Montek Singh Ahluwalia, Deputy Chairman, Indian Planning Comission
As a key craftsman of Indias fiscal policies in recent years, Ahluwalia is intent on rebalancing the nations wealth and placing India at the heart of the global economy
A key architect of Indias liberal reforms, the prime ministers chief sherpa on the global economic stage, and the craftsman of Indias fiscal policies for the past five years Montek Singh Ahluwalia is, clearly, no ordinary academic-turned-bureaucrat.
He has forged a formidable alliance with the prime minister Manmohan Singh to build the foundations for Asias second-largest economy to post mouth-wateringly high growth rates. In 1993, Ahluwalia was plucked from the department of economic affairs to become finance secretary to Singh, who was fiscal commander-in-chief. Together they embarked on a drive to transform the socialist economy into a capitalist heavyweight with the backing of the then prime minister PV Narasimha Rao.
Singh and Ahluwalia dismantled the regulatory straitjacket that was the License Raj system, relaxed curbs on foreign direct investment, and kicked off privatization. These moves are credited with boosting Indias potential growth rate from 3% to 5% to around 79%.
The Oxford-educated economist, turned World Bank/IMF technocrat, turned reformist policy-maker is, thus, a key figure in Indias capitalist project. His power is garnered by his ideological proximity to Singh. They both believe in the power of market forces to power growth driven by the civilizing force of the state, says Saugata Bhattacharya, chief economist at Axis Bank in Mumbai.
Upon Singhs launch into office in 2004, Ahluwalia was installed deputy head of the powerful Planning Commission which shapes the federal governments five-year spending plans and annual plans for state governments. Ahluwalia immediately sought to bring down the political hurdles to further reform by boosting the power of the technocrats.
Analysts say he has forced ministries to submit funding requests first to the commission, and has given commission members the power to make proposals directly in front of the federal cabinet, with Singhs blessing.
The centre-left administration has placed rural growth at the heart of the development agenda while winding down the states role as provider of marketable goods and services. The government implementing the commissions blueprint has cancelled small farmers debts, established an ambitious rural employment scheme, and increased wages for state employees. These measures were key to ensuring Singhs un-expected election victory in May. Ahluwalia was rewarded by becoming the first person to be reappointed deputy head of the commission for a second term.
But priming the fiscal pump to boost growth has come at a price. Rating agencies have threatened India with a downgrade unless it reins in its ballooning deficit that the government says will not breach 6.8% this fiscal year. Ahluwalia is standing firm. I dont think the ratings agencies really understood the changing perceptions now in macroeconomics; they are really reading from last years rule book, he told Emerging Markets earlier this year.
As the prime ministers chief aide at IMF and G20 meetings, Ahluwalia will help shape Indias further integration with the global economy and, in particular, reform of the financial sector. Sid Verma
Trevor Manuel, Minister, National Planning Commission, South Africa
Critics charge that he has become South Africas de facto imperial prime minister. But Trevor Manuel also has his eye fixed on the nations development as Africas largest economy emerges from recession
Trevor Manuels move this year to become South Africas Minister in the Presidency for National Planning has done nothing to dampen his passion for continued liberal economic development a philosophy he had harnessed for over a decade as finance minister towards boosting growth in the fledgling democracy.
At its national congress last month, Cosatu, the ruling ANCs powerful trade union federation ally, warned that Manuel was trying to set himself up as a de facto imperial prime minister.
Manuel, who during his 12 years as finance minister consistently rebuffed Cosatu and South African Communist Party calls for a rethink on economic policy, ruffled their feathers again as recently as June when he said big business was too scared to take on the labour unions.
There is nobody representing the class interests of business, and when anybody from the trade unions opens their mouth, they run like hell, he said at a World Economic Forum meeting in Cape Town. If were going to have cowards in business, were not going to get very far. You must have that counterweight if you want progress.
A green paper released earlier in the month by Manuel described a National Planning Commission that will help draw up a long-term plan, called Vision 2025, for South Africas development. People must talk about the country they want, Manuel says in an interview with Emerging Markets. What would be the features of a country 15 years hence? What would we want in that country? Once we have that, its possible to talk back from that and work in shorter periods and work in issues of some detail. Unless were clear about the kind of country we want to construct for ourselves, we miss opportunities.
