initiatives which have had direct impact on improving the lives of poor in India. While Ujjivan provides microfinance to the poor, Parinaam completes Ujjivan by providing education to customers on financial planning. Parinaam launched its first financial literacy program called Sankalp around two years back. The program focused on teaching customers on the ill-effects of multiple borrowing, ghost lending and over-indebtedness. The tremendous success of Sankalp culminated into the beginning of even more ambitious program, Diksha, with a vision to teach customers the importance of savings and to finally connect them to the mainstream financial institutions by helping them to open bank accounts.

While the feeling of being able to touch the lives of our customers at the most grassroot level has in itself being quite fulfilling, the memories given by some of customers has been even more satisfying. One of Ujjivan’s customers, Lata Chawla from Jahangirpuri branch went through Parinaam Foundation’s Diksha program. Realizing the enormous change that the program brought about to her personality, confidence and understanding about financial planning, she wrote a wonderful poem expressing her gratitude towards this great initiative.

We present to you her poem and its English translation below:

Translation:
Ujjivan & Parinaam jointly made Diksha Program,
This program guided us how to save,
Diksha dairy provided to us, taught us to make budget,
Then we were provided the Calculator which taught us calculation,
Saving box given to us guided for savings ,
Satya Prakash’s role play of Sukhi Dukhi taught us how to use & spend money wisely,
Manoj Sir explained us difference between good borrowing & bad borrowing,
With the help of Meenakshi we joined this program & got benefited.

Thanking Ujjivan and Parinam institutions, Satyapraksh, Manoj & Meenakshi ji you made us Rupee Rani!

We thank Lata Chawla and many others like her for their appreciation of our small initiative. We stand humbled and even more committed towards touching the lives of poor people in a more meaningful way. We also thank our brave trainers such as Satyaprakash and Meenakshi who toil hard in the field and make this program possible!

-Parinaam Foundation

Microfinance in India has had its own share of ups and down, from enjoying a dream ride in pre-Andhra crisis period to almost coming to the brink of extinction immediately post crisis to the phenomenal turnaround it has done in the last one year. Post-crisis, there were many times when the death of the sector seemed inevitable. Such were the times that one could prognosticate that anything even remotely connected with the microfinance and that could go wrong will surely go wrong. It was in these tough times that the Microfinance Institutions Network (MFIN) (link), under the leadership of Vijay Mahajan, rose to the occasion and achieved what at one time seemed “Impossible”.

Vijay Mahajan is one of the highly respected pioneers of microfinance in India. Starting his journey by setting up an NGO PRADAN (link), a leading NGO working in the domain of livelihood promotion, Vijay went on to establish one of the most respected MFIs in India, BASIX (link), which was literally the school for microfinance for lot of leaders in the sector today. Over the years, Vijay has been an active member of numerous committees formed by Government of India for financial inclusion and livelihood promotion. He has been the founding President of MFIN and Board member of CGAP, a World Bank arm, for seven years with three years of those as the Chair. On 29^th June ‘2013, Vijay Mahajan hung his boots as the MFIN President and CGAP (link) Chair, passing the baton of MFIN Presidency to Samit Ghosh.

It may be helpful to look into some of the major contributions of MFIN to the development of microfinance in India:

1. First of its kind self regulatory organisation for microfinance, brought all the for-profit NBFC MFIs (constituting around 70-80% of all MFI portfolio in India) of India under one roof.
2. Fighting the legal and other battles to save the embattled microfinance in Andhra Pradesh.
3. Advocacy with RBI, central and concerned state governments to create awareness on the constraints and challenges of MFIs and help introduce regulations conducive for the disciplined existence of microfinance in the country.
4. Played a crucial role in the establishment of the first credit bureau, Highmark, dedicated to MFIs and the remarkable success of putting in place the credit bureau usage discipline in the country.
5. Cobbled together with Sa-Dhan a unified code of conduct for all NBFC-MFIs for customer protection and put in place an enforcement committee in MFIN for its members.
6. Developing a standard policy framework for the working of all NBFC-MFIs in the country and ensuring its stick implementation and adherence, emerging as a strong self regulatory organization.

