This newsletter from S.P. Mandali's Prin. L.N. Welingkar Institute of Management discusses various topics related to rural management and microfinance. It includes an editorial note, articles on microfinance institutions and the challenges they face, the impact of demonetization on the microfinance sector, opportunities for growth in rural housing, and mergers and acquisitions in microfinance. It also summarizes interviews with industry experts, shares student experiences, and highlights achievements.

1. S . P . M A N D A L I ' S P R I N . L . N . W E L I N G K A R I N S T I T U T E O F M A N A G E M E N T
D E V E L O P M E N T A N D R E S E A R C H
R U R A L M A N A G E M E N T ( E M E R G I N G E C O N O M I E S )
Wishing all our readers
a very happy
independence day
IN THIS ISSUE
EDITORS NOTE
Editors Note.....................1
Industry Experts...............1
Meanwhile in Sector......1-3
Student Experiences.........3
Talking Heads..................3
Alumni Speaks.................4
Issue Special....................4
Celebration.......................4
Achievements...................4
Watch out for...................4
S t u d e n t s ' N e w s l e t t e r
C r e a t i n g C o r p o r a t e M a n a g e r s w i t h R u r a l I n s i g h t s
V O L U M E 1 , I S S U E : A U G U S T 2 0 1 8
MicroFinance meaning
"Small Fundings" is the
provision of financial
services to low income
people. To ensure access to
financial services, namely,
Banking/ Savings & Deposit
Accounts, Remittance, Credit,
Insurance, Pension in an
affordable manner, govt. has
introduced Pradhan Mantri
Jan-Dhan Yojana (PMJDY)
for financial inclusion.
Microfinance institutions
are lightning the hopes of
uplifting the low-end
societies to live a better
and healthy lifestyle period.
The global financial inclusion
agenda also recognizes
broader need for
development. It also
recognizes the importance of
financial literacy, building
consumer financial
capabilities, and for consumer
protection policies that take
the conditions and constraints
of poor families in the
informal economy into
account.
We have tried to give you a
brief about the topic
Microfinance through this
Newsletter Gram Samachar
about how microfinance
works, what is the market of
MFI's and what are the
challenges faced by them.
What are Micro Finance Institutions?
Akshay Vincent ( Batch 2018-20)
The term microfinance was coined by Bangladeshi
economist Muhammad Yunus. Micro means small
and finance means management of financial
services like loans, insurance , credit etc.
Micro finance is basically designed for the people
who have low income and want loans ranging from
Rs 5,000 to Rs 50,000 but don’t have access to banks
or any investors, in such cases this institute come
into picture wherein they provide loans of smaller
value for shorter duration. The main reason people
opt for such institute is because it is organised and
has transparency about the rate of interest to be
charged ,even when it charges high rate of interest
which is 24-30%. Even then it is better than any
unorganized lenders like money lenders, land lords
etc who charge extravagantly high rate of interest as
high as double or triple the amount they have
lent.Today, around 200 million people in the world
borrow from microfinance institutions.
According to Micrometer MFIN, microfinance in
India is offered by NBFC-MFI's, Banks, SFB's , MFI's
and Non profit MFI's. Micro finance institutions
aim at getting people out of poverty and improve
their financial conditions.
It is usually procured by loan applicants through 3
modules which includes firstly banks, non-banking
financial corporations, and microfinance
institutions, second, good relations with banks or
other financial institutions and thirdly by getting
together as a group with a common goal of
obtaining finance to create and develop new small
business ventures or to make a living. Some of the
well known MFIs are Spandana, Annapurna
Microfinance Pvt Ltd, BSS Microfinance Pvt Ltd,
Ashirvad Microfinance Pvt Ltd, BFIL, Muthoot
MicroFin, etc. In order to promote micro finance
and financial inclusion, RBI came up with 10 small
finance banks which will work closely with
MFI's. However, at present and probably in the
medium term, there is still a gap in which NBFC-
MFIs can help to bridge the gap. Few years down
the line, SFB's may turn to universal banks for
advantages such as lower capital adequacy
requirement.There are a lot of institutions who
only deal with scheduled banks. So, the cost of
funds can also be expected to go down.
