2008 Woodie Awards
Microfinancing brings capital to the masses
An Interview with Bhakti Mirchandani of Lehman Brothers
Ari Jahja
Issue date: 2/20/07 Section: Business
Bhakti Mirchandani works in Lehman Brothers' Investment Management Division and is the co-founder of the Global MicroEntrepreneurship Awards (GMA), which had issued a call to the global community to extend basic financial services - including business loans as low as $100 - to the world's poorest people. It was first established as a student project in nine countries and later expanded to a three-way partnership in 32 countries between Citigroup, the United Nations and the GMA Student Alliance. Mirchandani was also one of the experts who came to speak on Dec. 6 at Baruch on the topic of "Microfinance: from Wall Street to Dhaka." The recent awarding of the Nobel Peace Prize to microfinance pioneer Muhammad Yunus has brought global attention to the concept. Microfinance is about giving low-income people access to the financial system, typically by lending small amounts of money to people who usually would not be able to borrow from traditional financial institutions, mostly because they don't own anything to offer as collateral. Readers can visit Globalization101.org for more information.
Ari Jahja, business writer for The Ticker, was fortunate enough to have the opportunity to interview Mirchandani in January.
Ari Jahja: How has microfinance changed since Yunus started Grameen Bank 30 years ago?
Bhakti Mirchandani (BM): Microfinance has changed in a number of ways. First, it has become more customer-driven than product-driven, as customer service is becoming more important. When microfinance was first started, it mainly used a solidarity lending model, (i.e. group loans). By contrast, now increasing numbers of microfinance institutions are offering a range of products and services for the poor. Second, microfinance started solely as a non-profit endeavor. Today, although the majority of the industry remains development-oriented, some of the players operate quite profitably due to improvements in technology and operations.
AJ: Do you think that microfinance should or could make money?
Ari Jahja, business writer for The Ticker, was fortunate enough to have the opportunity to interview Mirchandani in January.
Ari Jahja: How has microfinance changed since Yunus started Grameen Bank 30 years ago?
Bhakti Mirchandani (BM): Microfinance has changed in a number of ways. First, it has become more customer-driven than product-driven, as customer service is becoming more important. When microfinance was first started, it mainly used a solidarity lending model, (i.e. group loans). By contrast, now increasing numbers of microfinance institutions are offering a range of products and services for the poor. Second, microfinance started solely as a non-profit endeavor. Today, although the majority of the industry remains development-oriented, some of the players operate quite profitably due to improvements in technology and operations.
AJ: Do you think that microfinance should or could make money?
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