Citizens' Issues
Anna Hazare calls on youth to raise the Indian flag in the fight against corruption

The Gandhian, who is leading the civil society movement for a strong legislation against corruption, announces protests to resume on 11th August

Reiterating like a chorus between a popular song, "Sarkarki niyat acchi nahin" (government's intention is not good), an electrified audience of nearly 4,000 people, most of them youngsters, cheered Anna Hazare with repeated applause at the 4th Prakash Kardaley Memorial lecture, organised at the Balgandharva Rang Mandir in Pune on Friday.

Pune scripted a historic chapter in the spirit of citizens' involvement in Anna's movement and there was a record crowd at the prestigious public auditorium.

Dr Kiran Bedi, the main speaker on the occasion, delivered an address on the subject, 'Is the government afraid of a people's movement?'. She informed the gathering about the aspects of the draft Lokpal Bill of the government as compared with the formidable Jan Lokpal Bill scripted by the civil society members. Her crisp and incisive Power Point presentation provided bullet-to-bullet comparisons. (Log on to or for details of the presentation.)

Ms Bedi said, "We already have two bodies-the Supreme Court and the Election Commission which is out of the reins of the government because of which they have been performing effectively. Through the Jan Lokpal Bill, we are only saying that make the systems independent and not dependent. However, in order to protect the corrupt in the legislature and bureaucracy, the government wants to hold the reins of the Lokpal Bill."

Describing the background in which the bill was prepared, Ms Bedi said, "India signed the UN declaration against corruption after five years of deliberating on it and do you know the only country who has not signed it yet? It is Somalia!"

She said, "The Jan Lokpal Bill is the only bill drafted through public consultations and interaction. It is for the benefit of the aam aadmi while the Lokpal Bill drafted by the government is a 'dead' one as Anna has pointed out."

Anna Hazare said that the Jan Lokpal Bill would be the only effective legislation against corruption which has denied the common man his right to a dignified life. "I go around the country spreading the message of a strong Lokpal Bill because I have faith in it. Every investigative agency in the country is under the government which scuttles every investigation and lets the corrupt go scot-free. Thanks to the media which has played an important role in exposing the magnitude of corruption in the country, citizens are informed. For the first time ever, television cameras focused on our agitation at Jantar Mantar for a full 100 hours and this led to instant, nationwide support."

Urging the youngsters to keep up the momentum, Mr Hazare said, "Anywhere in the world, the power of the youth is supreme. Revolutions have always been fought by youngsters. We won our independence in 1947, but that was not real freedom. In the lust for power and money, our netas have forgotten the sacrifices made by Bhagat Singh and other great freedom-fighters for our freedom."

Describing late Prakash Kardaley as his guru, Mr Hazare said, "The seed of the RTI revolution was sowed in 1995. We campaigned for 10 years to get the Act implemented, which came only after I agitated. Kardaley used to burn the midnight oil, drafting letters to the government and guiding us on how to go about making a strong RTI Act."

Ms Bedi also said that "if there were more crusading editors like Kardaley, a strong Lokpal Bill would have been implemented faster through large-scale dissemination of information."

Mr Hazare asked youngsters to shine in their personal and professional lives, but not to forget the service to the nation. He announced the resumption of protests on 11th August and suggested: "From 11th August, carry the national flag on your shoulders and take out prabhat pheras (morning marches) at 6.30am, and in the evening conduct candle-light processions. This would help to build a strong mass movement towards implementation of a strong Lokpal Bill to eradicate corruption."

Ms Bedi urged the people to spread the word about the features of the Jan Lokpal Bill through facebook, twitter and on web sites.

That Anna has become an icon for youngsters was evident as the youngsters waited patiently for him to emerge from an interaction with the media and then cheered him loudly with slogans of 'Vande Mataram' and 'Inquilab Zindabad'.

(Vinita Deshmukh is a senior editor, author and convener of Pune Metro Jagruti Abhiyaan. She can be reached at [email protected].)



Rajkumar Singh

4 years ago

Team Anna is going to do the same thing, which the other politicians are doing it!

The public will not have a SAY in the election and selection of the candidates in his regime also.

We are just transferring our power from one Team to another, and continue living the life of commenting for and against each other, for self-interest only, and remain proudly disunited!