MEANWHILE IN THE SETOR
Kunal Maheshwari
Surabhi S Patil
Anushree Bhattacharya
EDITORIAL
TEAM
G R A M S A M A C H A R V O L 1 I S S U E : A U G U S T 2 0 1 8
Anuj Mehra, the Managing Director of Mahindra
Rural Housing Finance Limited says he spends a
lot of time travelling across rural India and away
from his comfortable office at the Mahindra
headquarters building in Mumbai. It’s this ground
level effort that is helping him lead a business
focused on the rural market, full of opportunity as
well as complexity.
Mr. Mehra identified the three growth
opportunities for Mahindra Housing finance.
There are over 6 lakh villages in India, however,
Mahindra Finance has reached only 3.5 lacs
villages. Out of the 60,000 villages Mahindra has
reached hardly 10 houses' in a village (7
lacs/70,000). Even in these villages, there are 200
more units to be covered, so from 10 to 200 is the
second growth opportunity. Third growth
opportunity is the fact that houses in rural areas
are constructed incrementally i.e when the harvest
is good. Mahindra finances these kind of loans
with the loan size is only about a Lakh.
So, the person who has taken a loan of 1 lakh Rs. to
construct a house would take another loan for
their son’s/daughter's marriage.
INDUSTRY EXPERTS
Mr Anuj Mehra, Managing Director
Mahindra Rural Housing Finance Limited
Mumbai
GRAM SAMACHAR

2. Both these entities generally look for
synergy after a merger. In July, IDFC Bank
and ShriRam Capital agreed to examine a
merger to create one of the country’s
largest retail bank. According to RBI, the
government should only merge strong
public sector banks (PSBs) while allowing
weaker banks to recuperate after
recapitalization. Sometimes merging
entities with weaker entities lead to
adequate bringing down the stronger
entity.
Mergers and Acquisitions are all about
creating value. Before taking part in such a
transaction, one should consider the
upsides for all parties. Also, look for
synergies, that is, one plus one is
greater than two, growth opportunities,
increased market power, acquiring
technical capabilities, improve
governance amongst others. In addition to
this, companies should always ensure that
they have competent and experienced
merger and acquisition advisers holding
their hands through the process to ensure
that there is no value leakage. One of the
most critical parts of the merger and
acquisition process is the due diligence
because it helps to identify potential issues
early enough, rather than later.
In December 2016, the Prime Minister
announced that 500 and 1000 rupee notes
would be void. The attempt was to reduce
bribery and the black economy so that
India may shift towards digitized money
transfers, which are more traceable and
taxable. India is a cash-driven economy as
87% of the transactions were made in cash.
Even online shopping in India is done with
cash as about 70% of online commerce is
paid with cash on delivery. Increased
financial inclusion and transparency were
of-course fantastic goals, and if achieved,
would alleviat poverty and increased
productivity, After one year,
Demonetization proved that Indians can
strive. People finally began to trust the
digital payment systems, but at the same
time the reality of the economic slowdown
Challenges in Micro-Finance
Karan Singh ( Batch 2017-19)
Demonetization's blow to Micro
Finance Sector
Manish Agarwal ( Batch 2017-19)
SPECIAL THANKS : ABHISHEK MOUDGIL & ARPIT KULKARNI
Milton Friedman once said that "the poor
stay poor, not because they're lazy, but
because they have no access to capital."
The challenges in the Microfinance sector
can be categorized into the following sub
points. First, Over-indebtedness due to
multiple borrowings and inefficient risk
management: Micro finance institutions
could not be ignored as GDP of Q1 2017-18
falls down to 5.7%. The GDP growth
forecast by World Bank reduced to 7% for
2017-18. Even some MFI’s and Banks such
as Bandhan Bank, has suspended its micro-
credit disbursement after the
demonetization as they still had a large
microlending business and MFI's cannot
accept demonetized notes as they are not
banks. However, the NPA bounced back to
3.2% in the quarter ended September 2018
as per MFIN Micrometre and GDP grown to
8.2%.
But now, the sector has recovered with the
fading impact of demonetization.
