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We are pleased to publish interview with Pranay Bhargava who has recently co-authored a book on microfinance titled “Rajasthan Microfinance Report 2010”. He founded ORYZA Consulting Pvt. Ltd. in Rajasthan.
Pranay received his B. Tech (Mining Engineering) in 2002 from our institute. Pranay is a Chartered Financial Analyst and he earned his CFA® charter from CFA Institute, Virginia, USA. He did his MBA from Asian Institute of Management, Manila, Philippines in 2007.
We all must admire his determination to help poor in the state of Rajasthan. Pranay undertakes research studies and develops innovative models which are aimed at financial inclusion in Rajasthan.
Yogesh K. Upadhyaya from Chronicle talks to Pranay Bhargava about his mission to contribute to financial inclusion in Rajasthan with his research and innovation.
(Pranay Bhargava)
Q-1: Welcome Pranay, congratulations for publishing a book on microfinance
Thank you. I am pleased to share that this book was launched by Dr. C. Rangarajan, Chairman of Economic Advisory Council to Prime Minister. The book advocates policy changes at state level and targets policy makers, government functionaries, developmental agencies, multi-lateral organizations and microfinance institutions in Rajasthan. The book has been published by Center for Microfinance (Jaipur) whose executive director, Shri Jaipal Singh, is a co-author. There was a dire need of such a publication as it brings fore key trends, developments and happenings in the industry. No other publication in state does that. This book is not a news publication. It is product of extensive primary research and meticulous analysis of secondary data, enriched with varied experience of authors and supporting team.
The book presents current status of microfinance in Rajasthan, India. It encapsulates key developments and trends in microfinance sector. It delves deep into issues facing poverty alleviation initiatives in the state and concludes by making recommendation for various stakeholders and policy makers. The book starts by analyzing the current status of Self Help Group movement in state followed by analysis of burgeoning Microfinance Institutions in the State. An in-depth analysis of problems facing SHG – Bank linkage program and of credit demand-supply gap in state is captured thoroughly. The book also analyses the robustness of recent policy initiatives of Government in India. A concluding chapter makes recommendations that are needed to revamp and strengthen poverty alleviation policies in the state.
Q-2: Please explain to us the concept of microfinance.
Microfinance is provision of financial services to poor, who generally lack access to banks and formal financial institutions. Microfinance includes basic services like saving, credit, insurance, remittance etc.
Traditionally, banks have not provided financial services, such as loans, to clients with little or no cash income. The operational cost of processing loans of tiny size (that poor require) is huge as evaluation of poor borrowers, their repayment prospects and management of outstanding loans, collecting from delinquent borrowers, etc., has to be done in all cases. Going by cost-benefit analysis, there is a break-even point in providing loans or deposits below which banks lose money on each transaction they make. Poor people usually fall below that breakeven point. In addition, most poor people have few assets that can be secured by a bank as collateral. Because of these difficulties, when poor people borrow, they often rely on relatives or a local moneylender, whose interest rates can be very high. In Rajasthan, I have come across interest rates of local money lenders as high as 120% p.a. (compare this with what us ‘privileged’ people pay to banks – below 10% p.a.).
Given this context, various interventions have been experimented and implemented over last 3 decades in India towards financial inclusion and poverty eradication. Two models are most prevalent – First, ‘Self Help Group (SHG)’ model (also called community based microfinance) and second, ‘microfinance institution (MFI)’ model based on success of Grameen Bank in Bangladesh (for which M. Yunus was awarded Noble prize recently). India has been home to SHG based microfinance for over 1.5 decades now. MFI model came in much later but has been successful in overtaking SHG model, as far as volume of loans is concerned. Recent controversy in Andhra Pradesh may put a lid on MFI model of microfinance, thereby, making headway for SHG model to grow.
Q-3: You embarked on this unusual career after studying engineering.
This is true. This is path less traveled. Since college days, I had a desire to start on my own but wanted to learn as much as I can, before venturing out. At IT-BHU, I was convener of Technex, which, I believe is nothing short of an entrepreneurial attempt. After engineering, MBA and CFA, I co-founded a Growth capital fund at Ventureast (a Venture Capital firm managing 6 funds in Chennai & Hyderabad) that invested in micro & small enterprises in Chennai. This fund is up and running and is first of its kind in India.
