On Wednesday, 5th August '09 we had a session on Microfinance by Mr. Ramesh Ramanathan, Chairman and Founder of Janaagraha and Janalakshmi. Mr. Ramanathan walked us through the various technicalities, challenges and the business process of Microfinance.
He gave us an insight into the history of Microfinance whose pioneer was Md. Yunus who is aptly called as the "Father of Microfinance".
1. Access to credit
2. Saving and contingency
3. Wealth Creation
And this led to telling us about how Microfinance institutions fall into the Non-Profit Financial Institutions (NBFI) whose main goal is to give the lower income group Access to Credit. He gave us the basic information about the processes involved in the working of NBFIs including the setting up of technology base to administer the same. He told us about the challenges faced in the procurement of cutting edge technologies for core banking solutions for the basic operation of these institutions.
Mr. Ramanathan then went on to explain to us the novel method of Biometric solutions used by his organization Janalakshmi to track customers for credit purposes. He explained to us the use of smart cards to compete with the challenges faced by the institution with respect to maintaining proof of identity.
We were also briefed about the challenges faced by the institutions in the following areas:
1. Institutional Design
2. Cost of Creation
3. Scale
4. Risks
The audience then had a very interesting discussion with him and brought out different perspectives to the same. The discussions were about modes of operation of the microfinance institutions, challenges faced, microfinance and main stream banking regulatory problems and ethical issues while handling these institutions and finally Mr. Ramanathan told us his story of how Janaagraha and Janalakshmi was born!
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