Micro Finance should be driven by passion

by Surekha Galagoda

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Micro Finance is patience, commitment and belief. Therefore, Micro Finance (MF) should be driven by people with passion, said DGM Personal Banking and Network Management, HNB Chandula Abeywickrama.

He said that due to the unprecedented awareness created for MF not only banks but also top level businessman want to be involved with a MF program as a means of helping the poor, but it is definetly not doling out money.

Abeywickrama said that economic development doesn’t come with sophistication but rather with simple things and according to his experience there are many who have succeeded with the right guidance and commitment.

Banks need to look long term. At present they have a known customer base and they are complacent with them and give benefits to attract customers from other banks. But never invest on future customers.

This is where commercial banks have missed the bus. There is tremendous potential in the market to expand without pinching customers from other banks.

At present 50% of the branches of commercial banks are in the Western Province which shows that people in rural areas are not looked after by most banks.

Therefore, the Central Bank has decided to request commercial banks who want to open a branch in the Western province to open two branches in the outstations. It is a good initiative but it should have been implemented much earlier, he said.

Micro Finance is misunderstood at most times as lending money to the poor. There are many money lenders and therefore financial institutions are not needed to do that job. Micro Finance involves a multitude of factors and is built on four main pillars which includes savings, credit, insurance and remittances.

At present worker remittances globally account for US$ 3 bln and it is said that it will increase to a US$ trillion by 2010.

Therefore, Micro Finance is a major investment on people in the area of economic development. In today’s context it is called financial inclusion. In most instances the marginalised people are excluded from the financial system which results in them not having access to finance.

Micro Finance is not a CSR program, instead it is sustainable and profitable and is driven by a commercial aspect. Financial Inclusion is a program driven on a commercial level, it is not charity but servicing them while making a profit. There are many MF programs in the world and they are all driven by profitability.

Initially a customer is given a small loan to bring the entrepreneur skills and it is an investment based on his entrepreneur skills. The financial service provider holds him by the hand and guides him with patience. Monitoring and mentoring needs commitment.

Financial institutions should give the entrepreneur time to blossom while believing in him and well-known Micro Finance programs such as Grameen are a success as Prof. Muhammad Yunus believed in people.

He said that MF programs have to function more passionately with patience, commitment and sharing the vision of the entrepreneur.

Abeywickrama said, “If you don’t have patience to nurture entrepreneurs don’t get into MF as it is not your line of business.”