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Microfinance has become a popular topic of discussion in the recent years not only because of its different models, benefits and controversies but due to the impact it is able to create at the grass root level of the society. While many efforts are being undertaken in different parts of the country and the world, the projects and initiatives of MicroGraam are recommendable. 



 (photo credit: https://www.micrograam.com/)

Dr. Rangan Varadan, the founder of the Bangalore based MicroGraam, found time amidst his busy schedule to interact with the students of MSE course during one of his visits to Deshpande Foundation. The interaction was an inspiring and practical insight from a man of profound knowledge and with experience of 28 years in financial service industry who has seen his organization grown tremendously since its inception in 2010.

The students had earlier discussed about microfinance in their classroom sessions and were excited to discuss the concepts with Dr. Varadan.  The session opened up with a dialogue on the meaning of social enterprise. The concepts of helping the community, creating sustainable solutions and the value creation came up as the main points. The interaction brought forward that while the sustainable solutions was important, another concept that is equally significant was value creation. An in-depth discussion on the points of differentiation between social business and social enterprise initiated. It highlighted the fact that every company who is in business is also into social business because they are catering to people at large through quality products and services.However, the social enterprise is slightly different. The main feature was the strength to create value out of fewer resources but with a bigger impact. 


The notion of value creation automatically put forward the concept of profit earning and reaching the break even. The issue that everyone during the session pondered on was whether earning profit was a wrong thing. As the session progressed, the students understood that there was nothing wrong in earning profit because without it, the business will neither be able to sustain itself nor grow further. However, the way theprofit is getting created was important. Dr. Varadan gave an example that if the farmers are taking a loan and have to pay 6 percent interest, they will not mind it if they are able to earn a return over 6 percent and will also not worry about the profit that the lending organization is making. This helped the students discover that their work needs to create additional value for their customers. 


Since microfinance is about helping the small businesses and entrepreneurs creating a relationship by providing them financial services and more prominently the funds, the aspect of value creation and profitability takes center stage. Thereafter, the students talked about the work of MicroGramm. The matter of discussion was that the organization does not provide charity but facilitate low cost credit to the small businesses and entrepreneurs in a systematic manner.The organization helps to mobilize the resources from investors who are ready to invest with a return of low interest and then forward it to the businesses in requirement. The investors however get a benefit of full repayment as the organization guarantees the scheme of complete repayment. The conversation encouraged the students to become practical in terms of value creation approach while considering the financial aspects when considering their ventures that will create social impact over time.

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