I am sure others will also agree to this bitter truth, but our ego rules over it, to start a new development of like and dislike minded people!

sumit kumar

5 years ago

vande mataram

saideswar rao mittapalli

5 years ago

I am an Indian
Anna Hazare also Indian
are you Indian or Not , If yes Raise the hand and slogan Jaiho Hazare Who is the oldest man for younger indian

saideswar rao mittapalli

5 years ago

every indinan should convey their genue support to Anna's movement for currupt less india and who is real fighter on half of indians

sumit kumar

5 years ago

anna go and fight against corruption.

saideswar rao mittapalli

5 years ago

i am appreciate to anna hazare declare war against corruption india and the same time I feel who is Next Generation Gandhi to the nation and I shall support to him heatfully and pray the god for long live of hazare.


5 years ago

Cheers! Salutation to one and all contributing for the National cause and particularly for the well being of the ever ignored AAM AADMI in the country.

The present situation in the country is such that I am constrained to express it in the following manner.

Darwin propounded the concept which proclaimed that the fittest only can survive, may it be plant or animal and when weighed on the scale of scientific reasoning, this appears to be significantly true and universally holding fast at large.
Should I elaborate this concept in terms of “struggle for existence” it will not be untrue in the wake of the scenario prevailing in country presently. Furthering this could be self expressed in the form and state of affairs, encountered by the inmates of society day to day.
The Human civilization evolved through a continuous process of reformation and achieving excellence remained centre of the objective. While learning about the theory of evolution one comes across a statement given by some eminent researcher – the goal of evolution is not human. Then what? The level of intelligence & excellence acquired by the human beings should not be mistaken to be the ultimate perfection or goal achieved. It will not be out of place to state that in the quest for excellence and achievements, the human values are rather lost somewhere.
The all time great leader Abraham Lincoln has wisely described the Govt. in a Democratic set up as- “The Govt. of the people, by the people and for the people”. But today what is observed and experienced distastefully is- “The Govt. is off the people, bye to the people and far from the people”. With this the scenario, the essence of Democracy is lost, no doubt.
And with this situation in the fore the quote of Fred Woodworth appears to a reasoned truth when, he states that ‘Government is an unnecessary evil. Human beings, when accustomed to taking responsibility for their own behavior, can cooperate on a basis of mutual trust and helpfulness’.
It left me wondering on many occasions, does the Democracy in India mean an environment in which everyone is free to behave as frantic as wished and is there no place for the law with natural justice? Does it mean to be license for the strong armed subjects to overrule the norms of the society and dogmatize the weak?
Does Democratic freedom achieved through struggle by leaders! Means a society where the law abiding inmates are scared of the Policing, they have a sense of insecurity and their effort is to avoid approaching for any kind of relief to the makers of law so as to avert undue harassment? If one approaches to a police station to lodge a complaint, firstly the station I/c will not be available and if at all he is there, it is next to impossible for the commoners to register a report. The station officer & his assistants will harass the complainant so much, as if he has committed a crime by coming to the police station that one would run away without writing a report. In the event of a road accident the on lookers would refrain from taking the wounded to hospital due to the fear of getting ‘trapped’ in the police enquiry, for exhibited mercy & humanity! Where the elections of the University students are sponsored by the Political parties and to inculcate among the youth what kind of leader ship?
Is it a true Democratic system in which competence is ignored and preferential treatment is extended on the basis of cast and creed? The voice of certain categories is promulgated while the stakes of others are ignored- why?
Whereas the Constitutional provisions are based upon the principle of equal opportunity to one and all, then why discrimination? The motive behind this practice is getting unveiled gradually and this practice would be revolted and challenged may be, after a gap of few generations when, Democracy in its true spirit will prevail in the country.
The above are a few instances quoted and this situation is not only explosive but also alarming for one and all and should be reckoned as eye opener for the days and generations to come. People grow, strive for something and …vanish from the scene but, the fact remains that the marks of their thoughts and actions remain and the legacy is to be accounted for inevitably by the upcoming generations. This holds true since the ages past- the era of Ram-Krishna, Buddha- ‘Tathagat’, may be Nero, great warrior Hitler or Gandhi, to quote a few who propounded their thoughts and policies when, the masses were mobilized. In the context of the Indian democratic set up the thought expressed by Jorge Luis Borqesthat that ‘Democracy is an abuse of statistics’ becomes pertinent and at times one feels ashamed of being a part of the system.
For the youth, it is a note of caution that their involvement does not end with heralding the slogans of 'Vande Mataram' and 'Inquilab Zindabad'. They will have to come out of their comfort zone for establishing the effect of the ambitious movement being launched by Anna Hazare. Today the youth very well knows and enjoys 14th of Feb as ‘valentine day’ but hardly know that on 14th Feb 1931 at Lahore the legendary freedom fighters “BHAGAT SINGH, RAJGURU & SUKHDEV” were hanged to death- for the cause of freedom!

