Lokesh Singh, CEO of Sanchetna Microfinance responds to Devindar Sharma’s article on Microfinance
Dear Mr. Sharma,
Though as much I like the sympathy that you have for the poor of the country I could not disagree more with you. The article that you have been writing show the shallow knowledge that you have about the entire dynamics of poverty and how to get rid of it.
Though you have been more than vitriolic with your criticism for the entire system which has evolved because of the market failure to reach the poor but to my surprise you do not offer any alternative system to this. By just focusing on interest rate (which I think is important factor but definitely not the most important) you are missing the woods for the jungle.
It is very easy to criticize but had you been little more objective with your observation then you would have realized that the cost of funds to the MFIs itself comes to 13 – 14% plus if you add the cost of conducting meeting with the borrowers every week in the villages and the entire systems part to that the combined cost would be at least 22%.In such a scenario it will take either some ultra-rich guy to dole out money from his/her pocket to get people out of poverty or some body who has no sense about doing business. I do not know which one you would prefer but I think none of this will be long lasting solutions to the problem at hand.
Please mind this that I in no way defending some dark horses which might be involved in profiteering but you can not paint everyone with the same brush. Please learn how to distinguish between what you perceive to be bad and what is bad.
In case if you want to discuss this objectively rather than going after winning brownie points you can always discuss this with me.
Lokesh – lokesh.singh(at the rate)sanchetnaindia(dot)com
Devinder Sharma can be contacted at hunger55(at the rate)gmail(dot)com
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