As of July 2013, the population of India is estimated at 1,220,800,359 people (about 1.2 billion). The urban population of the country is 352 million (32 percent of the total population). Of those living in urban areas, 30 percent are currently living below the poverty line (106 million).
To combat this problem, former CitiGroup and Bank Muscat employee Samit Ghosh started a company called Ujjivan in 2005. Based in India, Ujjivan offers microfinance loans to the urban poor, specifically women, whom they believe are more likely to use the money to help raise their families out of poverty.
What makes Ujjivan different is its focus. Though many microfinance institutions were already in existence, they mainly were present in rural areas. This neglected the urban areas. To bridge this gap, Ujjivan stepped up to focus on the urban poor. Ghosh described his company as being “sort of the pioneers to work with the urban poor in a large scale. There have been others that have done it in a small scale, but not in a large scale like we have.”
The organization found that the urban poor are “exposed to enormous contingencies and are required to share their meager resources with neighbors, friends, relatives and colleagues. Hence, there is a tremendous amount of bonding and affinity among them.” It was also discovered that the urban poor are a stable population. The big difference between rural and urban poor populations was concluded to be the lack of time and space in cities.
Ujjivan’s website describes their mission as providing “financial services to the economically active poor, to help alleviate poverty.” Ujjivan’s goals include providing a full range of financial services required by customers, building an institution which is best in class in all aspects (customer service, innovation, efficiency, work place engagement, leadership, governance, and reputation), operating a viable business to provide satisfactory returns to investors, providing professionally rewarding careers to employees, attracting and retaining quality talent, and holistically approaching poverty reduction in partnership with Parinaam Foundation though social welfare to enable customers to lead a better life.
In order to achieve these goals, Ujjivan follows a business model for group lending known as a The Grameen Model. Developed and tested for over 30 years by the Grameen Bank of Bangladesh, the model ensures that capital reaches each individual member of the group based on merit.
As people and situations evolve over time, needs of certain clientele change. To accommodate such changes, Ujjivan offers customized credit that meets the specific needs of their “Graduate Clients.” Graduate Clients are those clients who have successfully completed at least one loan cycle through the Group Lending process. Not only does this allow the organization to cultivate healthy relationships with customers, but it also secures their place as a market leader in microfinance.
They offer four types of individual loans to their Graduate Clients: Individual Business Loans, Short Term Business Loans, Livestock Loans, and Housing Loans. While IBLs go to entrepreneurs who run their own businesses, STBLs are provided to clients who run seasonal businesses. Livestock Loans cater to the needs of clients who participate in animal husbandry. Housing Loans are obviously meant to provide for rentals, leases, and construction.
Ujjivan has received many awards such as India’s Best Company to Work For in 2012 and Microfinance Organization of the Year in 2011 (Microfinance India). To date, Ujjivan has disbursed over 54.553 million loans to more than 1.2 million customers within 324 different branches in 21 states across India.
For more information on this outstanding organization, check out their website at www.ujjivan.com.
– Samantha Davis