What I'm reading today

• Android or iPhone? Looks like Android it is.
• The JD has lost its prestige here in America. Is it worth going to law school?
• Advice like youth, probably just wasted on the young.
• I want one of these for my bike ride this summer.
• I have set up a new blog to document my experiences as I bike across America for cancer this summer! Please check it out and donate to the cause!

A Relationship with Self

The most important relationship we have in our lives is with our selves, mind, body and spirit.

The most important relationship we have in our lives is with our selves. And even though we are the only ones who are present at every moment of our lives—from birth onward—this relationship can be the most difficult one to cultivate. This may be because society places such emphasis on the importance of being in a romantic partnership, even teaching us to set aside our own needs for the needs of another. Until we know ourselves, however, we cannot possibly choose the right relationship to support our mutual growth toward our highest potential. By allowing ourselves to be comfortable with being alone, we can become the people with whom we want to have a relationship.

Perhaps at no other time in history has it been possible for people to survive, and even thrive, while living alone. We can now support ourselves financially, socially, and emotionally without needing a spouse for survival in any of these realms. With this freedom, we can pursue our own interests and create fulfilling partnerships with friends, business partners, creative cohorts, and neighbors. Once we’ve satisfied our needs and created our support system, a mate then becomes someone with whom we can share the bounty of all we’ve created and the beauty we’ve discovered within ourselves.

As we move away from tradition and fall into more natural cycles of being in the world today, we may find that there are times where being alone nourishes us and other periods in which a partnership is best for our growth. We may need to learn to create spaces to be alone within relationships. When we can shift our expectations of our relationships with ourselves and others to opportunities for discovery, we open ourselves to forge new paths and encounter uncharted territory. Being willing to know and love ourselves, and to find what truly makes us feel deeply and strongly, gives us the advantage of being able to attract and choose the right people with whom to share ourselves, whether those relationships fall into recognizable roles or not. Choosing to enjoy being alone allows us to fully explore our most important relationship—the one with our true selves. 


[Relationship  with Self, 04/30/2010]

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What I'm reading today

• It says a lot when 5 of the Fortune Global 500 top 10 are oil companies. 3 of the 5 most profitable companies in 2010 are oil companies- I can only seek solace in the knowledge that their profits have fallen tremendously from previous years.
• The secret to beauty unlocked. A MUST-READ for males who are successfully failing in their pursuit of the female kind; it will force you to rethink your strategy.
• Bringing power to the people.. with rice husks. Inspirational.
• Major Dick Winters, a truly great man, has left this world and his mark on it. I shall never forget in Band of Brothers when he talks about the seconds before he jumped: "When the jump light turned green, I was out that door immediately." We should all strive to be like him, men of action and character.
• Facebook will end on March 15th. It is time to go outside and make real friends. If only this was real..

Best short movie I have ever seen.

3 Minutes from Ross Ching on Vimeo.

Susan Hockfield, the president of MIT, explains the secret to innovation quite marvellously-

You start with some very bright people, let them hang out with other very bright people and let their imaginations roam.

[MIT and the art of innovation] 

 

What I'm reading today

• Wait, marriage is not about putting the relationship first? It's about me? Awesome.
• This sounds like every parent I knew in Singapore.
• America has a LOT of money to burn on useless things. Look at the comparison list at the bottom- puts things in perspective.
• This is my new bible for choosing a medical specialty.
• King Kenny is back to rule the fields of Anfield Road!!!

a few lines that hit the spot.

This is my wish for you: Comfort on difficult days, smiles when sadness intrudes, rainbows to follow the clouds, laughter to kiss your lips, sunsets to warm your heart, hugs when spirits sag, beauty for your eyes to see, friendships to brighten your being, faith so that you can believe, confidence for when you doubt, courage to know yourself, patience to accept the truth, Love to complete your life.

Pay-for-performance tutoring?

The fee-for-service model in the service industry is a problematic one. It creates an undesirable set of incentives for the service provider, which does not involve improving service quality delivered to the consumer. The failures of the fee-for-service model in healthcare are well known-- physicians are incentivised to provide more services to the patient that are not necessarily for their benefit. This past semester, I took a health economics class in which we discussed the different compensation schemes and their characteristics. I thought, why not extend this to other service industries as well? When purchasing a service, we are at the whim of the individual service provider; we are dependent on his or her skills and ability as well as desire to offer service of the highest quality. Shouldn't it make sense that we turn this around and let the consumer be the judge of the service being provided? Pay-for-performance is the way to go in my book!