The intention is not, he says, to recreate Soviet-era-like central planning. Nor was he trying to take over the work of other ministers, Manuel says. Im very conscious in trying to be outside the frame of immediate decision-making, he says. Im quite comfortable about standing back and allowing colleagues with line-function departments to take the necessary decisions. Ive got to believe theyve got the skills and competencies in their departments.The ANCs left-wing allies, who provided the backbone of Jacob Zumas support in his successful struggle with Thabo Mbeki for the partys presidency, are relishing their newly-found influence and are keen to re-establish an economic policy framework that differs from the 1996 class project, as Cosatu calls the economic orthodoxy established by figures such as Mbeki and Manuel, and promotes growth with less of an eye on inflation.
How this plays out will have a great influence on how the South African economy performs once it returns to the net growth expected next year. Between 2000 and 2008 the country enjoyed an average growth rate of 4.1%. Restoring such a performance occupies all leaders with a responsibility for planning, but Manuel insists he is not going to be stepping outside his remit, especially when it comes to economic policy.
Im more conscious than anybody of not wanting to peer over the shoulder of [finance minister] Pravin Gordhan, he says. Michael Bleby
Zhang Ping, Director, National Development and Reform Commission, China
To many Zhang Ping is just a faceless functionary in the National Development and Reform Commission. But look further and youll see one of the key figures running Chinas $4.4 trillion economy
Torches representing the long-term transfer of power, wealth and fortune are rarely passed from nation to nation. When those moments happen, however, they are usually overlooked by a doubting or sidetracked public.
The latest seismic shift took place last November. Global economic growth was slowing markedly, leading to an outright contraction in the developed world. Seeking solutions, eyes turned not to Washington DC, lost in its own financial nightmare, or Europe, buried in a quagmire of failing banks and falling employment, but to China, a country incapable of paying the gas bill 30 years ago.
While others were failing or fumbling around, Beijing showed remarkable agility and clarity of thought. Aware that export growth was slipping Chinese GDP fell to 6.1% in the fourth quarter of 2008, down from 11.2% in Q4 2007 the countrys leaders acted swiftly.
A vast Rmb4 trillion ($600 billion) stimulus package was pushed through, directing 14% of national GDP into major infrastructure projects, notably new rail links, highways and ports.
Responsibility for overseeing the stimulus package fell to the National Development and Reform Commission (NDRC), the countrys state planning body. All major economic and industrial decisions are routed through NDRC, from the price of soybeans to social development policy and the management of Chinas strategic petroleum reserve.
When foreign governments or corporates moan about China flouting WTO commitments, or raising tariffs on foreign-made products, the cause of the ire is the Beijing-based body.
At the head of the NDRC sits Zhang Ping, a 63-year-old career civil servant trusted implicitly by Beijings senior politicians. Zhang himself is an unprepossessing individual, which is entirely the point. The closest he comes to having a genuine public personality, say sources close to the NDRC chairman, is in having a nice line in the Chinese rapid-fire comedy form of xiangsheng, or cross talk, and being a reasonably good ping pong player.
As much as anyone below the level of premier, Zhang runs Chinas $4.4 trillion economy. With the aid of his deputies and overlords at the core of the politburo, Zhang did as much as anyone to stem global recession and to begin the healing process. In preventing Chinas growth dipping too far earlier this year via direct state investments and aggressive bank lending Zhang sowed the green shoots of global economic recovery.
A former governor of eastern Anhui province, Zhang can expect to move up a rung or two on the political ladder when his tenure expires in March 2013. His predecessor, Ma Kai, ran the NDRC for five years until March 2008, moving on to run the State Council, the Partys central cabinet. Ma is also a leading voice on Chinas Climate Change committee, headed by state premier Wen Jiabao, putting him front and centre during the UNs Climate Change Conference in Copenhagen this December. Mas forerunner Zeng Peiyan made the step up to national vice premier after running the body.
To be sure, Zhangs personal power and his ability to influence economic events directly is mitigated by the countrys decision-by-committee mentality. Yet in a country run by civil servants, Zhang is right at the top of the tree.
And when a history is written about the financial crisis of 200809, viewed from a global perspective, more notice will eventually be taken of the torch passed from Washington and Brussels to a functionary from Anhui province. Elliot Wilson
Yang Chao, Chairman, China Life Insurance
Buoyed by extraordinary leaps in the wealth at their disposal, growing numbers of Chinese are using basic financial products such as insurance meat and drink to Yang Chao at China Life
Chinese citizens are a pragmatic bunch: they know when they need a product or a service and when they dont. For most of the 20th century under first imperial then Communist rule, the populace had little need for financial services. The Emperor, or the state, provided everything and punished any who suggested it should be otherwise.