According to MFIN, India’s for-profit NBFC-
MFIs portfolios grew 43 percent in 2017
calendar most MFIs took the quick measure
of adopting Core Banking Solutions (CBS).
Initially, it was a big challenge for MFIs but
of late, the sector has also found value in it.
It helped in achieving operational
efficiency and speedy processing of
transactions.
According to a report by MFIN, average
loan amount disbursed per account during
Q1 FY 18-19 was Rs 23,510, an increase of
12% from Q1 FY 17-18. During the last
financial year, 4 MFIs have moved from
medium category to large category, 1 MFI
has moved from a small category to large &
3 MFIs have moved from Medium to large
category. It is also noteworthy that out of
42 members, 25 NBFC-MFIs have also
reported 100% and 28 have reported 90%
cash-less disbursements. So it wouldn’t be
wrong to say that the disruption was
created due to currency ban but the
aftermath is reflecting a growth side in use
of technology as well as financial
portfolios.
The growing demand for microfinance in
India and the increasing number of
players in the industry have created a
need for inorganic growth through
mergers and acquisitions. Consolidation
through mergers and acquisitions has
several advantages including lower cost of
funds, shared resources, faster client
acquisition, better synergy, increased
market share and economies of scale.
Micro Finance
Mergers and Acquisitions
Kamlesh Bachhav ( Batch 2017-19)
So, there is a lot of growth opportunity.
That itself is also an indication of rising
aspirations and rising income levels.The
philosophy behind the risks associated
with the smaller amount of loans to the
rural areas and the corporate loans in
urban market is distributed or diverse
risks. In this business, there is a huge
difference between NPA and credit losses.
An NPA is a regulatory requirement, it
depends on the number of days for which
the EMI has not been paid. It doesn’t
necessarily mean that the non-performer
is never going to pay you and it’s a loss. In
rural areas, sometimes there is a severe
draught. After two years there is a terrific
harvest, good monsoon and then suddenly
scenario of demonetization. For a farmer,
there was a good crop along with an event
like demonetization and lack of liquidity.
And therefore for 3 years, there was no
money with the farmer. But today the
same customer is slowly paying all his past
dues. So we still have a very high NPAs but
people are paying it eventually. And in
next quarter the situation may improve
dramatically if the harvest is good. The
situation will come back to normal. There
may be a spike in NPA's but that doesn’t
mean credit losses. And this is something
we need to appreciate.
A word for the Rural Management
students, "Believe in Yourself, start
working hard. All the best!! "
Excerpts from the Interview of Mr Anuj
Mehra dated 23rd August 2018 by Rural
Management students - Manali
Mahindrakar & Karan Singh
(Batch 2017-19)

3. We would like to begin with thanking
WeSchool for giving us the opportunity to
be a part of LSE Summer course. We are
grateful and will be indebted always. This
exposure was our first international visit
and has undoubtedly made us even more
independent and confident. To
understand and to mix with cultures from
globe is a fantastic experience .
The summer course was on how iconic
brands in all the major industries have
remained competent in the market ,have
been market leaders and have lured
the customers, specially by amending its
strategies. Case studies on Iconic brands
Corporate and Organizational
Strategy at
London School Of Economics
Rachna Kumari Shrushti Jain
(Batch 2017-2019)
STUDENT EXPERIENCE
S P E C I A L T H A N K S : K U M A R S A R T H A K & K H U S H B O O S H A R M A
TALKING HEADS
Mr Arun Nathan
Director, IDFC Foundation
“What is CSR? How is it related to Rural
Management? What are the career
opportunities in this field for Rural
Managers? Who all are the stakeholders? is
it a measure to mask money related issues?
Why only 2% of profit to CSR activities? Is
the alignment needed at all?” Well, these
were few of the questions the entire Rural
batch (2018-20) was pondering over before
attending this session.
Mr. Arun is an alumnus of IRMA, Anand &
is currently the Director at IDFC
foundation. IDFC Bank is a private sector
bank which is trying to bring digital
inclusion to rural India. Its distribution
model relies a lot less on regular bank
branches, but rather seeks to extend reach
using mobile technology and partnerships.
