CHENNAI: “If you have to travel on water, you need a boat. What is being done now is akin to trying to use a car to sail in the ocean.” This was how Nobel Peace prize laureate and micro finance pioneer Muhammad Yunus described efforts for financial inclusion. Yunus’ objection to the current efforts to take “banking to the unbanked” and spread the benefits of financial services to the poor is not over the idea itself. After all, he is the man who bagged the peace prize by founding the largest and first modern social business concept in the world. Taking finance to the poor has been his magnum opus. Yunus is opposed to the way government is going about it.
“What is being done is an extension of the existing banking system to the underprivileged. But the conventional banking system is not one that is designed to cater to the poor. They are banks for the rich,” he pointed out.
In an interview with the Express after a lecture at the Rajiv Gandhi National Institute of Youth Development, Yunus said that the problem inherent with conventional banks was that with their eyes on the bottom line and “credit-worthiness”, they were of no use in helping the poor gain the most important thing needed to improve their lives — funds.
“A normal bank wouldn’t lend money to a poor person, you see, because he or she is not credit-worthy. The system is designed around a collateral for a normal loan, and success is measured in terms of profit,” he pointed out. So what was the purpose of extending access to a banking system opposed to the idea of lending to people who have no money, he asked.
What we need instead was a completely different system — one designed to meet the needs of the poor. One that will lend without insisting on a collateral and credit-worthiness of an individual. And more importantly, it has to be bereft of a focus on profits. “We need a completely new vehicle to take finance to the poor. And once it is done, there should be a law for it and regulations, regulatory authorities, etc. It has to be a whole new system,” he exhorted. Yunus’ Grameen Bank was built around that concept. If banks would lend only to the rich, then Grameen Bank would lend only to the poor. The success of the measure can be seen in its enormous growth and the critical acclaim that it has won since its inception in 1983.
But Yunus hasn’t restricted his attention to micro finance. He acknowledged that his brainchild had deviated from its original purpose, transforming into a money making venture in several places. Yunus, however, gives enormous importance to promoting the concept of social business as a whole.
“The idea of a social business is not that it doesn’t make a profit. It is a business after all, and it has to make a profit to be successful. But the owner of the business doesn’t take the profit. It goes back and grows on and on. And it solves problems,” he explained. In fact, every factory and company in India could set up a small social business on the side. “The cost would be peanuts for them.” And the government and the press have to promote this by being cheer leaders.
“But one thing the government has to do is stay out of the business. We do not need tax breaks, subsidies or concessions. Because the minute there are benefits from them fake businesses will come in,” he cautioned.
Also dear to Yunus’ heart is the discarding of an education system that has constantly trained robots for a production line. “There is so much unemployment and it is such a waste. Why should a human being, the most creative force on the planet, be left idle? We need to tell these youngsters that they do not need a job. They need to be job creators instead. What they need to do is to become entrepreneurs,” he concluded.