This would make a lot of sense in the tutoring industry. Currently, tutors are paid on an hourly basis rather than on the quality of the tutoring session. The impetus lies with the consumer to take the initiative and be willing to learn. The tutor is more concerned about the length of the session and is not as invested in his or her tutee's learning experience. With a pay-for-performance system, we could revise the payment scheme such that the tutor is paid per concept taught or per chapter taught. The tutees could take a mini-test of sorts once the concept/chapter has been taught to test their newfound understanding of the subject, and once a minimum score has been met, it could serve as proof that the tutor has actually done his or her job and justify payment. This shifts the initiative from the tutee to the tutor and requires him to be very well invested in his or her tutee's learning experience. Outcomes in the tutoring industry would improve dramatically. because the incentives have been set in the right place. In reality, this may be hard to lobby for as most tutoring agencies are for-profit machines that are far more concerned with the money they rake in than their customers' academic performances. Still something to think about though..

What I'm reading today

• Smack in the middle of winter, and desperately needing to learn how to pack a snowball.
• Medicine is not just science anymore. Medicine is more business than anything.
• India's New Generation of Caste Busters.
• A classic Cold War era-esque spy thriller. The Last Raven by Craig Thomas.
• Signs that the mighty America is in decline.

What I'm reading today

I came across the Investoralist, and I loved how the blog had a regular 'What I'm reading today' post! It is such a superb way to share good articles, links, blogs, and whatnot. I am adopting this wonderful idea.

• Let physics be the judge in the skiing vs snowboarding debate.
• Bollywood actresses doubling up as prostitutes.
• 101 Real Dumb Laws [You May Not Tie an Alligator to a Fire Hydrant].
• White cops taser BLACK diabetic. Racist undertones?
• A TED talk by Simon Sinek on why Apple sells.

Stephen Fry on Language

This is an interesting 'essay' on language by Stephen Fry, the British actor, writer, journalist, comedian, television presenter, and film and football club director. He attacks those self-acclaimed 'guardians' of language who claim to be defending its proper form when they correct others' everyday use of language; he says that these elitist defenders seek out every opportunity to correct others but they do not appreciate the beauty of language themselves. Language is a communication medium-- it should not matter whether we are using the appropriate word to convey a particular meaning, it should only matter that we are understood. Very interesting viewpoint, because, on occasion, I admit I can be one the elitist 'rude and haughty' types who frown upon those whose use of language is not 'right' or 'proper'. This has got me reconsidering..

Microfinance: In whose interest?

By Ramakrishna Nishtala 

Microfinance companies’ interest rates have been the centre point of a controversy for some time now. The protagonists of lower interest rates base their arguments on two points. Firstly, as microfinance companies are serving the poor, they should not be chasing profits and instead they must give them loans at low rates of interest. Secondly, customers themselves, who are at the bottom of the economic pyramid, would not be able to pay the high interest rates that they are charged. The debate has often been marked by a feast of rhetoric and a famine of facts. 

Let’s get some facts on the table first. A typical microfinance loan is of Rs 10000 to Rs 15000, payable in 50 weeks, with a weekly repayment. For argument’s sake let’s consider a Rs 15,000 loan. The interest rate that the protagonists of lower interest rates would have the MFIs charge is 22% to 24%, while the current rates of mainstream MFIs are 28% to 32% calculated on an effective reducing balance interest rate basis, including processing fee and other such charges. So the difference is about 8% on a reducing balance, which on a loan of Rs 15000 translates into Rs 600 over the one year lifecycle of the loan. 

Take the case of a customer who borrows Rs 15000 to buy a cow. The cow enables her to generate an additional income of Rs 2000 per month, through a supply of milk to the local dairy, even after considering her dairy expenses such as animal feed, vitamins etc. And the cow is typically not the only source of income for the household as she and her husband would also be engaged in other productive activities such as rearing one more cow, agricultural labour, small petty businesses etc. Even after repayment of the loan installment of ~ Rs 1400 to Rs 1500 per month, she is still left with an adequate surplus and what is more, once the loan is repaid after a year, the entire income of Rs 2000 is available to her. The debate raging around her of ‘can she pay the additional Rs 600 per year (ie Rs 50 per month!) due to higher interest rates’ is quite academic to her. Similar is the case with other productive livelihoods such as kirana stores, powerlooms, home-based industries etc. To most MFI customers, the availability of a lump sum of money through a loan facilitates purchases which they would otherwise find very difficult to do and the returns that they generate through these loans far outweigh the interest costs they pay to MFIs. 