For a man who has toiled hard for his mission for much part of his life, Vijay Mahajan retires from the CGAP Chair & MFIN Presidency with a certain amount satisfaction, which reflects from his parting message to the MFIN members “Now that The Economist in its May 31, 2013 issue says, ‘Hooray! Poverty will not always [be] with us’, I think I can retire a Happy Man.”

While accepting the baton, Samit too expressed his gratitude towards the exemplary leadership of Vijay Mahajan, saying “It is indeed an honour to be elected the President of the MFIN Board. It is a daunting task to follow the footsteps of our Founder President Vijay Mahajan, whose life long contribution to this sector is unparalleled”. Samit acknowledges his debt of learning from Vijay & BASIX, when he started out his journey more than ten years ago, as has many sector stalwarts today. All this was possible because of Vijay’s open arms to all comers and a true teacher & guide.

Ujjivan takes this opportunity to thank Vijay Mahajan for his continued support, guidance and leadership to the Indian microfinance industry and wishes the newly elected MFIN President, Samit Ghosh, also Founder & Managing Director of Ujjivan, all the very best.

Please Read: Link

Paper titled “Microfinance in India - Way Forward” by Ministry of Finance, Government of India, which Mr Mahajan shared with the MFIN community as his parting thoughts.

The paper is a comprehensive work on the Indian microfinance journey, current situation and way forward. Discussing the customer profile, it also highlights the various types of products the target customer of an MFI needs. It highlights the enormous potential microfinance holds but also speaks of current challenges and constraints. It also presents some key learning from other successful microfinance markets of the world. Besides looking into the current landscape of microfinance in India, it also tries to delve into the changing paradigms of Indian microfinance sector. The paper is a vision document and seminal work which makes some important recommendations for the sector and envisions the sector to be “branchless by 2020 and cashless by 2030”.

Some Important Links:

MFIN Brief History: Link

MFIN Mission & Vision: Link

Composition of MFIN Board: Link

-Communications Team, Ujjivan Financial Services Private Limited

Great Places To Work Study:

The 2013 Study of India’s Best Employers to Work For is one of the largest Employee Satisfaction Study in the world covering 550 companies, spanning across 22 industries.

Ujjivan has been participating in the survey since 2009. Participation in Great Place To Work Survey and working on the Employee Feedback enable us to track Ujjivan Trust Index annually and work toward continuous improvement every year.

Great Place To Work Trust Index Score is a key business metric tracked by over 6000 organizations every year in over 45 countries across the globe. Organizations with high Trust Index Score are identified to perform 3 times better than the general market indices and experience up to 50% less employee turnover. Increase in Trust Index directly leads to increase in productivity and other business results.

Ujjivan Recognition:

It was a Proud event for Ujjivan Team to be Ranked 7^th this year, among the India’s Top 10 Best Employers to Work For in 2013.

The CEO, Mr Samit Ghosh and the HR Team were felicitated in the award event on Friday, June 21, 2013 in Mumbai in the presence of over 60 CEOs and over 300 HR Chiefs.

Ujjivan Progress year-on-year:

Over the past 5 years, Ujjivan has progressed from the initial rank of being Best Employer in Microfinance Industry to being among the India’s Top 25 Best Employers for the last 3 years consecutively.

Ujjivan vs the Top 50 Employers in India:

Ujjivan Trust Index Grand Mean has progressed from 80 in its first year of participation to 90 in 2013. Corresponding Index of India’s Top 50 remained in the range of 82.

There is no individual dimension where Ujjivan has shown a negative trend year on year. Even in the lowest scores of Top 50 Best Employers, Ujjivan remained higher by over 10 index points, confirming its belief in its people practices.

