Agents have spread their tentacles far and wide across the country, and they are breeding resentment against MFIs. The MFIN-NCAER study acknowledges the presence of these middlemen, but the report has a number of loose ends
As the Ministry of Finance and the RBI (Reserve Bank of India) are trying to solve the Indian microfinance regulatory puzzle, there is further evidence on the use of agents in Indian microfinance. The question to be asked then is whether and how the proposed Microfinance Bill will prevent use of such middlemen in the future.
Some people have brought up the aspect of the notorious broker-agents driving Indian microfinance to scale. However, in all these cases, their (loud) voices seem to have fallen on deaf years. Many stakeholders including investors, bankers, regulators and others have not even taken cognisance of this (serious) agent phenomenon that is spreading fast on the ground, even as many MFIs (microfinance institutions) continue to describe any such aspect that is brought up just as an aberration.
They are, however, sadly mistaken, as agents seem to be turning more the rule than the exception, based on what I have been observing at the groundi level since 2005/6. And what is very interesting is the fact that we now have more evidence with regard to the presence of agents from the MFIN (Microfinance Institutions Network)-sponsored NCAER (National Council for Applied Economic Research) conducted small-borrowing study, released by Union Minister for Rural Development Jairam Ramesh at Hotel Claridges (New Delhi) on 10th October.
The MFIN-sponsored study indeed has some serious problems and suffers a number of limitationsii . However, these limitations (of narrow and inappropriate sampling and other aspects) notwithstanding, the report clearly notes that: “Agents’ role is most predominant in (the) Hyderabad cluster and much larger for MFIs and SHGs (self-help groups).
“Agents clearly play a larger role in the Hyderabad cluster than elsewhere, and in this cluster, they seem to be much more involved in MFI activity than any other activity. This could be one of the reasons for higher borrowing and, at the same time, resentment against MFIs in Hyderabad. ‘Intermediation’ by agents is negligible in the case of informal sources of loans. The role of agents and brokers is observed to be significant in Hyderabad.”iii
I reproduce data from the MFIN-sponsored NCAER study below:
ia) Proposed Microfinance Bill has to look at the centre leader as a microfinance agent (http://moneylife.in/article/proposed-microfinance-bill-has-to-look-at-the-re-leader-as-a-microfinance-agent/20019.html); b) How and why did microfinance agents become a part of the Indian microfinance business?”, (http://moneylife.in/article/how-and-why-did-microfinance-agents-become-a-part-of-the-indian-microfinance-business/19301.html); and c) Implementation safeguards against notorious agents are an imperative for the proposed microfinance bill”, (http://moneylife.in/article/implementation-safeguards-against-notorious-agents-are-an-imperative-for-the-proposed-microfinance-bill/19017.html)
iia) Microfinance institutions not the answer for poverty alleviation, says Jairam Ramesh (http://www.moneylife.in/article/microfinance-institutions-not-the-answer-for-poverty-alleviation-says-jairam-ramesh/20513.html); and b) The RBI and the Ministry of Finance should view the MFIN-sponsored NCAER study on small borrowings with a great deal of caution (http://www.moneylife.in/article/the-rbi-and-the-ministry-of-finance-should-view-the-mfin-sponsored-ncaer-study-on-small-borrowings-with-a-great-deal-of-caution/20566.html)
iiiQuoted from “Assessing the Effectiveness Of Small Borrowing In India by Rajesh Shukla, Prabir Kumar Ghosh and Rachna Sharmar (2011) (Sponsored by Microfinance Institution Network (MFIN)
ivQuoted from “Assessing the Effectiveness Of Small Borrowing In India by Rajesh Shukla, Prabir Kumar Ghosh and Rachna Sharmar (2011) (Sponsored by Microfinance Institution Network (MFIN)
vIs It Micro Usury? By Lola Nayar with Madhavi Tata from Hyderabad and Dola Mitra from Calcutta and Siliguri (http://www.outlookindia.com/article.aspx?267394)
viQuoted from “Microfinance in India State of the Sector Report”, by Srinivasan N, (2010) Sage Publications
viiQuoted from http://www.microfinancefocus.com/content/big-league-microfinance-institutions-using-group-leaders-agents
viiiQuoted from Microfinance in Crisis: the Case of the Hidden City, 25th Jan 2011 -http://www.microfinancefocus.com/content/microfinance-crisis-case-hidden-city.
(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).
Passing an interim order, the telecom tribunal directed Bharti Airtel, the country’s largest telecom operator, to pay 50% of the Rs50 crore penalty imposed by the DoT within a period of two weeks. The penalty relates to alleged violation of licence terms and conditions by the private operator for issuing bulk mobile connections
New Delhi: The Telecom Disputes and Appellate Tribunal (TDSAT) today directed Bharti Airtel to pay 50% of the Rs50 crore penalty imposed by the telecom ministry in the matter of alleged violation of licence terms and conditions by the private operator for issuing bulk mobile connections, reports PTI.
Passing an interim order, the tribunal directed the country’s largest telecom operator to pay 50% of the Rs50 crore penalty imposed by the Department of Telecommunications (DoT) within a period of two weeks.
The TDSAT said it would be in the interest of justice to direct the company to pay the sum, but underlined that it would not prejudice the hearing of a plea filed by Bharti Airtel against imposition of the penalty.
The tribunal’s interim order came over a petition filed by Bharti Airtel challenging the penalty.
On 19th September, the DoT had imposed a penalty on the telecom operator after it found that the company had issued 1,847 bulk mobile connections to Falcon Business Resource Pvt Ltd and 741 to Galaxy Rent, violating the terms and conditions of its licence agreement.
However, the penalty was stayed by the TDSAT on 5th October till its further order on the plea of Airtel.
“In the meantime, the respondent (DoT) may not take coercive steps to implement the impugned order dated 19 September 2011,” TDSAT had said while issuing the notice to the DoT.
During the proceedings, DoT had submitted before the tribunal that by issuing SIM cards to the companies, which later transferred them to NRIs and foreigners, Airtel breached the security conditions of the licences.
It further submitted that the government suffered a loss in Adjusted Gross Revenue (AGR).
However, the charge was opposed by Bharti, which said the right AGR was paid by the company to the government.
The company had further said that the two firm selling SIM cards were actually franchisees and were distributing them on behalf of Airtel.
Motilal Oswal Financial Services has reported an EPS of Rs2.41 for the September 2011 quarter compared to Rs2.30 for the same quarter last fiscal
Motilal Oswal Financial Services Ltd has announced the financial results for the period ended 30 September 2011.
The company has reported net sales of Rs109.82 crore for the quarter ended 30 September 2011 compared to Rs151.03 crore for the same quarter corresponding year.
During the same period, the net profit stood at Rs34.95 crore against Rs33.11 crore.
The company has reported an EPS of Rs2.41 for the September 2011 quarter compared to Rs2.30 for the same quarter last fiscal.
In the early morning, the stock was trading at around Rs90 per share on the Bombay Stock Exchange, 2.70% down from the previous close.