Also, not only the youth but the experienced seniors of the society who have completed their first inning should also be encouraged to be an active part of the movement. This will not only give them a ‘reason’ and ‘sense of self prestige’ but also the movement would be benefited with the copious experience gathered by these ‘time over’ members of our society who, otherwise neither find place to sit nor adored by even their family members nor the Government have any concrete plans for their living.

The beginning as above is attempted with the hope that such writings might prove to be a guiding lamp for the upcoming generations and the "Aryan" Nation regains its glory as before globally. (shripad)


5 years ago

.Our beloved former president Sir Abdul Kalam once said that corrupt persons become successful in their works because they gets united and good (honest) people do nothing to stop them. If dirty people for the dirty purpose can be united so WHY CAN GOOD PEOPLE BE NOT UNITED FOR GOOD AIMS. and if good people are united no one can anyhow stand in front of them. And I am seeing that good people are now getting united. SO WE ARE SURE TO WIN. JAI HIND

Learning from experience: The key to drafting a good microfinance bill for India

There are critical lessons from the crises we have suffered over the past two decades, that the authorities will do well to learn from, as they plan the course ahead for the microfinance sector

The Union Ministry of Finance is in the process of formulating a bill to regulate micro-finance, which is why it is crucial to learn from past crises. While there have been several crises points in India with regard to corporate India, two crisis situations (the NBFC scam of the 1990s and the Satyam saga of 2009) are somewhat relevant to the micro-finance crisis of 2010 in Andhra Pradesh, at least from the manner in which they unfolded.

A comparative analysisi of these three situations is attempted here, which reveals that we in India, have learnt very little over the years from past crisis situations. I am sure that you would find this comparative analysis interesting and it should also provide valuable insights to regulators/supervisors dealing with such crises in the future. Most importantly, I believe that the lessons from these three crisis situations should be of immense value to the stakeholders involved in drafting the proposed micro-finance bill, as the essence of regulation is to prevent market/institutional failures.

So, let us look at the three crisis points on various parameters:

Crisis situation # 1: NBFC scam of the 1990s  

Legal form and regulation/supervision: The legal entities were different kinds of (for profit) non-bank finance companies (NBFCs) who promised the world to their depositors in terms of returns. Regulation and supervision, although mainly under the ambit of the Reserve Bank of India (RBI), was passive by most standards, as the NBFCs pretty much had a free run in terms of offering abnormal returns for depositors–precisely because they knew upfront that they were not going to refund the deposits to the people concerned.

Growth and competition: The growth was indeed explosive as more and more gullible people deposited money, lured by higher than normal returns. Competition made things worse, as the fight for market share to loot innocent people off their savings led to these NBFCs (especially, plantation companies) announcing outrageous schemes, offering whimsical returns to woo customers–some advertisements (example, like Anubhav Platations and some others) carried the caption, “Can you spot Rs36 lakhs in this advertisement?” . Without question, growth and competition brought their own problems and in many local settings, ‘crisis flash points’ were evident, not to the regulator, who was far away (both physically as well as operationally).

Group entities and non-transparent transactions:
Interestingly, this was among the first instances where group companies with complex institutional arrangements could be seen. Transfer of funds through non-transparent transactions was also evident. And much of this was controlled by the promoter and his/her confidantes, with significant support from the auditors.

Financing, governance, systems and operations: ‘Cheapii and unlimited public deposits and other forms of capital were the primary source of funds for these NBFCs, which had weak governance, poor MIS and very little internal controls. Risk management did not appear to be a part of their institutional systems. Ghost plantations and fraudulent transactions were the major phenomenon that caused institutional failure. In fact, the same plantations were sold to many investors–for example, I have personally seen what happened at places like Bodinayakanur (Tamil Nadu), where teak farms (in terms of same land titles and survey numbers) were sold to different clients in Mumbai and Delhi. Unscrupulous agents convinced people to deposit money and then, simply disappeared.

