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Giving a fair chance: Utkarsh……Tapash Talukdar
Utkarsh is the first MFI in India to get funding from IFC As a child, Govind Singh used to walk 10 km everyday to attend school in a village near Almora. That struggle early on in life, as he realised later when he grew up into an able banker, would become the cornerstone of his success. Singh didn’t want to let go of that experience. “I have a small piece of land in my village and I am planning to build a library there with the help of a few investors,” he says.
The dream of building education infrastructure in his village notwithstanding, Singh has already gone back to his roots. He gave up his 20-year career in the banking sector and launched a microfinance business a year go. Singh’s firm Shree Pathrakali Finance is a microfinance institution aimed solely at women loan-seekers. The firm, operating under the brandname of Utkarsh, started in Varanasi to lend micro credit of Rs 100 to Rs 5,000 to small businesses such as vegetable vendors, saree-weavers, carpet-makers and mobile-shop owners. It has already helped 9,350 members through 18 branches in northern UP and has disbursed Rs 1.35 crore.
Singh, 44, now plans to create a base of 7 lakh members by opening another 300 branches, mostly in rural areas, over the next five years. By then, he hopes to disburse an additional Rs 6.5 crore. “Our mission is to create as many micro women entrepreneurs in rural India and make them self-dependant,” he says. Utkarsh is banking on those poor women who wish to start their own businesses but have no linkages to raise credit.
Utkarsh has received funding of Rs 4 crore from IFC, the finance arm of the World Bank, and Aavishkar Goodwell. “We are the first MFI in India to receive funding from IFC,” Singh says. He raised the remaining Rs 3.5 crore from entrepreneurs Deep Kalra of makemytrip and Amin Narula, and from his own personal savings. Singh now plans to reduce the rate of interest from the current 31.74% to 15% in the two-three years.
Singh started his banking career as a probationary officer in State Bank of Patiala in 1988. And he was lucky to spend most of his banking career on micro-credit. In his last job with ICICI bank, he brought in many significant changes in micro lending and earned a name for himself.
The idea of setting up a microfinance institution came to him in 2007 when he was on a trip to Brazil and African countries. The reserve bank had organised the tour to understand micro-credit and the delivery in savings. After coming back to India, he started thinking about creating opportunities for people living in rural areas, and so began his research on the subject. “I researched through 40 MFI models before creating my own. In northern UP, an all-women MFI requires a high penetration module,” says Singh.
But working with people in villages, with a lot of vested interests around, could lead to a lot of disadvantages. So, Singh also decided to appoint KPMG as auditors. “I wanted to ensure our operations were transparent and no one questioned the intent,” he says. He also hired experienced professionals and created a 360 degree work environment. Intellecash supported in forming infrastructure facilities and servicing of branches.
Utkarsh also introduced value-addition to the traditional model—like market linkages, vocational training and market awareness. Intermediaries would make information available from various sources. Most of the branches are located in rural UP, Bihar and Madhya Pradesh. Initially, it was a hurdle to convince rural women for new avenues. “Our first group lending was of Rs 6,000 for starting a dairy business in Haruva village in Varanasi,” recalls Singh. It was a struggle to convince people then. Now ‘word of mouth’ works best for Utkarsh.
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