But when Chairman Mao died in 1976, all of that changed. Two years later the country began its opening-up process, slowly letting the worlds best ideas in, including basic financial products such as savings accounts, mortgages and securities.
The end of the so-called iron rice bowl system from the 1980s slowly cut the citizen from the embrace of the state. Chinese workers found the freedom to make their own choices but also found that freedom came at a cost, if illness, injury, unemployment or theft intervened.
Thus Chinas insurance industry was born. Few markets generate as much excitement among insurers as China, a country with 1.3 billion innate savers. In 2008, insurance premiums jumped 39% to Rmb978 billion ($143 billion) a year in which global insurance premiums fell for the first time since 1980.
Few companies have done better in this new world than the countrys flagship life insurer, China Life Insurance. Listed in Hong Kong, New York and Shanghai, China Life and its chairman Yang Chao have managed to keep their heads above the water throughout the global recession, becoming the worlds second-largest insurer by market capitalization.
The firm posted a 15% rise in first-half 2009 earnings to Rmb18.23 billion, thanks largely to a strong rally in mainland-listed stocks.
The company has long been a staunch investor in major Chinese corporations and stock issues. It is planning to buy a stake in China Development Bank, which finances the countrys infrastructure and energy projects, and a prelisting stake in Agricultural Bank of China, which is planning a giant Shanghai-Hong Kong initial public offering in early 2010.
China Lifes great fortune is to be headed since July 2005 by a deft politician with financial acumen, and with insurance premiums born into his bones. Educated in China and Britain, the 59-year-old Yang chaired two arms of China Life group between 2000 and 2005, including the Hong Kong division. An economist by nature, Yang has more than three decades of experience in the banking and insurance sector and heads several of the countrys most influential financial advisory bodies.
That top-down institutional knowledge is essential to the development of a sector vital to China as the countrys vast population gains in both wealth and age. China Life itself has rapidly become a genuine corporate giant, at least in its home market, with 740,000 agents, a rising ratio of renewal premiums, and a 39% share of the domestic life insurance market.
China desperately needs individuals like Yang politicians capable of thinking outside the box.
Chinese citizens are wealthier than ever, and more likely than at any point in the countrys long history to own real estate, securities and, much to the advantage of China Lifes business, insurance policies. For the company and their experienced chairman, and for Chinas fast-growing but still semi-formed financial sector, that at least is a step in the right direction. Elliot Wilson
German Gref, Chairman, Sberbank
German Gref,described by one analyst as one of Russias rare great minds, is still relatively unknown domestically and internationally. But not for much longer
History books are crammed with overrated and bloated egos, but what of the underrated figure whose role in the creation or protection of a nation or way of life is underrated or overlooked or relegated to a mere footnote?
Until recently one of those individuals was German Oskarovich Gref, a Russo-Kazakh economist and former minister, appointed in 2007 as chairman and chief executive officer of Russias largest lender, Sberbank.
Overnight Gref was catapulted into becoming one of Russias most powerful and influential executives. In many parts of this vast, underbanked country, Sberbank literally is the state, sucking in savings from the populace, disbursing loans, and ensuring that state capital is directed into investment and social development programmes.
Sberbank is an enormous institution. Though total assets, impaired by the global recession, shrank by 2% year-on-year in the first seven months of 2009, operating income jumped 34%, with net interest income rising 44%.
Much of this black ink is being put to good use. During the 1980s and 1990s when Russian customers lost virtually everything as the rouble collapsed and inflation soared, most kept their savings in one of Sberbanks more than 20,000 branches. That debt may now be repaid.
Sberbank has long dropped hints about reimbursing customers for the original value of their savings, shredded during Russias lost economic years, adjusted for inflation.
Gref has always been an unusually colourful and candid figure within Russias follow-my-leader political economy. He once owned an Audi with the personalized numberplate 007. In an infamous 2004 speech, as the countrys minister of economic trade and development a position he held between 2000 and 2007 he lectured several ministers on their clouded view of economics, stating that Russias mission was to become the brains of the world economy.
The Sberbank chairman has also always been something of a sharer, perhaps due to a peripatetic Soviet upbringing he was schooled in the Siberian city of Tomsk before completing a law degree at Leningrad University. A long-time advocate of Russian membership of the World Trade Organization a laudable objective stymied by his boss, Vladimir Putin, Grefs greatest legacy may be as co-creator of Russias Stabilization Fund in 2004.