I have always been passionate about doing ‘something big’ for under-privileged fellow countrymen. I couldn’t figure out ‘something big’ until I founded my own firm, ORYZA Consulting Private Limited. At Oryza, we do advanced research to develop innovative mechanisms to enhance financial inclusion (That’s where all my engineering, management and finance skills save me!). Our target clients include government, multilateral agencies, development institutions, think-tanks and NGOs, who hire us for research/ consulting. The beneficiaries of our work include poor in rural and urban Rajasthan. We hope to scale it up to other states in 3-5 years. I am in process of bringing in more professionals in team.
Q-4: Please describe your college days
What I am today is highly influenced by IT-BHU days. I had privilege of studying among one of most unique batches of times, Min 2002. It is hard to believe but we still exchange, on an average, 50 mails every day among the group. The bond that we developed at IT-BHU is, beyond doubt, un-breakable and deep-routed. Apart from that, I still remember my ragging well. And memories of frequenting Lanka at mid-night for a cup of tea on borrowed scooter/ petrol are vivid.
Pranay, it was nice talking to you.
Thank you. It is my privilege to share thoughts with fellow alums. I am grateful for this opportunity.
Pranay Bhargava can be contacted at:
Email: pranay.bhargava@oryza.in
Phone: +91 8890806000
Education of Pranay Bhargava
*B. Tech. (Mining Engineering) in 2002 from Institute of Technology, Banaras Hindu University, Varanasi, India.
*MBA (Finance) from Asian Institute of Management, Manila, Philippines in 2007.
*Chartered Financial Analyst (CFA®) from CFA Institute, Virginia, USA.
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* About Microfinance in Wikipedia
http://en.wikipedia.org/wiki/Microfinance
*Oryza Consultants Pvt. Ltd, Jaipur and New Delhi.
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* Center for Microfinance, Jaipur, Rajasthan
http://www.cmfraj.org/
Our Vision
“We strive for the timely availability of microfinance services on fair terms and with dignity to help people enhance their livelihood”
CmF believes that poor have the right to credit and other financial services like the other people. It is a challenge for all those who are working for/with poor to make microfinance services available to them on competitive terms.
About CmF
Centre for microfinance (CmF) is an autonomous organization registered under the Rajasthan Societies Act, 1958. It came into existence in 2005 in response to the need for an agency to guide the growth of microfinance and particularly, community-based microfinance in Rajasthan. CmF employs high quality professionals to provide a wide range of technical and other support services to mF players. Given its mandate the centre places value on networking and collaborations with stakeholders. CmF undertakes direct action only in gaps where players neither exist nor can be catalysed.
Prof. V.S. Vyas, an eminent economist, conducted a feasibility study in 2005 and suggested the setting up of an agency to deepen, widen and upscale the sector in Rajasthan. The Sir Ratan Tata Trust (SRTT) supported the idea for such an agency acting as a ‘knowledge and support centre’ for micro finance sector in Rajasthan. A steering committee under the chairmanship of N.S. Sisodia with representatives from the state government, banks, voluntary organizations and eminent citizens, was formed to formulate the role, strategy and action plan of CmF.
As nodal agency of the Sakh Se Vikas (SSV) programme supported by SRTT, CmF has contributed significantly by providing technical support to SSV partner NGOs who have a combined outreach to more than 50,000 poor households in Rajasthan.
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*Rajasthan Microfinance Report 2010
Note: You can completely view/download the above book using GoogleDoc. Just click on the above book image from the website www.oryza.in. For a hard copy, please drop a mail at pranay.bhargava@oryza.in. The book has been published with support of Sir Ratan Tata Trust (SRTT) and Ford Foundation, USA and is priced at Rs. 300 only.
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*Asian Institute of Management, Manila, Philippines
http://www.aim.edu/
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(if you having troubles, try posting your comment on this page or send an email to chronicle @ itbhuglobal.org)Institute of Technology, Banaras Hindu University
Varanasi 221005, UP