Microfinance in India Part 2

As I previously stated Andhra Pradesh emerged as India’s largest site of micro-finance activities due to the early efforts of the Indian government through its Self Help Group-Bank Linkage Programme with some financial assistance from the World Bank. The government built its robust MFI portfolio through cooperation with NGOs investing in new financial client education. Private MFIs and government MFIs – the Self Help Groups – provide a range of financial services at similar prices, which results competition. In some cases, SHGs have been used by political players as vehicles of patronage, thus further complicating the picture.


In the past five years AP, experienced two major MFI financial crises, one took place this past year and the other in 2006. The circumstances for the crises were similar and led to a state-wide lending freeze. MFIs faced accusations of usurious (unfairly high) interest rates, opaque pricing models, inappropriate collections methods, poaching clients from SHGs and culpability in suicides. Both crises brought to light improvements that the industry will want to focus on; improving client protection, developing credit bureaus, and creating an environment of sustainable growth.


Both crises brought out a number of grievances. 


High interest rates: Indian MFIs charge different clients between 24% and 40% interest per annum. Recent equity market studies indicate that a well run MFI charging 28% on a loan will have a return of approximately 8-10%. So what are alternatives for poor clients? Option 1: traditional moneylenders which still charge higher rates and tend to be a rougher crowd than MFI representatives. Option 2: borrowing from SHG (Self Help Groups), which receive preferential lending rates from commercial banks, thanks to a lending subsidy from the Indian government through a variety of financial vehicles. SHGs lend to clients at annual interest rates of 24-48%. 


Multiple borrowing: Although it happens, multiple-borrowing takes place rarely, due to two factors poor clients are more risk averse in general and once they join a group of similarly risk averse borrowers that will take a loan together, the resulting group of borrowers ends up even more risk averse than individuals. With that said, borrowers that take more than one loan tend to make national and local news as they are the ones that will likely take their own life in the event of inability to pay back borrowed funds.


Coercion in collections: Micro-lending relies on the model of lending to groups that have potential to maintain a high level of fiscal discipline, which is enforced by members of the borrowing group internally. Paying back as a group will open up opportunities for future loans. However this model relies on the ability of clients to make weekly repayments on their loans and everyone falls on hard times at some point in their life. Since the reality of default exists, protections for individual clients fallen on hard times can be instituted by financial institutions. Such regulation will protect the vulnerable individual debtors and MFIs lending to them from public outrage and liquidity issues associated with panics. Additionally, in a few rather rare instances some MFIs have hired a few less than upstanding collectors who have used less than reputable methods to collect on loans. Since abuse of customers by collectors has occurred in the past, regulation that codifies acceptable ways of collecting on loans may be a good idea.


Proposed Regulation


The Malegam Committee was born in October 2010 to look at the MFI crisis and propose remedies. The committee is part of the Reserve Bank of India. Implementing regulations coming from the RBI will supersede state level regulation already in force. Proposed regulations by the Malegam Committee will likely enter force around April 1, 2011. The new regulations aim at both protecting consumers and allowing MFIs conduct the business of lending. 


New regulation would cap interest rates offered to clients of MFIs at 24%, limit the size of the loan to 25000 Rupees ($550 USD) and restricts the number of loans per borrower two just two. In order to control the MFIs’ profit margin the Committee proposes a cap on the differential between the lending institutions’ cost of borrowing and lending to clients at 10%. The Committee proposed a separate regulatory category for MFIs; non-banking financial companies (NBFC-MFI), requiring MFIs portfolios to include at least 75% of loans for income generation, and allowing borrowers to choose frequency of payments; weekly, bi-weekly, or monthly payments. A microloan qualifying household must earn fewer than 50000 Rupees ($1200 USD) annually. The Commission also proposed capital requirements for micro-lending institutions. Regulation of MFIs is proposed through the National Bank for Agriculture and Rural Development in cooperation with the RBI. 


So what do these regulatory proposals mean? Regulation affects the MFIs, the SHGs (indirectly), their clients and the overall micro-credit industry in India. Implications for all three groups are different. What are the effects on micro-lending institutions? The good news is that regulation of MFIs remains under national and not state government institutions, allowing for a regulatory approach relatively far from local political and social upheavals. The downside is that no other non banking financial companies have a proposed interest cap looming. Self Help Groups (SHGs), which compete for MFI customers and vise versa, do not fall under the same set of regulation, potentially giving them a competitive advantage over MFIs. 


Market competition with other financial institutions offering similar services for a better price provide stronger incentive for efficiency than interest rate caps. Interest rate caps will not bring get customers improved and better priced products. While I outlined some of the more straight-forward recommendations by the Malegam Committee earlier, I found other recommendations either hopelessly confusing or contradictory. If all proposed regulations are passed and enforced, they will likely drive well run and relatively efficient MFIs out of business, because they may not be able to fulfill all regulatory requirements. On the other hand, additional regulation while expensive and painful  in the short term, may help rebuild MFIs’ credibility both as fair lenders to their customers, sound investments for both private funders and large multi-nationals, and borrowers of good standing for commercial banks. New regulation will also help unfreeze the micro-lending marketplace after the last financial crisis, giving more opportunities to MFIs and their customers.


The SHGs in the short term will gain a competitive advantage in providing financial services to current and new customers, while MFIs work through new regulations and ways to conforms to their new regulatory environment. In the short term, some SHGs may end up losing business, because of interest caps on MFIs. While it is unlikely that interest rate caps on MFIs will help them become more efficient, the caps are in fact lower than SHGs’ interest rates. So once the MFIs work out compliance issues they will at the very least offer less expensive financial services to customers, which may lead to some SHG customers choosing to bank with MFIs. 


