I see the moon…

Besides keeping family and friends assured of my well-being halfway around the world, one other purpose of this blog is to document my crash course in the practice of microfinance in South Asia. I’ve been in contact with Creditwatch (permanent link on the right) via their Chief Economist Dr. Rajesh Chakrabarti, former Georgia Tech Assistant Professor of Finance, now teaching at the Indian School of Business. He introduced me to Dr. Pradip Har, Director of Creditwatch. Over the summer, under Dr. Har’s indirect instruction and facilitation, I will be studying several methods of microfinance currently in place in South Asia.

Microfinance is more than just extending credit sustainably to the poor. In its broadest sense, it includes all desirable financial services (savings, counseling, insurance, investing, etc.). However, small loans (micro by western standards) constitute the most famous examples. The varying actors – lenders and borrowers – do much to distinguish the methods. Sometimes banks lend directly to individuals. Sometimes non-bank financial companies lend to groups of tenant farmers in joint liability. Often NGOs lend to groups of 10-20 women with their pooled savings as collateral. The business plan of the lender can also serve to differentiate things. Sometimes the lenders seek a profit. Other times it is the best kind of charity – helping the hard-worker help themselves (note the permanent Five Talents link also at the right).

It was at a Five Talents presentation a couple months ago that I learned of another amazing benefit of microfinance. When the poor are empowered to take charge of their lives financially and escape poverty; when they no longer go to the local loan shark charging 12 times the interest of the microfinance institution; when they are educated about money, business and have hope of providing a better future for their children; then they are much less susceptible to the lies of the trafficker who would take their children. Microfinance is tangibly helping to cut off the human supply lines to the evil trades of bonded slavery and the forced prostitution of minors.

I have much to learn, yet I’m very excited to take what little I know from reading and cement it in the context of real lives. I hope I get to meet the successful as well as the hopeful.  It’ll make for some great stories.