Recognition of Best Practices:

Ujjivan has been progressing each year from being at 100^th Rank overall to 7^th Rank this year. Ujjivan also retained its position as 2^nd Best in the Financial Services Industry.

Other Special Category Awards that we received were:

• 2^nd Best in Rewards & Recognition Practice (after Intel)
• 3^rd Best in Engaging the Field Force;

Overall, Ujjivan believes that Happy Employees lead to Happy Customers. The repayment rate of 99.73% is a testimonial of its belief of building the right institution with the “Employee First, Customer Second” approach. It is the ‘U’, ‘I’ and ‘V’ that makes Ujjivan today.

On 6^th August ‘2013, Raghuram Rajan was announced as the new Governor of the Reserve Bank of India. The announcement was immediately welcomed by the politicians, economists, industrialists, financial institutions and domestic and international media in India with great optimism. In this moment of economic fragility and uncertainty, where India is experiencing its share of economic woes, Raghuram Rajan, with his academic and professional credentials, is being looked at as the man who has the knowledge and experience to get the country back on track.

Who is Raghuram Rajan?

Raguram Rajan graduated from the Indian Institute of Technology (IIT), Delhi with a Bachelor's degree in Electrical Engineering, and he completed the Post Graduate Diploma in Business Administration at the Indian Institute of Management (IIM), Ahmedabad in 1987. Rajan was a gold medalist in IIT Delhi and IIM Ahmedabad. He received a PhD in management from the Massachusetts Institute of Technology (MIT) in 1991 for his thesis titled "Essays on Banking". Rajan joined the Booth School of Business at the University of Chicago. He was then appointed as the youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (IMF) from October 2003 to December 2006. He was then appointed as the Chief Economic Advisor to the Ministry of Finance, Government of India on 10 August 2012. He has been appointed as the next (23rd) Governor of the Reserve Bank of India on 6th of August ‘2013 for a term of three years and will take over from Dr D Subbarao, whose five year term completes on September 4, 2013. He is well-known across the world for being one of the earliest predictors of the 2008 economic crisis through his then-controversial paper “Has Financial Development Made the World Riskier?”

For more on this profile: Chicago Booth Profile ; Wikipedia Profile

What Does this Appointment Herald for the Microfinance Industry?

Just like the overall economic scenario, the microfinance industry too has been functioning under a tremendous uncertainty and lack of timely decisions from the government, regulators and the parliament for last few years. While the tension between the political system and the MFIs, which peaked post the AP-crisis, has reduced, much work still needs to be done to get the microfinance industry back to its normal. Besides strong global economic understanding, Raghuram Rajan has also demonstrated good understanding and direction for the financial inclusion in India. “The Report of the Committee on the Financial Sector Reforms” produced by the Committee led by Raghuram Rajan is a seminal work on the various aspects of the Indian economy. The report gains much importance for the microfinance industry for its dispassionate and unbiased view on the role microfinance has played in bringing about financial inclusion in the country in last few decades.

The extract from the Report says, “Microfinance is the fastest growing ‘non-institutional’ channel for financial inclusion in India. A key factor that influenced the success of microfinance was its ability to fill the void left by mainstream banks that found the poor largely uncreditworthy, and were unable (or unwilling) to design products that could meet the needs of this segment in a commercially viable manner” clearly recognizes the need for microfinance in the country and stresses on microfinance as an emerging tool for financial inclusion. Further, the Report believes that microfinance has been an important tool in enabling poor from escaping from the shackles of the moneylenders, “There is evidence that an increase in microfinance lending is associated with a lower incidence of borrowing from moneylenders, especially for low income segments.”

While Rajan Committee included both SHG and MFI while commenting on microfinance, its recognition of MFIs has been a great positive for the sector.