Target clients and impact of the crisis: A majority of the target clients were from middle-income and economically well-off classes. The loss of deposits wreaked havoc on clients who lost their valuable savings, which is a safety net for the rainy day. Many farmers who had sold their land to the concerned companies were affected in terms of not having received their entire sale consideration and of course, their land was already sold.  In institutional terms, the NBFCs became bankrupt and there was significant loss of faith in the NBFC (financial) system in civil society and much of that distrust continues today among the middle-income group.

Crisis situation # 2: The Satyam episode of 2009

About the legal form and regulation/supervision: The legal entities were mainly for-profit companies (Satyam and its related entities) engaged in providing a range of services, in the information technology sector, although the group companies were involved in unrelated businesses like real estate (Maytas). While regulation and supervision were the responsibility of the Registrar of Companies, in real terms it was minimal and perhaps limited to the verification of statutory filings and the like. For those companies in the group that were listed (like Satyam), the Securities and Exchange Board of India (SEBI) came in as the market regulator and again, the emphasis was on checklist compliance rather than real supervision.

Growth and competition: Indeed, competition for Satyam and its businesses were all along burgeoning and margins were perhaps being forced down. Satyam was also often getting caught in its own cycle of trying to catch up and keep pace with its three major IT competitors–in terms of quality, cost leadership, scale and service differentiation.

This perhaps also made the Satyam group look seriously at other unrelated activities like real estate, infrastructure, ambulance services, etc, through related companies like Maytas and others. The strong desire to diversify into various other businesses suggested that all was not well inside. Yet, the subtle signals were not picked up by the regulators, who were busy looking at awards and paper compliances and least concerned about the real operations.

Group entities and non-transparent transactions: The Satyam saga, took the related companies concept to a new height, where several group entities with complex relationships were seen transferring funds through non-transparent transactions on a regular basis. While there had been widespread speculation about the funds diversion, ironically, the cat was out of the bag when the promoter made a proposal to facilitate the funds transfer under the garb of diversification.

In fact, this incident led to the famous 2009 crisis caused by shareholder activism. As in the first situation, much of the happenings were directly controlled by the promoter, Ramalinga Raju, and one/two of his henchmen. Of course, the auditors and other stakeholders also appeared to have been involved.

Financing, governance, systems and operations: Shareholder investment and other liabilities were the major resources for Satyam, although operational surpluses were claimed to be significant. Despite the various corporate governance awards, the company and its group, in reality, had very poor governance and systems–as it became clear when the scam broke out.

This was the first large company in recent times to illustrate the fact that neither corporate governance awards (like the Golden Peacock award) nor the presence of a high-profile board symbolise (and/or ensure) good corporate governance in implementation. It is clear that MIS (including invoices and records) were fabricated, as proved later by the existence of fraudulent financial transactions undertaken by the company.

Controls also seemed to have been manipulated and a self-confession is what led the ‘cat’ out of the bag. Without question, ghost (sometimes, duplicate) invoices to boost operating results and a whole range of fraudulent and very complex transactions led to the collapse of the financial system in the Satyam group and this resulted in institutional failure eventually.

Target clients and impact of crisis:
Again, the majority of target clients were middle income to economically well-off classes and they were affected in two ways: (a) The loss of work wreaked havoc on hired (regular as well as surplus) employees who could not even meet their regular housing EMIs. (b) Shareholders were badly affected as the stock price of Satyam and related companies plummeted and significant wealth was lost. Most importantly, the Satyam fiasco dented corporate India like no other event and we are still recovering from the financial and image loss suffered. {break}

Crisis situation # 3: The Andhra Pradesh and Indian microfinance crisis of 2010

Legal form and regulation/supervision: In terms of legal form, microfinance institutions (MFIs) are mainly for-profit companies registered as NBFCs with the RBI. While there are other forms of MFIs including non-profits (societies, trusts and section 25 companies) and mutual benefit organisations (like different types of co-operatives), the large MFIs that dominate the Indian microfinance market are predominantly for-profit NBFCs.

RBI is the regulator/supervisor for the largest group of MFIs–NBFCs. In addition, SEBI is the market regulator when such NBFC MFIs get listed. In terms of regulation/supervision, it is basically statutory filings and compliance checklist type regulation for the NBFC MFIs. There is no serious on-site or for that matter, even off-site supervision. The other legal forms are supposedly regulated and supervised by the registrar of societies, trusts and cooperatives under various acts of the central and state governments–in reality, statutory filings and checklist compliances are predominantly relied on by these regulators.

