| Sreelatha Menon: Remembering Sitaram Rao | |
| The death of microfinance expert Sitaram Rao brings the spotlight on credit-plus services that institutions in the field can offer | | Sreelatha Menon / New Delhi July 26, 2009, 0:00 IST | |
The death of microfinance expert Sitaram Rao brings the spotlight on credit-plus services that institutions in the field can offer.
It is difficult to get emotional in a sector like finance, even if it is microfinance. Though there is talk of poverty alleviation, its practitioners admit it is business and not charity. But some people have a knack of turning bleak situations into those bubbling with promise. Indian microfinance was lucky to have someone like that, a person who touched it with his magical wand and made people dream all sorts of things one could do to remove poverty with credit. Sitaram Rao was like a mentor without borders, stepping in with guidance wherever he was called.
Rao, who died at the age of 52 in an accident last fortnight, was a chartered accountant who became the CEO of the biggest and most successful microfinance company in the country, SKS. According to the company’s young founder Vikram Akula, who bid him a tearful farewell at a memorial in Hyderabad, Rao was a strong force behind SKS’s evolution, with the micro-finance institution (MFI) growing five-fold under him.
His death put the spotlight not on big MFIs that have been on an expansion spree but on the “credit-plus’’ services that MFIs can provide and become an instrument for reducing poverty.
For that is where Rao’s heart was after he quit SKS two years ago, not happy with “credit-as-an-end” type of microfinance. For him, micro-credit had to be centred on the client and credit alone was not enough to satisfy him.
Some of his associates recall how during his “two-year” vanvas, he worked with obscure MFIs in places like the North-East Chhattisgarh and Jharkhand. He was promoting models of livelihood finance and helping people explore new ways to link finance with activities that could remove poverty, improve healthcare services and provide food security.
Mathew Titus, executive director of Saadhan, the NGO platform for all MFIs, credits Rao with getting Institute of Chartered Accountants to prepare accounting norms for microfinance. This year’s annual report of the NGO is dedicated to Rao.
He was a great networker, on the boards of most bodies dealing with MFIs and remembered by almost everyone who knew him as someone who would treat the lowest to the most powerful with same warmth and personal attention.
He had one problem. It was difficult to pay him for any service. Brij Mohan, former executive director of SIDBI, who has also been on boards of various MFIs and related institutions, recalls how difficult it was to pay him. People called and said he did not leave his account number and that he did not encash the cheque issued to him. He always said his needs were little and he did not need much.When he was the CEO of SKS, he surrendered shares worth Rs 2.5-3 crore given to him saying that they be used for a useful cause.
Today, SKS is launching a fund for a cause that was close to Rao’s heart in his last days: Using credit to ensure livelihood, food security and education. He was unstoppable as far as his curiosity for new ideas was concerned, said Brij Mohan. He linked credit with cultural tourism and wildlife preservation.
Lok Capital, a funder of MFIs, was doing some brainstorming on how and why MFIs can go for “plus services’’. The debaters at Lok Capital's discussion did not mind MFIs offering plus services but were concerned that MFIs were offering things people did not need. For Rao, the solution would have been simple. If the MFI has client as the centre of its activities, nothing will go wrong.
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