The fund split in two in 2008 with the creation of a $125 billion Reserve Fund and a $32 billion National Welfare Fund, which invests in higher-risk securities is essentially a buffer against a repeat of the 1998 rouble crisis. It is used to mop up excess liquidity in good times and balance the budget whenever global energy and commodity prices fall below a cut-off point.
A technocrat and a progressive, Gref has never quite received his due for helping broaden and deepen Russias consumer economy. Described by one Moscow-based market analyst as one of the countrys rare great minds someone who actually thinks beyond the end of the day as a minister he helped stabilize the economy, boosting per capita GDP and job numbers by promoting Russias image abroad. Foreign direct investment into Russia rose from $2 billion in 2000 to $30 billion in 2007 during his time in office.
Grefs tenure at Sberbank has coincided with a global recession that has struck Russias economy harder than most. But the chairman sees his firm as a genuine financial force, both regionally and globally. Sberbank wants to become the countrys leading issuer of credit cards. He is considering an autumn acquisition of the troubled Kazakh lender BTA and an overseas listing of global depositary receipts.
Determined to remain in the public eye, in September Sberbank and Canadas Magna International finalized a deal to buy GMs European automotive unit, Opel. If the process continues and there is no obvious reason to doubt otherwise German Grefs days as a relative historical footnote in Russias modern financial history look like being a thing of the past. Elliot Wilson
Chanda Kochhar Chief Executive, ICICI
ICICIs rapid expansion left it vulnerable when the financial crisis hit. But since then incoming CEO Chanda Kochhar has put it on a solid footing
When Lehman Brothers collapsed last year, ICICI faced a crisis of confidence with a run on bank deposits and a precipitous drop in its share price. Suddenly the banks aggressive growth strategy was under attack and seen as a classic example of financial excess in an over-levered post-bubble world.
But everything changed in May when Chanda Kochhar, a 25-year veteran at Indias largest private bank, became its chief executive. Her appointment coincided with such unprecedented market turbulence that it forced her to rethink the banks business model.
Kochhar has torn up ICICIs growth-at-all-costs approach, the strategy that characterized her predecessor KV Kamath. She now preaches efficiency savings and low-risk corporate lending against the sins of unsecured retail loans as well as unbridled global expansion. For the ICICI staff who have worshipped upon the altar of global, universal banking for the past decade, this sounds like heresy.
But Kochhar says times have changed. When there was a bull run, ICICI made good use of that, but we now need to be nimble enough to say that in this volatile environment we have to be a lot more risk-averse, she tells Emerging Markets in an interview in her Mumbai office.
The banks reliance on wholesale funding markets which predominantly drove ICICIs annual credit growth of 47% between 2004 and 2007 was the chink in its armour after credit markets froze at the end of 2008. The banks profitability, funding base and liquidity position were deeply challenged.
In response, Kochhar reduced ICICIs balance sheet by 7% year-on-year by the end of June and predicts a single-digit growth in the next year compared with the five-fold expansion over the past nine years. She says she plans to significantly reduce our wholesale funding bias to focus on traditional retail deposits. But not content with simply improving the banks liability base, Kochhar has set herself a bold ambition: to double its return on equity in the next three years. Its a personal push rather than a target imposed by the board, she says.
To achieve this, Kochhar will continue to restructure the banks loan portfolio in favour of corporate lending rather than unsecured consumer credit, reduce its international portfolio and control credit losses while focusing on trade finance and infrastructure projects. In periods where consumption is driving the economy, we calibrate our strategy accordingly. In times when there is investment-led growth then project and infrastructure finance become the larger focus, she says.
Nevertheless, her top-floor office located in the Bandra-Kurla complex a commercial hub in northern Mumbai which overlooks a cluster of rehabilitated slums and a large hospital, serves as a visual reminder of Indias huge development needs.
Kochhar denies that ICICIs change in business strategy will be a snub to Indias poor. The plain, vanilla unsecured loans to fuel consumption will be reduced, but there is still so much to do in underbanked areas, in terms of giving customers an account for daily banking purposes and, at a later stage, lending, she says.
ICICI is planning to open up another 600 branches in the next three years but without adding to operating costs. The plan is to redeploy staff to local branch networks rather than rely on third-party agents to sell ICICI products.
