Yes to micro financing

IN the American comedy film, Yes Man, the main character Carl Allen (played by Jim Carrey) is a junior loan officer who used to reject almost every application that came his way. It was not just due to good, old-fashioned banking practices but also part of his overall morose outlook on life.

After attending a motivational seminar called “Yes!’’ he was determined to say “yes” to almost every opportunity that came his way. When it came to giving out loans, he had begun saying ‘yes’ to almost every application that was presented to him.

His bosses were shocked when they discovered he had approved more than 500 applications when they would have approved only 30 to 40. But those were small loans for which the repayment track record turned out to be very good.

“These people are so grateful,’’ his boss told Carl. They made sure the loans were repaid. Soon, his work in this new area of micro financing got noticed and Carl was promoted with a good raise.

In current times when huge loan and trading portfolios have collapsed, it is significant that the ordinary man and the productive small loans are being highlighted.

With so much focus on the financing for small- and medium-sized enterprises (SMEs), people here may also have overlooked the potentially vibrant business in micro financing. The amounts are much smaller but taken together, its power and role in helping to reinvigorate the economy cannot be under-estimated.

To garner more interest, banks and associations should plan more initiatives that highlight the success stories and opportunities in micro financing. Putting up stickers at entrances of banks is a good idea but we should go further than that. The recent Micro Financing Expo revealed a lot of public interest in this area.

Charging high interest rates on micro finance may be a dampening factor in its growth. It pays for loan officers to get to know these people and their businesses better. They should start getting to the ground, if they have not already, and not just sit in their offices, saying they have “no time to go through every small detail.’’

With the economy taking a while to recover, these small loans may just help make up the loan growth numbers. Sometimes, banks get misleading information from people who are out to cheat for a few bucks. There have been cases where set-ups and machinery had disappeared after the loan was dished out!

To ensure that micro financing works, it is important that genuine business cases are presented. It must also be a strong part of our micro-financing culture that every dollar borrowed must be repaid before further purchases or small investments are made.

The Government and private sector should work hand in hand to revive the economy. At this juncture, it may be difficult to take big steps as the world is still reeling from the effects of the crisis. But we should not ignore the problem and start taking small steps.

Recently, the Government decided to end its austerity drive and allow the purchase of assets, moving into new premises and renovation of offices. These may not sound like grand measures but they give opportunities to people in office equipment, commercial property and renovation services.

In the same vein related to a sound micro finance culture, people involved should be careful in their dealings with public money, as the crisis has taught us that every cent should be accounted for. There should be no more inflated and unnecessary claims even for the smallest item of office equipment.