MFI interest rates have often been compared to moneylenders. A typical moneylender charges 5% to 10% per month for the income strata that the MFIs address, for an uncollateralized loan which is several multiples of the MFI interest rates. A money lender I met in Coorg recently explained his modus operandi. He lends Rs 10000 to his customers and they repay Rs 1250 per week over 10 weeks. If we were to compute the annualized interest rate on a reducing balance, this would translate into well over 200%! 
The reality is conventional perception of interest rates is governed more by loans of longer tenures running into several years, while typical microfinance loans are of 12 months, making the interest more like a service fee rather than ‘interest on the loan’. 

But why do the MFIs charge higher interest rates merely because their customers can afford it? Firstly, banks are the main sources of funding for MFIs. The banks charge them 10% to 14%, depending on the scale of the MFI. On top of this, the MFIs incur significant operating costs due to their model of offering service at their customers’ doorsteps. Even in the more scaled up companies, this cost is 8% to 10% considering that the loan officer has to make 50 trips to the customer, for collecting weekly installments. Or else, the customers would have to visit the MFIs’ branches to make their repayments incurring additional costs of transportation, besides the loss of income due to the time spent in the process. The question is who bears the costs? In the case of banks, the customers bear the cost more than offsetting the advantages of lower interest rates. This is without even getting into the aspect of the sheer difficulty of getting bank loans for the poor customers. 

Even with all these costs, there are MFIs which make good profits. But why can’t the microfinance companies charge lower interest rates instead of making sizable profits? There are MFIs which have ROAs (Return on Assets) which are well in excess of 7% to 8% and there is little doubt that these are excessive numbers. However, the comparison that is often made to banks which have ROAs of 1.5% or so, is inappropriate. With capital adequacy ratios of 9% to 10%, this translates into an ROE (Return on Equity) of ~ 15% for the banks. Given their risk profile, investors are willing to invest in banks for this level of ROE. MFIs, in contrast, are a small fraction of the banks, in size, and give uncollateralized loans to poor people, with a far greater degree of enterprise level risk. So, it is only fair for investors to look for a higher ROE of 25% or thereabouts from MFIs. 

As the capital adequacy requirements of MFIs are now to be a minimum of 15%, this translates into an ROA of 4%, post tax. Some of these numbers may change given the recent Andhra Pradesh ordinance as investors would review the level of risk attached with the sector and frame their expectations accordingly. In the absence of significant commercial capital (both equity and debt), albeit with a social angle to it, the sector would struggle to grow, leaving several millions of customers underserved or un-served. 

Amidst all this debate the customer whose interests are ostensibly at the heart of the whole argument is lost sight of. It would indeed be a pity if heavy handed ordinances stifle the growth of MFIs, ironically, with the stated purpose of protecting the same customers who would be the most adversely affected in the absence of MFIs. 


(The author is Director & COO, Vistaar Livelihood Finance. Views expressed here are personal)


Microfinance: In whose interest? [Economic Times, India, Dec 16th 2010]

2000 vs 2010

It's hard to imagine we are already 10 years gone from Y2K! I can still vividly remember celebrating the new Millenium at a family friend's NYE party half in excitement and half in trepidation of the world coming to an end. Has it really already been 10 years? On one hand, time seems to have simply flown by. On the other, this decade has seen me morph from a child to a man and accomplish so much.


As we hurtle into the teens of the 21st century, we should stop and take stock of how the world has progressed over the span of the past 10 years. io9 has done exactly this:


2000 vs 2010: How the world has changed [io9]


The world's population has grown by a billion (it'll be interesting to know how much of that we can hold India and China responsible for), and half of the world's citizens now reside in cities. The Technology statistics reveal how the world has become more connected. More than a quarter of the world's population are now patrons of the world wide web; most people are now connected by fast, round-the-clock broadband subscriptions instead of the 56k dial-up that was the norm in 2000. More than 3 in 4 people have cellphones for communication, banking, and just all-round connectivity. Communications technology is taking over the world. However, the most shocking statistic in my opinion was that natural disasters killed 260,000 people in 2010 as opposed to 17,000 in 2000 (!!!). Maybe something for us to reflect on and look for improvements in emergency management, current infrastructure, warning systems, and disaster response planning?


A lot has changed in 10 years. Change for the better necessarily? I am not so sure. The world may now be flatter, but we are also consuming more energy, facing more destructive natural disasters, and putting more of the species whose care we have been entrusted with on the Endangered list. It is vital that we keep this big picture in mind as our generation begins to take charge and holds the power to change the course of our planet's future. Having said that, the next 10 years will offer us opportunities galore to seize the future, for the future is now.