IDFC Bank provides banking services
customized for the unserved and
underserved segments. Corporate Social
Rising instances of farm loan waivers in
many states has affected credit discipline of
rural borrowers, a development that
weighed on the stocks of NBFCs such as
Mahindra and Mahindra Financial Services
(MMFS), Shriram Transport Finance (STFC)
and micro finance players such as Bharat
Financial Inclusion (BFIL) in the last few
years. However, unlike NBFCs for which, the
loans are secured in nature, backed by
assets like tractors, commercial vehicles
and the quantum of loans are bigger, the
deteriorating credit culture may be a bigger
worry for MFIs that have already seen 20%
to 35% correction in the consensus
earnings expectations for FY18 in this
calendar year. The management of rural-
focused NBFCs appears confident that farm
loan waivers are less likely to
impact the credit discipline among their
borrowers. While the effect of increased
public debt will play out over the long run,
the increased interest burden due to higher
like Coca-cola, Gucci, Polyface, Fisdap,
Loblaw etc were discussed.
The case study session and lectures were
highly interactive. They never tried to
create our opinions beforehand. They used
to appreciate different views and give a
direction to our thought processes.The
teacher also used to take our answers on a
online portal poll and used to question
randomly to keep the session alive always.
LSE and its huge campus , situated at
theheart of the city of London is one of the
most beautiful campuses we have ever
seen.The positive vibe at LSE, its old and
new buildings, its lecture halls, its huge
library were places we used to be around
the whole day.
LSE summer is no doubt a “once in a
lifetime” experience for us and will always
remain close to our existence.
debt will hit state finances . As in case of
U.P, debt waiver of Rs 36,4000
crore,equivalent top one fourth of total
estimated farm debt of the state. The
aggregate interest payment burden of
states will rise by 8% (over their 2016-17
levels).During post demonetization phase,
the cash crunch impacted loan
repayments,disbursal, collection efficiency
or bad asset levels of rural credit. In a note
stated by Morgan Stanley, these loan
waivers apply only to loans by banks which
in due course will get compensated by the
respective state governments. However, the
concern is risk of 'moral hazard' or willful
defaults by borrowers. However, in our
view, the impact is likely to be greater for
banks with large unsecured farm loans and
less for secured loans or joint liability
group (JLG) lending.
Farm Loan Waiver: The true impact
Aakash Sharma ( Batch 2018-20)
(MFI) provide financial services to the
poorer section of the society in order to
improve their standard of living. Lack of
risk management and multiple borrowings
by most clients led to micro-finance crisis
in India in 2010. In some cases, it has been
seen that there is no apex control over the
MFIs’. This sector gives loans without
collateral which increases the risk of bad
debts.
Secondly, the sector experiences high rates
of interest as compared to mainstream
banks. MFIs’ (24-30%) when compared to
commercial banks (8-12%) do not enjoy
the same rate of financial success. One of
the reason is that while the banking
system is centuries old, micro finance is
only a few decades old in India.
Like all other developing and
underdeveloped countries, the literacy
rates in India is very low(74.04%) and the
rate is much lower in the rural areas
(67.8%). Nearly 76% of India’s adult
population does not understand basic
financial concepts. Thus, lack of awareness
of the people about the financial services
provided by the Indian micro-finance
industry is a challenge for both, customer
and MFIs.

4. Sharda Sharma
Batch: 2016-2018
Dy. Manager, Kotak Mahindra Bank
Interviewed by Kunal Maheshwari
(Batch 2017-19)
ALUMNI SPEAKS
My journey in WeSchool has been
phenomenal. Rural Management program
prepares you for the worst thereby making
you confident enough to tackle any
difficulties. The curriculum prepared me
well for a client facing role as well as the
zeal to learn something new from each and
every person. The reach of Rural is
everywhere be it Banking, FMCG,
Microfinance or any other industry.
All the learnings and exposure during the
course, be it the summer and winter
internships, Grassroots, GCL or other
college activities would help you think out
of the box and also inculcate creative
problem-solving skills. Rural program
overall is complete in itself as it open-up
opportunities to work in any sector.Micro-
finance has a significant role in bridging
the gap between the formal
institutions (like banks) and the rural
poor. It is the new mantra for rural
financing. The concept and role of
microfinance is for social uplift as well as
for the development as well as for the
development of rural backward area. Lastly,
make good friends and enjoy these 2 years!