Growth and competition: The NBFC MFIs experienced burgeoning growth, through the years, and especially from April 2008 onwards until the crisis in October 2010. During April 2008 to March 2010, six of the top 14 MFIs were headquartered in Andhra Pradesh and these MFIs increased their gross loan portfolio outstanding by a little over $2 billion and added almost 9.59 million clients. This is phenomenal growth by any standards.

Although a large part of India remained unsaturated as far as microfinance services were concerned, several pockets–especially urban and peri-urban areas of Andhra Pradesh, Tamil Nadu, Karnataka, West Bengal and Orissa–witnessed significant competition. And multiple/successive/ghost lending to same clients became the norm for growth. In other words, many MFIs aspired to be the fastest to disburse a loan. As a result, clients and joint liability groups (JLGs) were shared between MFIs and different MFIs serviced the same clients/JLGs on successive days. Surely, a recipe for long term disaster. Burgeoning growth also meant that frauds (ghost lending) increased, as admitted in the financial statements of several MFIs, mainly due to failure of credit delivery and other systems.

Group entities and non-transparent transactions: The MFIs made the related entities concept even more complex with the introduction of not-so-legal entities like Mutual Benefit Trusts (MBTs) a part of the overall group structure. MBTs were strange animals because they had no real law of legislature backing their existence, let alone their regulation and supervision–I am still puzzled as to how they can be called as a body corporate. There is also strong evidence of non-transparent relationships between these group companies as espoused by dilution and/or liquidation of MBT shares and the like.

There are also clear cases of significant related party transactions between group entities and promoters–like loans given by a large MFI to the promoter to buy shares in the same MFI (as per Professor Sriram’s article in the Economic and Political Weekly, June 2010). And further, there are so many legal entities involved in similar and related activities under the same group – an NBFC, a society, a section 25 company, several MBTs and even cooperatives. All of this makes the various institutional relationships within the group very complex and as a result, the microfinance operations are like a black box. And as with the other two crises, the promoter and his chosen colleagues ‘managed’ the various situations. What however needs to be ascertained is whether the auditors were involved in some of these non-transparent transactions.

Financing, governance, systems and operations: By and large, most MFIs had access to priority sector lending funds from commercial banks and soft loans from DFIs (like SIDBI) and donors–these were typically large, collateral free, soft interest loans with no personal guarantees. They were generally available on virtually unlimited scale during the years preceding the crisis. Many MFIs also had access to significant equity investments–both from secondary and primary markets. IPOs had indeed become the buzzword just before the crisis in October 2010. Last but not the least, some MFIs received grants from donors, which were subsequently capitalised, and often in the names of the promoters!

Further, despite corporate governance and transparency awards (from CGAPiii /others), many MFIs have weak governance as espoused by the happenings in recent years (2010 included). The tampering of board minutes, loans to founder promoters, irrational compensation to MFI promoters in many instances, and the unceremonious sacking of a CEO who led the concerned MFI through a spectacular IPO, are all aspects that raise serious questions about corporate governance.

Additionally, MIS is nascent and suffers from several weaknesses too—including lack of aggregation across geographies, clients and products. Internal controls and audits are also weak and risk management is almost absent and all of these make the microfinance industry a perfect setting for (potential) institutional failure.

It is now clear from several sources (including emails in circulation between MFIs) that centre leaders and local political leaders functioned as MFI agents and pushed loans to poor people, and used coercive methods and greening techniques to recover loans from them.  In fact, the audit statements of some MFIs themselves point to the presence of ghost and non-existent clients, misappropriation of client repayment collections and several other kinds of frauds, primarily caused by the decentralised MFI model that uses different kinds of broker agents. The current financial statements reconfirm the trends of ghost clients and the like.

It is now also apparent that some MFIs (perhaps even many) have engaged in not-so-desirable practices like multiple lendingiv , top-up loans, over-lending to the same clients and even creation of non-existent borrowers (sometimes to manage delinquency) and so on. In my opinion, the above illustrations of not-so-good governance, poor systems and non-transparent operations, along with client suicides, acted as one of the major triggers of the present microfinance crisis. Everything else, more or less, follows from these.

Target clients and impact of crisis: Most of the target clients were low-income and financially excluded people. The vulnerability of the clients and lack of sufficient livelihood opportunities for them are major factors in their getting exploited by the system. The multiple loans wreaked havoc in the lives of clients and the enhanced indebtedness was certainly a very important factor for the suicides.

