Sunday, June 20, 2010

World Social Business Day

For the last year and a half, we have been involved in setting up Micro Housing Finance Corporation ( - a company that provides micro-mortgages to the urban lower income group especially those from the informal sector. Today we have given home loans to about 250 customers (amounting to about Rs. 10cr) from diverse professions - vegetable vendors, taxi-drivers, electricians, plumbers, office-peons, house maids, etc.

Though our product is quite different from that of microfinance, the underlying principle is the same – just because poor people do not have formal documentation, does not mean they are not credit-worthy. Prof Muhammad Yunus has been the father of microfinance – both intellectually and as a practitioner – he and his team gave the first few microfinance loans in Bangladesh over three decades ago. Today the ‘Grameen Bank’ has helped millions around the world rise out of poverty. More recently Prof Yunus has introduced a new concept of ‘Social Business’ – a for-profit business aimed at solving a social problem. It does not pay dividends or returns to its investors - the investors only get back their principal investment. He often says ‘The Charity dollar has only one life, the social business dollar has infinite lives’. He believes this is really the way forward in attracting more capital to solve social problems.

The Grameen Creative Lab has decided to celebrate Prof Yunus’ birthday – 28th June 2010, by doing an around-the-world digital conference to create more awareness about the concept of Social Business. The digital event will aim at the following

- Celebrating the Birthday of one of the most honorable persons worldwide

- Using the momentum of the publication of Prof. Yunus‘ new book “Building Social Business“ to spread the idea of social business around the world and initiate concrete action

- Worldwide consecutive celebrations of Prof. Yunus‘ 70th Birthday according to time zones

- Connection of and reporting on celebrations through internet and social media

- Social Business ideas will be given as birthday present to Prof. Yunus

- Connecting the international hubs of Social Business

- Invite people all over the world to participate and involve themselves

Prof Yunus has been a great source of inspiration for all of us at MHFC, and so we have volunteered to organize the Mumbai chapter of this digital event – this would involve a brainstorming session (not more than a couple of hours) on ideas for new social businesses which would then be compiled into a short presentation. This would then be sent to the Grameen Creative Lab on 28th June 2010.

I understand this is very short notice and everyone is really busy. It will be difficult to get everyone at the same place at the same time, but I think it will be great if we can spare a couple of hours some time next week to sit down and brainstorm on social problems and their potential solutions.

For your reference I am attaching some material on two Social Business pilots that are being implemented across the world (BASF Grameen – Bed nets and micronutrients to decrease the incidence of malaria and malnutrition in kids in Bangladesh, Grameen-Otto – a textile manufacturing company to provide employment to the poor and improve their living conditions). Social Business Pilots

Please let me know if you are interested in joining us for this event. We are still in the process of working out the logistics, and will let you know the date, time and the venue as soon as possible. In the meanwhile it would be great if you can start thinking on the lines of ‘The social problem I would like to solve’, ‘My idea for the next social business company’, or ‘Why Social Business inspires me’ and send your ideas across to us – this will help us have a more productive session when we meet.

Please feel free to forward this to your friends/colleagues – the more the merrier!

Saturday, June 12, 2010

C ben

Last week we held a credit camp for the Saath customers of the DBS "Umang" project in Ahmedabad (almost 50% or about 150 bookings have been reserved for Saath customers who are typically from the LIG informal sector). It was inspiring for us to meet and listen to their stories - in terms of how they have struggled to make a living despite very difficult conditions, and now that they feel fairly settled monetarily, they would like to take the next step in buying a permanent home. The customers we met ranged from a family of tailors, to vegetable vendors, to maalis and waiters. But 1 couple stood out. The husband was fairly quiet, and the one who did all the talking was the wife - "C" ben. She worked at an NGO - for over 15 years - earning about Rs 5000 per month. She also gave tuitions to slum children for 2 hours every day at a programme organised by IIM Ahmedabad - earning another Rs 2000 per month. Her husband was a driver - working for about 16 years for 1 employer - and was earning about Rs 6000 per month. Total family income was about 13,000. They had made a booking for the bigger 2 RK flat (which cost about Rs 6 lakhs) and sought a loan from MHFC of about Rs 5.5 lakhs. While in any case this was not a possible loan from MHFC as we require a 20% client margin (1.2 lakhs), in any case the EMI (approx 7,000) would be unaffordable for the family from our point of view. We advised that we could not support her request, but would happily support if they bought the smaller 1 RK flat (which cost about Rs 3.5 lakhs). Initially, they were not very pleased and we had a long discussion on the affordability. But eventually she also realised that buying the larger flat would place a huge financial pressure on the family. Finally, she agreed to switch to the smaller flat and take a smaller loan of approx Rs 3 lakhs and pay an EMI of approx Rs 4,000 - but not without trying to negotiate for everything - the down payment required, the loan tenor, the pricing !

Wednesday, June 9, 2010

Growth addiction

The month of May saw major events at MHFC. Our first customer was one year old, and had successfully repaid 12 installments on time. Also for the first time ever we sanctioned 50 new customers in a month. We celebrated both events, and have set our sights on a target of 100 new customers for next month.
While we could easily get addicted to the growth, it is important not to lose sight of the commitment of our customers that ensures the quality of our portfolio and our ability to help many more....