She argues that if India reaches at least 7% growth in 2011 and 2012, ICICIs credit growth could grow by 20% year-on-year, and the consumption-driven balance sheet party will resume.
Kochhar, who started as a management trainee at the firm and has overseen its corporate, international and retail push, is well positioned to execute this nimble shift in business strategy to achieve sustainable growth. Sid Verma
Roberto Setubal, Chief Executive, Itau Unibanco
While leading a new phase of international expansion, Roberto Setubals main focus remains a burgeoning domestic market
Terms like global reach and international presence unfamiliar language to Brazilian financiers a mere handful of years ago are becoming commonplace for a select tier of the countrys bankers.
This is particularly the case for Roberto Setubal, president of Itau Unibanco, whose bank emerged as Brazils largest private-sector financial institution following the Itau-led merger with Unibanco last year. The bank has reached such a size and a capital base that we can now look forward to greater moves abroad. International aspirations are within reach for us, says Setubal, in an interview with Emerging Markets.
Setubals medium-term strategy goes beyond Brazilian borders. We think that we will have opportunities abroad. Latin America is a natural direction for us, he says. But we have nothing that is clearly defined at this stage. We do not have any defined target, and this will come out naturally as opportunities arise.
But the day-to-day focus remains on domestic growth and integrating the operations of Itau and Unibanco. The bank has a 17% share of the loan market in Brazil. Corporate loans fell 9.5% in the second quarter of this year, but retail loans rose 2.2% due to higher demand while loans to SMEs rose 5.3% as the bank targets small business owners.
At home Setubal has won praise from his peers even though he has recently had a hard time with the government after he said that state-owned banks policy to cut spreads aggressively was unsustainable.
Setubal is a great banker, says Louis Bazire, the Brazil-born president of BNP Paribas subsidiary in Sao Paulo. As a trained engineer, he is very rigorous. Hes very open to the international environment. He is a man of the world. Hes got vision and is always on the lookout for what is happening elsewhere.
The gradual deepening of local capital markets is, he argues, a prerequisite for sustained growth. Brazil is becoming more capitalistic, says Setubal. It is a country with very high rates of return, so its very attractive to investors. The capital market will still grow a lot.
Brazil is on the verge of the next turn of a huge investment cycle in oil and other infrastructure. The demand for capital will become greater in Brazil; a lot of people will want to invest; you can already feel that, he says. This is going to boost capital flows, and it is one of the factors leading to the appreciation of the Brazilian currency in the foreign exchange markets.
This is part of a wider pattern, he argues. The trend of the depreciation of the dollar compared to emerging market currencies is poised to continue, he says. Emerging markets have been experiencing stronger growth and more favourable scenarios. The US domestic market is going to be weak, and the pressure towards the depreciation of the dollar is real.
As vice-chairman of the Washington-based Institute of International Finance, the global banking association, he is also keeping a close eye on the debate over the shifting balance in global financial power.
Emerging markets with more balanced economies will generally carry a greater weight in terms of economic growth, and they will have a greater active voice in international decisions, he says. Thierry Ogier
Sheikh Nizam Yaquby, Islamic finance scholar
The global financial crisis may act as a catalyst for Islamic finance, as the industry reaches out to the worlds 1.3 billion Muslims. Shariah scholars will play an increasingly central role in this transformation
The majority of people who buy Shariah products, or park their money in Shariah accounts, want certainty that what theyre buying or investing in is Islamic, namely that it doesnt pay or charge interest. Shariah scholars claim to provide this certainty and in doing so, have become some of the most powerful people in one of the worlds fastest growing financial sectors.
The estimated $1 trillion industry is thought to be growing between 1015% a year, although hard data is poor. Whats known is that the 100 biggest Islamic banks had $580 billion in assets at the end of 2008 and that was a 66% increase on the previous year despite the global financial crisis. Many experts now believe that the global economic downturn and the financial turmoil caused by credit excesses can act as a catalyst for new approaches to finance based on Shariah principles.
Yet the industrys biggest challenge is a scarcity of well-trained, legally and financially literate and internationally-minded scholars. There are only half a dozen scholars on the advisory boards of the worlds top Islamic institutions.
Bahrain-based Sheikh Nizam Yaquby is arguably the most highly regarded of such scholars; hes believed to serve on more than 40 Shariah boards from Citi Islamic and HSBC to Abu Dhabi Islamic Bank and the Dow Jones Islamic Index. Operating for years out of the back of an electronics store in the Manama souq, he exemplifies the speed with which the Shariah adviser role has evolved into a jet-setting profession on a par with commercial law. Sheikh Nizam now finds himself endlessly on the road addressing conferences to improve knowledge of Islamic finance and of the Shariah scholar discipline; he is widely considered at the cutting edge of financial innovation.
