Need A Bank For Poor


MUHAMMAD YUNUS, the Bangladeshi banker who made a mark as a social entrepreneur, economist and civil society leader, was awarded the Nobel Peace Prize in 2006 for founding Grameen Bank and for pioneering the concepts of microcredit and microfinance. Yunus in 2011 went onto found Yunus Social Business (YSB) — Global Initiatives as an international implementation arm for his vision of a new, humane capitalism. Today, YSB manages incubator funds for social businesses in developing countries and provides advisory services to companies, governments, foundations andNGOs. Un-

fortunately, Yunus fell foul of Bangladeshi Prime Minister Sheikh Hasina, with the latter suspecting the banker of nursing political ambitions and challenging her supremacy. In March 2011, the Bangladesh government fired Yunus as chairman of Grameen Bank, citing legal violations and for breaching the statutory age limit.

Recently, Yunus was in Mumbai at the invitation of Nishith Desai Associate, where he made a detailed presen­tation on his concept of developing ‘social business’ to give capitalism a‘human face’.

Addressing corporate leaders and hard-nosed bank­ers, he said if the pitch was right, business promoters and shareholders would have no objection to committing funds for ventures aimed at transforming society. He illustrated his point by citing the example of the social business joint venture between Grameen Bank and Danone Foods, which was set up in 2006 to provide key nutrients to Bangladesh’s rural population. At the time the JV was being set up, Danone was faced with the task of seeking shareholder ap­proval for $500,000 as the multinational company’s share of the paid-up capital. However, when the issue was put to vote, not only did 98 per cent of the shareholders support the motion, they even contributed $35 million when all that was sought was a mere half a million!

BW | Businessworld caught up with Yunus on the side­lines of the Mumbai conclave. Excerpts:


charity, and call it CSR. I give it to a non-government organisation, or an education institution, as a gift to them. So, CSR is not a business. Social business is ultimately more sustainable. With CSR, I may donate Rs 1 crore, and it is a beautiful thing. But the money will never come back. With social business, I use the money, I solve the problem and the money comes back. It is self-sustaining, and can become very powerful.

The Indian Companies Act has made it man­datory to contribute 2 per cent of profits to CSR. Does this show that Indian corporate groups are not socially inclined, and there­fore, a law had to be enacted to make them realise their social responsibility?

This is a global problem, not just in India. Corporates are busy making money; they are mandated by their shareholders to give back maximum returns. To solve people’s prob­lems, to help people, is not in their mandate. Everything depends on how the company is performing on the stock market. The act of giving is certainly not part of the busi­ness. People have overtime realised that businesses are self-centered, they are selfish; they think only of themselves. Then, they said let’s give something away as charity. That’s how corporate social responsibility was born. It did not come from the government; it came from the cor­porates themselves. But later, they even started using the CSR money for self-promotion. It became part of public relations. They started promoting cricket teams, they started promoting music. You call it CSR, but you bring it back to your­self by promoting yourself. And, therefore, the government steps in and says: we don’t leave it to you, we will impose restrictions, you have to contribute 2 per cent; and these are the list of activities that can be considered as ‘CSR’. It is a good step.

You have also suggested that CSR funds be used for social business. Is that right? Yes, CSR as social business becomes powerful; it becomes self-sustaining; it can grow; it becomes an institu­tion. In the first draft, I was told, in the schedule of CSR activities, there were eight forms of social business listed. But in the final Bill, this was removed. Perhaps, someone in the government thought: how can we include a ‘business’ in CSR activity? This is regretful. Somebody in the conclave mentioned that Rs 35,000 crore is being raised as CSR. This can become a powerful investment. This can be used to address the prob­lem of slums, education, healthcare. But, if you leave it to them, it will remain pious wishes. You need a regulatory authority to see that this work is done.

India has had a history of tight-fisted family-run businesses. Has there been a change in this mindset in the recent past?

There has been substantial change. That is because with MBAs and professionals coming in, they trained the organisation not in the traditional business norms, but the norms of western, liberal capi­talism, and they are making a difference

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