Mohd Yunus’s model assumes that a micro loan can get people out of the poverty trap, which I believe is inadequate. Microfinance in its present form is not a model that India requires to replicate.
Microfinance requires innovation and should be in a position to finance the rural supply chain and should not just be applicable for financing a single cow or buffalo, which can turn out to be a liability without economies of scale. Micro loan as a standalone base creates an asset san market linkages or risk mitigation (insurance cover) and can therefore turn into a liability. Poverty alleviation needs sustainable cash flows for the poor, which a standalone micro loan can never provide.
What would be your next steps?
We plan to focus our efforts on microfinance, primarily to build an organized platform in terms of manpower and infrastructure. Once this is built, we will build franchises, that can double up as servicing and distribution points in rural areas. Subsequently we plan to build warehousing infrastructure to support the franchise network
In 2009-10, we will concentrate on developing a franchise model around client-operated healthcare centres and dairy farming units. We will explore partnerships with healthcare service providers and dairy firms to roll out operations in these two verticals.
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