“Despite its success, the future growth of microfinance is constrained by a number of factors. An important issue is the ability of MFIs to raise financing. Given the large estimated demand for microcredit, MFIs need multiple sources of financing, apart from the traditional loan financing from banks. Other constraints include an unclear regulatory environment and the lack of well-developed management information systems and an adequate supply of trained management talent to facilitate sustainable scaling up”, says Rajan Committee Report stressing on the immediate constraints faced by the microfinance sector.

Dwelling upon some of the successful examples of financial inclusion from countries such as Indonesia and Philippines, Committee re-iterates the importance of Small Banks in making economy more inclusive and equitable. The Report says, “Experience in Indonesia and the Philippines showed that the establishment of small banks has been a critical factor for increasing the provision of financial services to the poor”.

Based on the successful global experiences of Small Banks and the good track record exhibited by the MFIs in India in extending last-mile financial services to the poor, the Report goes on to make historic recommendations for creating more conducive policy framework in India for the conversion of well performing MFIs into Small Banks. The Committee suggests, “A number of dynamic local financial institutions with a good track record of reaching the poor currently exist in India. Many of these are MFIs, with a client base that largely consists of the poor. These institutions are small, yet well performing, and are undertaking a fair amount of innovation in increasing financial services to the poor. They are constrained in that they cannot offer a full range of financial products to their clients, especially deposits which would also allow them to lower their cost of funds (and commensurately their lending rates). This results in a situation where MFIs cannot reach critical mass, in terms of asset size or profitability, to be able to finance investments in core banking solutions, HR etc. These MFIs are too small to apply for an SCB banking license, which would require a capital base of Rs. 300 crore. As of March 2007, the total equity base of all the 54 Indian MFIs put together was a shade below the Rs. 300 crore capital requirements. Even among the top 15 MFIs, it would take anywhere between 5 years to 15 years to grow their asset and equity base to meet the minimum criteria to be a bank. Given the current interest in microfinance, raising equity capital is a possibility for expansion, but this would require promoters to significantly dilute their stake in the MFI, with attendant loss of incentives and governance. Some of these well-performing MFIs would benefit from transforming into small finance banks.”

For an expert to have shown this wide understanding of the economic system, both at macro and micro level, the microfinance industry is confident that Rajan has much to offer in strengthening the financial inclusion landscape, of which microfinance is an integral component, in the country.

We wish Raghuram Rajan all the very best and look forward to his progressive vision to drive financial inclusion forward in the country.

Read Complete Report of the Committee on Financial Sector Reforms here

Read Chapter on Broadening Access to Finance here

In the last few years, especially post-Andhra-crisis, there has been a considerable debate on the usefulness of microfinance and the real impact that it brings to the poverty alleviation. There have been arguments on both sides: some experts have argued how microfinance has enabled poor to access financial services at an affordable rate and in dignified manner while some have hold microfinance itself responsible for entrapping the poor into endless debt trap.

While poverty alleviation may be a much larger agenda, there is no doubt that microfinance has been a great enabler of financial inclusion. The recently released paper “The real cost of credit constraints: Evidence from micro-finance”, work of Renuka Sane and Susan Thomas, two researchers from Indira Gandhi Institute of Development Research, Mumbai, tries to measure the impact of micro-credit withdrawal in the Andhra Pradesh (AP) districts (treatment group), post-AP crisis, by matching them with similar districts outside AP and with microfinance services available (control group) to understand the differences in the consumption pattern between the two sets.

The paper looks into the following aspects:

    1. Policy intervention in Andhra Pradesh (AP) that forced a closure of the micro-finance industry
    2. Asks how micro-credit withdrawal affects consumption:
        a. Is average household consumption affected when access to micro-finance is reduced?
        b. Does the volatility of average consumption change?
        c. Which households are more affected?