ISSUE SPECIAL: SHRI
ATAL BIHARI BAJPAYEE
Abhilash Chandel
(Batch 2017-2019)
Atal Bihari Vajpayee, a recipient of Bharat
Ratna, on 16th August 2018, left many
Indians with tearful eyes. Being a
management student of Weschool, and a
close follower of Mr. Vajpayee, I want to
depict his personality on the 4 verticals of
management i.e. Marketing, Human
Resource, Operation and Finance. I may
commit a mistake while writing this, but I
felt making an attempt is more important at
this stage.
Indian politics or today’s world is into an
era, where everyone wants to be glorified
as a brand, and hence a major per cent
of their earnings is spend to the
consultants or branding agencies for
establishing them as a brand, but Atal ji had
always kept himself away from this, he
never created a buzz about himself and
therefore had never been the choice of
brand agencies (for personal glorification).
He believed solely in the idea of having
strong and effective communication that
must create and sustain a warm
relationship with the targeted stakeholders.
Atal ji, throughout his life, had always given
value to the people around him, He
possessed the art of managing human
resources effectively and efficiently, that
could be used to convert individual’s
talent and aspiration to the organisations
desired goal. He held mastery in the art of
identifying and acquiring right talent to the
board via talent acquisition, giving them
enough opportunity to nurture and prove
their mettle, which eventually leads to job
engagement and enrichment of the selected
employee. Managing more than 2 dozen of
political party specially of diverse ideology
and from different parts of India (AIADMK
of Chennai, Shiromani Akali Dal of Punjab
etc.)in itself was a difficult task to achieve
in Indian politics,
Atal ji, through his vision of making India
the nuclear equipped nation, not only laid
the foundation of Operation Shakti
(Pokhran II), but also conducted nuclear
tests in 1998 successfully. He knew that the
consequences of this test would lead to
economic sanctions or global isolation of
India, but country’s sovereignty was more
important.
While he was on his last journey to Smriti
Sthal(where he was cremated) Delhi, he
went with all emotional liability in his
pocket and absolutely zero monetary
liability of his follower. He was able to
imbibe the idea of ‘Nation Above All’ into
the mind of Indians, making them greatest
asset for the prosperity of our motherland.
नैनं िछ दि त श त्रािण नैनं दहित पावकः I
न चैनं लेदय यापो न शोषयित मा तःII
( F r o m B h a g w a t G i t a )
TALKING HEADS: Mr Ranvijay Singh,
National Sales Manager- Emerging &
Government Channels, P&G
NEXT ISSUE THEME: Agriculture & Allied
Services
Grassroots visit to Dahanu, Maharashtra
for Batch 2018-20
WATCH OUT FOR
G R A M S A M A C H A R V O L 1 I S S U E : A U G U S T 2 0 1 8
Harshal Lande & Vaibhav Gaikwad- 1st
prize in Business Idea- Arthacharya
Competition, Krishi Chanakya organised by
MANAGE Hyderabad. - 24th & 25th August
Aakash Mutkule & Chetan Jain-2nd prize in
B plan competition- Akanksha organised by
MANAGE, Hyderabad. - 24th & 25th August
ACHIEVEMENTS
Responsibility is a business approach for
sustainable development including
economic, social and environmental benefits
for all stakeholders. In a nut shell, “the
purpose of CSR is to drive change towards
sustainability.” It is applicable for the
companies having Net worth of INR 500
crore or more; or Turnover of INR 1000 crore
or more; or Net Profit of INR 5 croreor more
during any financial year to contribute to
CSR activity.
He emphasized that CSR activity can be an
opportunity for business growth by
addressing the social problem which exists
on a larger scale by shared value creation
which is a way of re-connecting a company
with the society, through identifying the
connections between societal and
economic progress.
INDEPENDENCE DAY
CELEBRATION AT
WeSchool
B a t c h 2 0 1 8 - 2 0