Basix: An organization with a difference?

Basix is an organization that believes in conducting social work like business. Whereas the government and NGO are believed to be largely corrupt and lack transparency, the model of Basix is worth a close look.

The mission of the organization is to promote a large number of sustainable livelihoods, including for the rural poor and women, through the provision of financial services and technical assistance in an integrated manner. Basix claims that they strive to yield a competitive rate of return to its investors so as to be able to access mainstream capital and human resources on a continuous basis.

Basix has acorporate structure, consisting of a number of companies. The website discloses that the unsecured loans have come from Ford Foundation and Swiss Agency for Development

and Cooperation. The loans are rupee denominated and thus do not carry exchange rate risk. Also the interest rate is nominal at 1%. This appears contradictory to their claim of competitive rate of return, at least on the debt, if not in equity.

Bhartiya Samruddhi Finance Ltd.

Samruddhi is registered with the Reserve Bank of India (RBI) as a Non Banking Finance Company (NBFC), through which credit and technical assistance is delivered. This is the flagship company of the BASIX group. BASICS Ltd earlier owned nearly 100 percent of Samruddhi with an equity base of Rs 4.5 crore at its birth in the year 1997. Samruddhi expanded its equity base to Rs 20.6 crore in 2001. The additional equity came from the IFC, Shorebank USA; Hivos- Triodos Fund, Netherlands; the ICICI and HDFC in India. The investment by BASICS Ltd was also enhanced to Rs 9.7 crore, bringing its share of Samruddhi holdings to 47 percent.

As on June 30th, 2007 Samruddhi was present in 6894 villages in 45 districts spread over Nine states of Andhra Pradesh, Karnataka, Orissa, Maharashtra, Madhya Pradesh, Jharkhand, Rajahsthan, Chattisgarh and Delhi.

It had cumulatively disbursed over 5,61,600 loans worth Rs 589 crore. The outstanding as on June 30th, 2007 were Rs. 144 crores with 211,550 active loans. The company maintained a high portfolio quality with an on-time repayment rate of 98.7 percent and eventual repayment rate of over 99 percent, with some delay. The company also provides Agricultural & Business Development Services to about one third of its customers through Livelihood Promotion Agents (LPAs) and Institutional Development Services for producers like MACS for cotton producers, dairy cooperatives.

Krishna Bhima Samruddhi Local Area Bank Ltd

The mission of KBSLAB is “to be a sustainable local community based institution providing financial services to the underserved, particularly rural poor and women and to arrange provision of technical assistance and support services to the borrowers with the ultimate goal of promoting a large number of sustainable livelihoods in the area”.

KBSLAB is the first micro-finance bank in the country which was incorporated under the Indian Companies Act of 1956 on February 19, 1999 and was granted license to carry on banking business by the Reserve Bank of India to operate in the districts of Mahabubnagar, Raichur and Gulbarga in Andhra Pradesh and Karnataka under the Banking Regulation Act, 1949.

The Bank operates through 11 Branches –in Mahabubnagar (Andhra Pradesh) and in Raichur and Gulbarga (Karnataka).

As on March 31, 2006, KBSLAB had a loan outstanding of Rs 189 million and deposits of Rs 126 million. It is catering to more than 22,800 borrowers and 31,859 depositors. The recovery rate of the Bank stood at 95.5% as on March 31, 2006. The average direct loan size stood at Rs 11,276/-.

Indian Grameen Services
IGS is registered as a Section 25, not-for-profit company, involved in carrying out research and development for livelihood promotion.

IGS is focusing on building the knowledge base required for supporting livelihoods and disseminating the knowledge so generated for building the implementation capabilities of various organizations playing a critical role in supporting livelihoods. IGS also carries out human resource and institutional development for the BASIX group as well as for and other rural/micro-finance and community / producers institutions. It also designed and developed financial products for extending credit, evolving distribution channels for delivery of its services and developing necessary systems for service delivery such as accounting and MIS.

The main sub-sectors in which action research has been initiated are:

• Dairy, Groundnut, Cotton, Soyabean
• Rural electric power (distribution reforms).Water for irrigation (borewells, lift irrigation, drip systems, watersheds), Retailing and mutual marketing by self-help group.

The financials of the company indicate that it might be passing through a rough patch as of now. Comparing the results of 2006-07 with the previous year shows that the worth of net assets has dropped to more than half. Income from all heads, except ‘others’, has dropped. This includes the contributions from different agencies and the revenues from internal activities.

Expenditure, on the other hand has increase, as compared to the previous year and is more than the income, which means that the company would have to aggressively search for more funds to avoid getting into debt, from a financial point of view.