Nobel laureate Muhammad Yunus from Bangladesh, who has been an inspiration for many in the Indian micro-lending space, feels it is time to build the rural economy as that could be the best tool against solving India's worker migration problem. He has also urged the Indian microfinance institutions (MFIs) to consider setting up a national disaster fund to help in times of calamities. Yunus, was speaking on June 6, Saturday, at a webinar organised by Sa-Dhan, the platform for Indian MFIs. Speaking in the context of the plight of migrant labourers, Yunus says, "Micro credit is about building rural economy. Corona crisis has given the industry an opportunity to aid in creating a strong rural economy. Creating a strong independent rural economy will not only halt rural to urban migration but in the years to come, the migration will be urban to rural. Microfinance institutions should create programmes like venture capital to create entrepreneurs in rural India."
Experts in the sector agree. Professor M S Sriram at the Indian Institute of Management, Bangalore (IIMB), who has looked at micro-credit and financial inclusion closely over the years, said his reading of Yunus comment is that such a move will not only ensure a move away from urban centrality (wherein certain urban centres end up attract disproportionate number of migrants) and instead create a live non-farm economy in a decentralised manner. Also, given that the migrant labour returning back to rural areas, having seen and worked in urban centres, may have a relatively higher risk appetite than many others locally and also a greater readiness towards entrepreneurship. Things that MFIs could consider when disbursing loans.
Yunus also spoke about a need to create a national disaster fund. According to him, "The microfinance industry in India needs to create a National Disaster Fund which should be for the sector and managed by the sector. Microfinance institutions should always remember that micro credit is always about people and not about money. A disaster fund can help people tide over calamitous situations."
At the webinar, which attracted around 770 participants from the MFI and banking sector, Yunus reminded: "Corona crisis is a great opportunity for the micro credit industry. This is the time to discover the true potential of microfinance industry."
Yunus also hailed the entry of State Bank of India into the microfinance industry. "The coming of SBI to the sector is a huge positive sign for us. While I would like to see more banks entering the sector, it is also imperative that banks create social sector subsidiaries. I would again like to reiterate that policy makers should take cognizance of the positive role of microfinance institutions and provide more banking licenses for the sector," he said.
The webinar was moderated by P Satish, Executive Director - Sa-Dhan and chaired by Chandra Shekhar Ghosh, MD & CEO - Bandhan Bank.
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