   3. Causal effect of the ban calculated as the difference-in-difference of the average household consumption between the treated regions (in AP) and the controls (matched regions outside AP)

Some of the key results of the paper are as follow:

    1. Average consumption expenditure of households in AP decreased by 19.5 percent
    2. Households in AP spent 16 percent less on food and 34 percent less on education
    3. Increased volatility of average consumption expenditure after the ban in AP
    4. The negative impact was bigger for households with liquidity constraints

In addition, the paper also makes some broader observations:

    1. Overall average treatment effect associated with the blunt policy intervention of banning micro-finance in Andhra Pradesh was negative
    2. In the global debate about the welfare consequences of for-profit micro finance, extreme government restrictions are ill-advised

The above conclusions (from the report) clearly exhibit how some of the government policies have greatly hampered the agenda of financial inclusion by preventing a large section of people from accessing financial services.

Read complete paper here

Presentation for quicker consumption here

Dear Friends,

Greetings from Ujjivan!

Pleased to share with you Ujjivan’s July’13 Monthly Newsletter. It will take you through the following:

• The update starts with the news of our Annual Awards and celebrations for South and East regions. The celebrations were done through the medium of song, dance & drama (skits) by our staff and customers. South region drew inspiration from the folk culture from the states we operate in and East region chose the theme of 100 years of Indian Cinema.

• The farcical theatre continues session after session at our Parliament leading to frequent disruptions and closure, while 116 bills are pending to be passed.  This makes the probability of the Microfinance Bill to be passed under tenure of the present government remote. The only good news in the recent past has been the appointment of Raghuram Rajan as the next Governor of the Reserve Bank of India. The recommendations made in the Report on Financial Sector Reform under his chair give a fillip to the financial inclusion and the role of the microfinance sector.

• There is a damning academic report on the impact on the poor people of the Andhra Pradesh post the legislation by the State Government crippling the operations of MFIs.

• Parinaam Foundation received international recognition from the Financial Times (UK) on the excellent work it has been doing with the ‘ultra poor’ in Bangalore through its Urban Ultra Poor Program.

• I attended the ‘Symposium on Financial Inclusion: Client at the Center’ in Turin organized recently by the Boulder Institute and the Master Card Foundation. Many success stories on product and service innovation were shared. The by-word for microfinance is no longer poverty alleviation but financial inclusion.

• Finally read about Sarah Owen-Vandersluis’ visit. Sarah is the kind of friend whose support is essential for many of programs that Parinaam undertakes for the ultra poor.

We would be happy to hear your feedback. Send in your feedback to mayank.mathur@ujjivan.com .

Best Regards,

Samit Ghosh

Follow Ujjivan on Facebook and on Twitter

Ujjivan July 2013 Update is attached herewith.

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This August, Mrs. Elaine Ghosh was named as person of the month by the CITI-FT Financial Education Online Forum. In an online interview, she discussed the story of how she started Parinaam Foundation and her vision for the future.

Mrs. Ghosh started Parinaam after realizing, through her experience with labour workers, that the poor in India needed a holistic set of interventions that addressed all their needs, such as financial services, healthcare and childcare. Parinaam’s two main programs, the Urban Ultra Poor Program (UUPP) and the Diksha Financial Literacy Program (Diksha FLP), work to address these variety of needs and give the poor the ability to sustain themselves. 

Both programs have been highly successful. Recently, UUPP was highlighted by the Financial Times as a top contender for the 2013 Financial Times and Citi Ingenuity Awards in the Asia Pacific. The program has expanded to serve over 650 beneficiaries and their families. The Diksha Financial Literacy Program has been rolled out to over 69,000 women, teaching them the basics of financial literacy and helping them manage their family’s finances.

Parinaam has developed a reputation for financial and ethical integrity, and as part of its vision for the future, Mrs. Ghosh says, “I see Parinaam in a niche market, running programmes that are not as easy as they are constantly evolving, but will have the greatest impact on our target market – the urban poor and ultra poor.”  

To read the full interview, please visit http://financialedforum.org/featured-person-elaine-marie-ghosh.

Congratulations to Mrs. Ghosh for her inspiring work.

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