The Hindu Business Line : AP micro finance model impresses London Mayor

These were some of the questions that were posed to Mr Ian Luder, Lord Mayor of the City of London, during his visit to Share Microfin woman loan clients at Muminpet in Medak district on Monday.

While the Mayor had no answer for the first question, he gestured upwards to the sky showing the sun replying that climate had a role in shaping the complexion of a person to the second.

Being the most ‘unlikely’ guest at a centre where the women clients of the Hyderabad-based company were meeting, Mr Luder attempted to know the nature of spending of the loans and the positive impact it made on the lives of the rural women and their families.

“Four years back, I took a loan of Rs 3,000 and purchased two goats. Now, I own three acres of agricultural land,” Ms Mangalamma, a wage labourer, who earns Rs 70 a day in agricultural season, told the Mayor in Telugu which was translated into English by Mr Udai Kumar, Managing Director, Share Microfin.

The Mayor enquired whether there was a bank in the village. “It is within one kilometre, but nobody there was willing to give a loan to us,” was the answer by Ms Lakshmi, who runs a grocery store.

Making a presentation on the operation of micro finance, Mr Udai Kumar said the company did not lose a ‘single rupee’ in the last 18 years due to the effective implementation of the programmes and the customised loans which were being offered. “The banks are not willing to give loans to these women. We focus on human relationships and extend finance to the 40-member groups in a phased manner,” he said.

When asked on the rate of interest, he said: “We are charging 23.6 per cent. The cost of funds is 14 per cent and operational costs are at 8 per cent.”

Later, speaking to Business Line, the Mayor said UK might replicate the microfinance model to take care of the financial needs of the poorer sections.

“The MFI model, as is being implemented in India, is quite impressive. In the UK too, there would be some situations where micro finance can be vital in some areas where poor people are living,” he added.

More Stories on : Credit Market | Andhra Pradesh | Rural Development

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