But this embrace of innovation is something of a double-edged sword. Nizam and his peers, like Mohd Daud Bakar in Malaysia and Yusuf Talal Delorenzo in the US, have become labelled as commercially-minded scholars, given their work in financial markets. A debate is growing over whether the products approved by these scholars whether it be an Islamically compliant hedge fund or the tawarruq or reverse murabaha structure, which the OIC Fiqh Academy has declared non-compliant breach the spirit of Shariah.
But Nizam denies that theres a split within the scholarship. There is no perception among scholars that there is one more conservative and one more progressive, he says. These are terminologies used by outsiders. Within our Islamic legal community, different scholars reach different conclusions for different reasons. In the last five or 10 years more conventional products are being designed in a way to be acceptable from a Shariah point of view. I believe if it is properly done, with proper approval and procedure, there is no harm in that, in giving Islamic bankers and investors more tools.
Whatever the case, the fact is that Islamic finance cant thrive without Shariah scholars, whose vocation needs recognition as much as development. But with the industry increasingly reaching out to the worlds 1.3 billion Muslims many of whom live in emerging economies in south-east Asia and the Middle East the influence of such scholars cannot be overstated. Chris Wright
Muhammad Yunus, Founder, Grameen Bank
By capitalizing on poverty, Yunus has boosted the purchasing power of millions in the developing world
There are roughly 140 million households in the world with access to microcredit, and a far bigger number with access to micro savings. Irrespective of who pioneered the idea of microcredit, theres no question who gave the idea momentum and had the greatest influence on building the powerful industry it is today. Its Muhammad Yunus, the Bangladeshi banker and economist, who, jointly with Grameen, the bank he founded, won the 2007 Nobel Peace prize.
The Grameen approach, developed with government and central bank backing from a research project by Yunuss team at Chittagong University in Bangladesh, was distinctive because it made lending to the poor a solid business model. Others had lent to the poor on the back of state subsidies but without worrying about its sustainability as a business practice.
Microfinance has emphasized its ability to alleviate poverty and to act for the general social good, and Yunus has been very much a key thinker behind it. But you wouldnt see banking groups as big as Citigroup building microfinance teams of their own if Grameen hadnt demonstrated that lending to people without collateral was not only good for the soul but the balance sheet too.
The global financial crisis has had some surprising impacts on the microfinance industry. Some have got into trouble.
Martin Holtmann, who heads microfinance initiatives at the International Finance Corporation (IFC), has developed an IFC-led facility that aims to raise $500 million to support microfinance institutions facing liquidity problems. In September it had already approved almost $140 million in disbursements. But that was chiefly for credit institutions suffering a knock-on effect of the liquidity crunch in commercial banks, not because of any lack of confidence in the microfinance institutions themselves.
You wouldnt call it a full crunch, because microfinance institutions, like any prudent institutions, had secured medium-term financing. But eventually you hit the rollover risk, says Holtmann. In the main, particularly in the deposit-taking institutions, they have, if anything, outperformed. Deposit takers have by and large escaped the liquidity crunch because deposits have been stable, he says. In some cases, they have benefitted from the fact that commercial banks have had runs on deposits.
So in these exacting circumstances, individual borrowers have remained uncommonly reliable, and the management of these banks has held up better than their global heavyweight counterparts. Grameen illustrates these trends. This August Grameen had an almost 98% recovery rate; its return on equity in 2008 was 21% and its capital adequacy ratio 12%.
Its also notable that when Yunus speaks these days, more often than not hes calling for better regulation. He wants the industry to be properly governed and supervised, with the right environment for stable growth. Along the way other long-standing micro-credit lenders have shifted their own models from state subsidy to free-standing sustainability, notably Indonesias powerful rural lender, Bank Rakyat Indonesia.
Microfinance is not universally admired. Some feel it creates a culture of debt; some feel interest rates, which typically are higher than those in mainstream commercial banks, are unreasonably high; some claim that banks like Grameen cant operate sustainability without subsidies; and still others find them prescriptive.
But theres no question it has provided an opportunity to a vast part of world society that would not otherwise have received it and it will remain one of the fastest growing areas of financial services for years to come. Chris Wright