Think Bigg

Business Week reported last month on the expansion of India’s largest commercial lenders into the microfinance arena.

…these bigger banks are discovering that lending small amounts to credit-worthy rural borrowers is lucrative as well as socially progressive. “Even as it is part of our sustainable development agenda, the trigger has been the large number of poor people residing in India,” says Moumita Sen Sarma, head of microfinance at ABN Amro Bank.

Ranjan Ghosh, who heads financial institutions for India and South Asia at Standard Chartered Bank, adds: “With fewer defaulters in this sector, clearly the risk return rate is acceptable to banks. We look at it as investment.”

Source

That’s amazing news. It’s my belief that social problems will get solved when the pressure to solve them comes not just from the small number of do-gooders that would have cared about them anyway, but from market forces. When a social problem becomes a market opportunity, you will see change.

Renewable energy and microfinance are perfect examples of this phenomenon. Faced with soaring gas prices and an uncertain oil supply, car manufacturers began to concentrate on alternative fuel vehicles. Similarly, when banks discover that microfinance loans can generate reliable repayment rates of over 95%, commercial institutions will capitalize on the fact that the “poor are bankable.”

To get personally involved in microfinance loans to entrepreneurs all over the globe, check out the lending opportunities at Kiva.org!

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