The rural and urban low income (credit) economy is in shambles. Many of the low-income clients could lose access to finance in the long term as financial institutions may be reluctant to lend to them (anymore), especially in the wake of the various problems identified during the present crisis.

Shareholders of the only listed MFI took a beating as the stock price plummeted and continues to be volatile, causing significant erosion of investor wealth. Further, the private equity investors are left without an exit strategy and many of them, have actually suffered huge losses as they had bought the MFI shares at abnormally high valuations. And last but not the least, the reputation of microfinance, as a pro-poor industry is in tatters and its image has taken a severe beating. MFIs are no longer considered the torchbearers of development and poverty reduction.

Lessons from the crises

We can take some key lessons from this comparative analysis.

•    First, every potential crisis situation has early warning signals, which, if ignored, could snowball into a major one. I am sure that all of us recognise the ‘early flash points’ in the various crisis situations (including the incidents in 2009/2010 with regard to the microfinance crisis). That these did not catch the attention of the regulators/supervisors is something that needs to be noted very carefully.

•    Second, in almost all the three situations, the companies that were involved were once much-feted and had received (corporate governance) awards and significant (positive) media attention. Their fall from grace was however swift, post crisis. Clearly all that glitters is not gold and it is better to avoid face value interpretations of corporate governance based on the mere presence of a high-profile board. Five-star boards do not guarantee good corporate governance and let us get that clear!

•    Third, in almost all three crisis situations, the companies/entities involved were purported to be doing something exceptionally innovative but perhaps legally untenable. They were therefore probably given the long rope, which is often a double-edged sword that will ultimately cut.

•    Fourth, in all three cases, there was no (one) serious regulator, and the lack of coordination among them perhaps led to regulatory arbitrage, thereby resulting in institutional failure. Alternatively, it can be argued that ‘hands-off’ regulation is a common factor that aided the crisis and, from this, it is clear that any well meaning regulation must be coupled with commensurate and effective supervision on the ground. Otherwise, the ‘subjects’ of regulation (companies, NBFCs, MFIs, etc) will claim to be complying, even while actually engaging in not-so-good practices. Thus, a hands-off regulatory approach could lead an industry to a serious crisis and well-intentioned regulation is of no real use if not backed by strong and local level supervision, which clearly indicates a role for state governments. This is a serious aspect that needs to be appreciated and taken cognizance of by the concerned stakeholders drafting the microfinance bill.

•    Fifth, in each of these cases, it was extraneous events that led to the crisis erupting and getting large-scale public attention and only after that did the regulators come in!  Thus, all these three crises situations symbolise regulatory failurev to some extent and the fact of the matter is that these regulators/supervisors were perhaps caught unawares. Further, interestingly, the regulatory responses, in two casesvi , were stringent to the point of crippling the operations post crisis, indicating an extreme and complete swing of the regulatory pendulum. Balance in regulation is therefore critical, as otherwise regulation may strangulate the very industry that it is trying to serve. Therefore, regulation must also seek to enable and incentivise behaviors rather than merely prescribe rules and rely on compliance checklists, which suits most companies/entities.

•    Sixth, self-regulation does not and will not work on the ground and this is a clear message from all the crisis situations. In fact, ‘self-regulation’ could lead to the crisis deepening further, as the concerned stakeholders (or subjects of regulation) rarely have right incentives to comply.   

•    Seventh, multiple regulators can only lead to chaos on the ground and whenever you have several regulators, there is confusion and important aspects are not properly enforced–like corporate governance for private limited companies and/or NBFCs, where circulars exist but are not fully promulgated and/or implemented, thereby enabling the subjects of regulation to engage in not-so-good practices. The issue of related party transactions for NBFCs is a case in point. Please see the RBI circular on corporate governance (of May 2007 on the RBI web site), parts of which—including loans to directors—have been kept in abeyance.

•    Eighth, regulation must first and foremost provide legitimacy to the industry and this legitimacy must be backed by certain non-negotiables and safeguards including minimum standards for governance, client protection, various systems (finance and accounting, internal controls, internal audit, human resources management and management information systems, etc), operations (lending and recovery aspects included) and the like. I hope that the proposed microfinance bill takes all of this into account.

