| If I recall correctly it was about two and a half years ago that I received an email from Arabinda Sinha, an Indian based in the US, detailing his vision of setting up an NGO in West Bengal which would work in the area of micro finance and asking me to join them in an advisory capacity. Others recall Sinha's story of setting up an organisation in his grandmother's name; his grandmother who had apparently brought him up through financially difficult times.
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| I declined then, as I was sceptical of NRIs wanting to do their "bit" for their country, wary of people with non-finance backgrounds jumping on to the micro-finance bandwagon and of course a personal inability to handle NGO type functioning "" that too remote-controlled out of the US. Last but not least my completely non- parochial appraisal of the Bengali's business acumen.
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| In order to compensate for my saying no, I recall I had replied to Sinha's mail with contact numbers and email addresses of persons working in the area of micro-finance who I had thought may be helpful for him to be in touch with.
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But this article is more than an admission of personal prejudices. It is about what commitment and single-minded focus can achieve in India today or even in West Bengal. Sarala Women Welfare Society, the NGO that Sinha and his five other Indian friends from the US set up, has, as of end September, already disbursed over Rs 4.5 crore to nearly 8,500 borrowers through five branches in Howrah district.
SARALA WOMEN WELFARE SOCIETY
30th September, 2007 | | | INR | | USD | | No of members | | 9,926 | | | No of borrowers | | 8,578 | | | No of groups | | 466 | | | No of branches | | 5 | | | No of staff | | 30 | | | Loan disbursed | 45,012,000 | | 1,125,000 | Loan outstanding
including service charge | 22,590,000 | | 565,000 | | Sarala's loan liability | 15,501,000 | | 388,000 | | Overdue loan | | - Nil - | | | Recovery rate | | 100% | |
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| An initial funding of $37,500 from the founders of Sarala, topped up by grants from SIDBI and ASA, and loans from SIDBI, ICICI Bank and FWWB, and technical assistance from ASA of Bangladesh, has enabled Sarala to reach its current size. Plans are on to first transform it into an NBFC from the current NGO status and infuse equity of another $250,000 in the current fiscal and thrice that in the next.
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| Sarala's intended area of operations is Greater Kolkata and other parts of West Bengal, Jharkhand, Bihar, Chhattisgarh, Orissa and North-East India. An ASA replication model, Sarala will benefit from ASA's written manual approach and low cost, decentralised, simplified accounting and MIS system. The growth plan is to achieve 150 branches in five years with clients numbering 240,000. The role models are clearly the fast-growing SKS Microfinance, Spandana, Share and Bandhan.
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| Despite ambitious targets, the going may not be as smooth for Sarala in future. Primarily because Sinha is the main force behind Sarala and apparently it is his networking skills that have helped the organisation reach out to almost every financial institution, venture fund, commercial bank that is working in the area of micro-finance. But Sinha may be constrained by his age and he may find it tough to co-opt or recruit a second line to match his vision and stamina.
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| If the micro-finance grapevine is to be believed, ASA is considering setting up operations in India directly in addition to its presence through micro-finance companies like Bandhan or Sarala. While Bandhan may have outgrown ASA's handholding (with 400 branches and loan outstanding of over Rs 200 crore as of end September), organisations like Sarala may feel the change if ASA becomes a competitor.
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| While just a few years ago much of the micro-finance action was in the South, concentrated most in Andhra Pradesh, many new micro finance companies have now identified the East as being the most underserved. As a result, both existing large MFIs as well as start-ups are targeting Kolkata and its surrounding areas as well as other eastern and north-eastern states. While there may be no dearth of people wanting unsecured loans in India and the market may seem without limit, in reality companies operating in Kolkata are already finding operational territories to be an issue. |
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