MHFC nominated for Financial Times 'Boldness in Business' Award

The beginning of this year has come with fantastic news for MHFC. We were recently given a 5 star impact rating by the world’s leading impact rating agency, GIIRS. Further, we had a full page story on our work and processes along with a customer story in the world’s leading business newspaper - the Financial Times, London.

We are now happy to share some more lovely news! MHFC has been nominated for the prestigious FT Arcelor Mittal ‘Boldness in Business’ award - which will be given out in London on March 19, 2015 (past nominees for the award include amazing companies like Google, Uber and Twitter).

While these are fantastic external recognitions and a strong endorsement of the work being done at MHFC in financial inclusion, we believe that even more exciting and promising this year is that on the supply side, we see several projects coming up - both in the private and public sector - which would mean increased activity at MHFC and greater opportunities to help many more financially excluded families get a home of their own.

A short cut to financial inclusion

The Central Governments ambitious plan for financial inclusion under the Sampooorn Vittiya Samaveshan (SVS) targets the inclusion of 100 million unbanked households. Is this achievable with the present banking network and mindset? Or is there a short cut?

Consider this. In the 67 years of independence despite the best efforts of the Reserve Bank through regulation, persuasion and coercion, banks have managed to penetrate barely 40% of all households. Even where they have supposedly opened bank accounts a very significant number of the so called “no frills accounts”, have remained dormant, with customers finding no sense in operating these accounts due to lack of access, benefits and products.  It is time to realize and accept that banks have neither the will nor the ability or indeed the technology to achieve the financial inclusion mission. Policy makers need to understand and acknowledge that the current banking infrastructure may not be the most optimum way to reach the unbanked. The brick and mortar model that banks employ is slow and expensive.

Cell phone companies have managed to accomplish a 60% penetration of the total population in one third the time that the banks took, through a mindset that values customers, technology that is cheap to deploy and a product that customers want. It is important to note here that the documentation that is required to get a cell phone account is not a lot different from the set that is prescribed by the RBI for the opening of no frills accounts. They already have developed capacity to handle micro payments, money transfers, and have the data to create sensible credit products that can be delivered cheaply. Most importantly, customers are very used to going to the nearest recharge outlet to load up their phones with airtime.

The communication architecture, the network and technology that these companies have put in place can easily be adapted to achieve the Governments financial inclusion targets. What it only requires is a change in the mindset of policy makers that banks are not the exclusive or effective option for delivery of financial products. Why not consider using the more efficient and effective infrastructure that is already in place.

In practical terms many prepaid customers already consider their airtime as storage of value. A few more sophisticated customers already use it as a payment mechanism. The track records of cell phone usage and bill payment cycles can form an excellent proxy for structuring credit products. Banks starting afresh with new customers will legitimately have concerns about extending credit to newly acquired customers.

Policy makers should seriously consider allowing cell phone companies to either act as full fledged banks. in the alternative allow them to operate as front end with customers, with banks providing the back end processing and balance sheet support.

The Government and the RBI may have the greatest opportunity here to accomplish a policy goal by simply marrying the credit, capital and balance sheet strengths of banks with the marketing, distribution and technology capabilities of cell phone companies.

World Social Business Day - Pics

Worldwide Social Business Day

Summary of our discussion on 24 June 2010 here

World Social Business Day

For the last year and a half, we have been involved in setting up Micro Housing Finance Corporation (www.mhfcindia.com) - 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!