At this point, I would like to reiterate that the Ministry of Finance, which is said to be drafting the proposed Microfinance Bill 2011, the Reserve Bank of India, which is said to be preparing detailed guidelines for the MFIs (based on the Malegam Committee Report) and the Planning Commission, which is said to be writing an approach paper to microfinance for the next (12th) plan period, should analyse and learn from these past and present crisis situations. Without question, we should not waste the lessons derived from these crisis situations after all...

iTo set the record straight, no offence is meant to anyone including regulators/MFIs/Companies/Other stakeholders and I am merely doing this analysis so that we analyse, learn and take sufficient precautions for the future. I recognise the hard task of regulation in a country like India and do sincerely appreciate the hard work done by the regulators but there is a critical need to learn lessons from the past in an objective manner and that is exactly what I am trying to do.

ii Cheap is low cost essentially as public deposits are the cheapest source of non-subsidized capital
iii A multi donor body which functions from The World Bank – CGAP Stands for The Consultative Group to Assist the Poor. I wish it were the Consultative Group to Alleviate Poverty.
iv This is yet to be examined seriously in terms of a national study but available evidence provides some support for the above assertions. The regulators and supervisors must order a neutral and objective study of the same
v To set the record straight, I recognize the hard task of regulation in a country like India and do sincerely appreciate the hard work done by the regulators but there is a critical need to learn lessons from the past in an objective manner and that is exactly what I am trying to do.
vi This is true of the RBI and State Government directions (in Tamilnadu) in the 1990s. The Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Ordinance, 2010 is another case in point as also its subsequent enactment as a Bill.

(The writer has over two decades of grassroots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural/urban development and urban poverty alleviation/governance. He has worked extensively in Asia, Africa, North America and Europe with a wide range of stakeholders, from the private sector and academia to governments.) 


Environment activist says unmonitored movement of sand barges is a security loophole government must plug

Sumaira Abdul Ali, who succeeded in getting a ban on sand dredging in Maharashtra last year, asks Union home ministry to check movement of barges

Almost a year after the Maharashtra government declared the dredging of sand as illegal, unregulated barges continue moving about unmonitored, often even docking at the city's ports. Now, noted environmental activist Sumaira Abdul Ali, whose efforts resulted in the ban, has written to the government to monitor these vessels as they cause a huge security loophole.

"In the wake of the most recent bomb blasts, I appeal to you to intervene to tighten the sea route and ensure that sand barges plying through Mumbai harbour be subjected to the strictest levels of security, including Customs checks, and that they should be registered by the Director General of Shipping along with appropriate permissions from the Mumbai Port Trust," Ms Ali has written in a letter to home minister P Chidambaram.

It is relevant to mention here that terrorists responsible for the serial attacks on The Taj Mahal Palace hotel, the Oberoi Trident and a some other prominent sites in November 2008 were found to have used boats to travel to Mumbai. "Security is not my cup of tea, but I do keep track of illegal sand dredging and smuggling," Ms Ali said. "All I am saying is these barges go unchecked when they are out in the sea, and we don't know what happens after they reach the docks. We don't know what happens there and what they are carrying when they reach the port."

"In my e-mail, dated 3rd December 2010, I requested tightening of the use of the still wide-open sea route by unregulated sand barges. While it is difficult to know the route any contraband can come by, it appears prudent to block unmonitored access to city ports," she says.

Ms Ali had faced several attacks during her struggle against the sand mafia. After she and a journalist accompanying her were attacked in Mahad, last year, she filed RTI applications to all the nodal agencies monitoring ship movements. In their replies, neither the Maharashtra Maritime Board (MMB), nor the Directorate-General of Shipping (DGS), neither the Port Trust nor the India Coast Guard said who was responsible for monitoring the movement of sand barges.

None of the agencies accepted responsibility and no records have been maintained about these barges. The DGS said that the MMB is responsible for licensing, regulating and monitoring of sand barges, while the maritime board said they had no role in monitoring the movement of sand barges. The MMB said they provided NoCs to the sand barges after the letters of approval came from the district collectorate.

The MMB gave a supplementary reply to Ms Ali a few months ago, saying that the regional port offices were to check the registration of these barges. Ms Ali opines that the contraband is routed through creeks in Raigad and Ratnagiri districts and then brought in through the harbour. When the barges go to sea and come back, they can dock at Navi Mumbai or Mumbai, without any more check, and then nobody can know what they are carrying or offloading.

However, her messages have not been acknowledged by the ministry to date.


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