Barren Baron

While media takes the onus of scrutinising and keeping tab on the functions of judiciary, government, public servants, leaders, corporations, persona of public life etc., isn't it fair to have a body that should oversee the role of a media house and its responsibilities towards the staff! India media houses and promoters have taken good care of their employees - from giving, by & large, a free hand to the editorial team to defined functioning of the sales & marketing team. But then, not all are lucky to be working with professional organisations. With the advent of online news portals, competition has grown and so has mushrooming of "media houses", "media barons" and "editors".

While traditional media has taken the natural course of starting online news services, the online news portals are making way into print media. For in India, even today, the respect that one receives being an editor or publisher or owner of a daily newspaper or magazine is far higher that of being a promoter of an online portal. This has got nothing to do with quality of journalists or journalism but due to sheer reach. Internet penetration in India is still at its nascent stage. It has not reached even a quarter of its capacity or capability. But that has not stopped entrepreneurs from starting news portals. And yes, they are all TRADE MEDIA. Now this is another concept that is playing havoc in the Indian online media space. There is niche news portals for almost every industry. And within a few years, the promoter suddenly decides to propagate that he is a "media baron".

Being niche has its advantages and disadvantages. The biggest advantage is that one reaches out to the target audience. The disadvantage is that the portal is dependent on revenue from handful brands. Now the day the portals decides to write negative about a particular brand or head honcho, the revenue stream starts drying up from the source. So, are trade media portals free and fair? I am neither the judge nor jury, but do ponder for a moment.

While growing the online news business, investments from angels and VCs are not difficult to come across. But how do you sustain and grow the business without being myopic is the test. While one of the leading marketing news portal is doing phenomenally well due to its content and clear separation between editorial and sales others are struggling. Recently I came to know of the struggle of another portal with diversified interest in niche print media. Situation is such that employees are getting salaries one month behind schedule that too in parts, vendor dues have risen to the extent that publishing print editions are becoming increasingly difficult. So much so that maintaining a swanky office in an upmarket address is no longer possible. Is this a classic case of biting more than one can chew? But in all this how badly are the promoters affected? I don't think it really perturbs them. While the employees languish and burn the mid-night oil, more often than not one can see the promoters at fashionable do's, collecting art, buying new personal properties, foreign jaunts etc. Unlike most media houses in India, there might be a few for whom personal recognition is far more important than building a respected, trustworthy media brand. Such a promoter is nothing but a Barren Baron

What needs to be done to resurrect the Micro Finance Industry In India

The Microfinance Industry is undergoing upheaval. A decade ago Microfinance held out a dream of impacting millions of BoP families to harness their skills and to improve their living conditions sustainably. However, this endeavour has come to an abrupt halt after clamp down on Microfinance Institutions (MFIs) following suicides attributed to over-indebtedness, coercive debt collection practices and governance issues. A decade of serious work in financial inclusion by various stakeholders including civil society institutions has been equated with money lenders on account of few erring MFIs.

Post the AP Ordinance, all banks and DFIs– which account for 70% of total funding to the microfinance sector – have nearly stopped disbursing loans. As a result, the industry is on the brink of a collapse. Malegam Committee report has brought some respite but is riddled with several unresolved issues and many of its recommendations are not practical, at the field level.

The current crisis in the Microfinance sector will adversely impact:

Ø 26.7 million borrower accounts ( estimated 18 million unique accounts) constituting 8% of all the households in the country and 13.6% of unbanked households in the country.

Ø It will render many of the rural undergraduates from backward classes unemployed. The Microfinance sector employs more than 150,000 people. Retrenchment on account of serious liquidity crunch has already started. These people will find it difficult to get reemployed.

In AP, beneficiaries of microfinance have already started borrowing money from moneylenders. Moneylenders’ interest rate varies anywhere between 60% - 120% and they resort to coercive measures to recover money.

Dia Vikas (a leading social investor in the microfinance sector, supporting, 18 small and mid-size local MFIs reaching out to 1.5 million poor families constituting nearly 10% of microfinance sector) is of the view that,

• Facilitating fund flow to the sector: A strong signal from MoF and RBI may be given to the Commercial Banks/ DFIs to restart their lending to MFIs, particularly to the smaller & medium socially focussed MFIs working in difficult regions of the country. The credit freeze which these MFIs are facing right now throughout the country needs to be arrested to continue providing financial services to the poor.
• Provide First Loss Default Guarantee (FLDG) to Banks. Government may consider building the confidence of the Banks by providing FLDG (say 10%-20%) for their loans to these MFIs till normal lending is restored. Bankers to be sensitised to the fact that size in itself is not a risk mitigator and they need to lend to local efficiently run and socially focussed MFIs.

• Set up a Regulatory and Development Authority for MFIs :

· A separate regulatory and development authority to oversee, monitor and develop small and medium sized MFIs is critical. This will ensure close supervision, balanced regional growth and broadening of financial services viz. pensions, technology backed savings solutions, health insurance etc., to reach the poor. This will also reduce concentration of operations in a few large MFIs focussed on only loan products and profit maximisation.

· This will give impetus to many not for profit MFIs who have significant contribution (14.3% of total borrower accounts,11.6% of portfolio) which have been ignored in Malegam committee recommendations.

· All existing MFIs to be registered.

· State level Ombudsman, monitored by an independent Central Agency to ensure client protection and grievance redressal.We further beseech you to:

Ø Work with various stake holders to reduce cost of borrowing for the poor-

· Refinancing facility for these MFIs and /or Banks at a lower rate so as to reduce cost of borrowings for these MFIs and their borrowers - currently the cost of funds is very high and is likely to increase further with the current crisis.

· Interest rate rebate for MFIs who contribute to financial inclusion agenda such as bringing their borrowers in the fold of Government pension schemes, health insurance and other services (for instance, 4 of Dia Vikas Partners are aggregators for NPS Lite / GoI Swavalamban Pension project and Dia is also actively engaged in supporting community health initiatives).

· Issue tax free microfinance bonds to raise capital for this segment of the MF industry so as to lower the cost of capital for MFIs and poor families.

Ø Encourage provision of domestic equity which is essential for stabilization of the MF industry:

· House the inclusion funds with entities who can administer them with agility and caution. The current inclusion funds have a very low utilisation rate with its deployment lower than its accretion in the last financial year.

· Social investment funds (both domestic and foreign) may be encouraged

· Encourage corporate sector to deploy CSR funds in such social investment funds.

According to Dr. K. C. Ranjani, MD - Dia Vikas Capital Pvt Ltd,

Ø MFI borrower accounts of 26.7 million is 1.5 times of RRB borrower Accounts

Ø 11.6% of portfolio and 14.3% borrower accounts are serviced by not for profit MFIs with a potential to grow and provide financial inclusion services.

Ø MFIs account for 26% of all small borrower accounts (<>

Ø MFIs account for 40% of all micro borrower accounts (

Ø MFI portfolio (Rs 29,544 crore) is 41.2% of all small borrower accounts portfolio of scheduled banks, 26.7% of RRB portfolio and 19.5% of DCCB portfolio.

Ø Surely it is small if compared to total banking system (1% of banks’ loan portfolio) but it is significant in terms of number of lives it impacts (over 100 million poor).

Ø In addition after a decade of experience and innovation it is poised to grow many folds if allowed.

Ø MFIs provide near door step delivery efficiently. The Indian MFIs are the most efficient institutions in the world. The typical MFI’s operating cost is 14.3% which is much lower than the global average of 20%.

Ø The RRBs which service the clients at 5.4% costs have an average loan size of Rs 43,600 which is almost 6 times the average loan size of Indian MFIs.

Ø The MFI cost of funds with most (70.3%) of their funds coming from Banks is in the range of 11 to 16%.This makes it very difficult to service a micro loan at an interest rate of 24% when compared to interest rates of - 36% for credit cards, 60-120% charged by money lenders and 30-50% real cost of small borrower accounts in Banks.

Ø Only 6 Top MFIs earn ROA of >5%; rest are just about sustainable.

Ø These top MFIs have the highest exposure from leading commercial banks. This has led to high geographical concentration risk for Bank Portfolio and skewed supply led growth in few regions, rather than a balanced regional growth.

Ø For every large erring MFI there are many socially focussed MFIs struggling for funding with no access to subsidy and working in remote areas with poor people who have had no experience of dealing with banking institutions.

I do hope that the Finance Minister will prevail upon to safeguard not only the Microfinance sector but also millions of unorganised poor families, benefitting from the services provided by the sector.

India Reality: Bengal - Option or Choice

India Reality: Bengal - Option or Choice: "The battle for Bengal is on. The intellectual Buddhadeb vs the feisty Mamata. If the early trends are anything to go by, Mamata will lead h..."

Bengal - Option or Choice

The battle for Bengal is on. The intellectual Buddhadeb vs the feisty Mamata. If the early trends are anything to go by, Mamata will lead her coalition to power bringing the Left Front's 34 years of governance to an end.

The only common ground that both these leaders share is arrogance. Before becoming Chief Minister, Buddhadeb babu was an arrogant minister in Jyoti Basu's cabinet. Mamata is not only arrogant but is outright rude more often than not. If elected to power, Mamata should not mistake the verdict as people's choice. It will be more out of disgust and apathy against the ruling Left Front government than a choice. The mandate given to her will have no upheaval expectations, as the people of Bengal has somewhat ensconced themselves with the thought of what can be worse.

On the other hand, the Indian National Congress, whilst creating all the hullabaloo should remember that they are only to be blamed for the sorry state that they are in. In the last 34 years, they have not been able to gather ground to create a strong opposition. The central leadership of the party did neither invest in human resource nor in financial resource to resurrect the party in Bengal. With Mr. Dasmunsi not around to manage the party in Bengal and Pranab babu too occupied with matters of national importance, it is left to the likes of Manas Bhuiya and Deepa Dasmunsi to create a strong Congress. Forgetting that the Congress at this juncture needs to play a second fiddle to Trinamool Congress, Deepa Dasmunsi is quite vociferous in her diatribes against Mamata, which even Mr. Dasmunsi at best avoided.

So with Congress almost a non-entity and BJP a no-goer, the people of Bengal is stuck between the Devil and the Deep Blue Sea. In the last eleven years, Buddhadeb has not been able to win confidence of people in regard to economic development. Be it Singur or Nandigram or for that matter the projects in the electronic city, Buddhadeb has taken a heavy beating when it came to industrialisation and job-creation. It will be noteworthy to see what Mamata outlines in her manifesto regarding job opportunities and job creations. Having forced the present government to shelve Singur and Nandigram, Mamata will find it extremely difficult to industrialise the state.

Whatever is the outcome of the assembly elections, people of Bengal is worried. The fear of blood-bath looms large and so does the fear of anarchy.

Picture source: Google Images