The SHGs, the MFIs, and the Indian government see the micro-lending customers as their chief concern and the reason for new proposed regulation. Do they win? In my opinion, customers will likely lose. Why? Customers seeking micro-lending loans in the short term and possibly in the long term as well see less different options for sources of financing. Some MFIs are bound to go out of business. MFIs may close their doors due to inadequate capital in reserves, loss of investor confidence, inability to comply with new regulation, or continued large numbers of non-performing loans. Interest caps on MFIs will not incentivize them to become better and leaner lenders, thus regulation will not result in an improved and less expensive product. Through new regulation customers will gain more flexible payment plan options and protection in terms of the way that lenders may collect on their loans. At the end of the day, customers will see a micro-lending market with fewer options, pretty much the same interest rates, no drastically improved financial products, and slightly stronger consumer protection.


Sources:

1. Bansal, Hema "SHG-Banking Linkage Program in India." Micro Finance Focus 9 August 2009. <http://ifmr.ac.in/cmf/mrap/wp-content/uploads/2009/04/shg-bank-linkage-program.pdf>
2. “Malegam Panel Proposes 24% cap on Interest rate on MFI Loans.” The Hindu. 19 January 2011. <http://www.thehindu.com/business/Economy/article1103090.ece?css=print>
3. Moksim, Julie. “MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Subcommittee Proposes Regulation for Microfinance Institutions (MFI).” Microcapital.org. 26 January 2011. <http://www.microcapital.org/microcapital-brief-reserve-bank-of-india-rbi-subcommittee-proposes-regulation-for-microfinance-institutions-mfi/> 
4. Rai, Vineet “India's Microfinance Crisis is a Battle to Monopolize the Poor” Harvard Business Review Blog , 4 November 2010. <http://blogs.hbr.org/cs/2010/11/indias_microfinance_crisis_is.html>
5. Ravi, Medha. “MICROCAPITAL BRIEF:  Reserve Bank of India (RBI) Proposal a Positive Step Argues Tripathi…But Andhra Pradesh Government Oversteps.” 19 July 2011 <http://www.microcapital.org/microcapital-brief-reserve-bank-of-india-rbi-proposal-a-positive-step-argues-tripathi%E2%80%A6-but-andhra-pradesh-government-oversteps/>
6. Rhyne, Elizabeth. “On Microfinance: Who's to Blame for the Crisis in Andhra Pradesh?” Huffington Post. 2 November 2010 <http://www.huffingtonpost.com/elisabeth-rhyne/on-microfinance-whos-to-b_b_777911.html> 
7. Shylendra, H S. “Microfinance Institutions in Andhra Pradesh: Crisis and Diagnosis.” Economic and Political Weekly 20 May 2006 <http://www.microfinancegateway.org/gm/document-1.9.27434/33479_file_EPW.pdf>

Microfinance in India Part 1

I read an article in The Hindu last week about the state of Tamil Nadu shielding its women from exploitative practices of Microfinance institutions. I found the content of the article thought provoking. While, I understand the economics of microfinance, I am only learning about India’s microfinance sector, thus the following post is heavily sourced. At the end of the post you will find sources which I used for this post.

Introduction and History

 

Some of you may have read about the microfinance credit crisis in India’s state of Andhra Pradesh in 2010 as well as the recent retirement of Mohammad Yunus, a Bangladeshi financier that created one of Asia’s most prominent micro lending institutions – the Grammeen Bank. India’s regulatory authorities, both state and national are working on instituting a package of new regulation which is supposed to both protect the consumers seeking micro loans and create a regulatory environment within which the micro lending industry will thrive.

I felt that to learn more about microfinance in India, I first needed to delve into the modern history of India’s financial institutions and regulatory framework. India’s experiences with establishing and regulating its financial sector created the environment within which social entrepreneurs established India’s micro-lending institutions in the late 1980s.  To understand India’s banking and regulatory legacy, I looked at the Economist Intelligencer Unit, IMF reports and Elizabeth Rhyne’s illuminating article on Huffington Post. Elizabeth Rhyne is the Managing Director at the Center for Financial Inclusion, Vaneet Rai of the Harvard Review Blog and others. 

Background 

Since India’s independence in 1947, the country carried out three major initiatives that shaped the country’s banking sector. The first took place in 1955 when India moved towards greater public ownership of banks, when the Imperial Bank of India was taken over by the government and renamed into the State Bank of India. The State Bank of India took over seven banks and its subsidiaries in 1959. In 1969 the Indian government nationalized 14 more private banks. The idea behind nationalizations was prevention of concentration of the financial sector within a few private hands and promotion of a balance of financial development. 

Following in Ghandi’s goal of self sufficiency, the government took steps to ensure that the financial sector provided enough credit to agriculture (especially in underdeveloped rural areas), export and small scale industries. While in 1974 the Reserve Bank of India issued guidelines indicating that both private and public banks must allocate at least one third of its credits to priority sectors indicated above, this requirement was increased to 40% in 1980. Heavy regulation of the banking sector lasted until the liberalization of the 1990s. Liberalizations of the 1990s removed controls on interest rates, liquidity ratios, entry barriers, relaxation of credit controls, and more. 

Microfinance: Background

The idea of micro-lending comes from the broader idea of financial inclusion. In other words, all people rich or poor need access to affordable financial services to conduct daily activities. When we think of banks we think of the types services they provide to customers; such as opening checking and savings accounts, obtaining credit cards, as well as loans to go to university, buy a house or a car. All banking services come at costs which are split between the bank and its customers. To issue a loan, the bank will need a lot of paperwork, including but not limited to establishing the customer’s identity, collateral, creditworthiness and the ability to repay the lent amount. Based on available background on the customer and health of the credit market, the bank will decide how much interest to charge. The amount of charged interest will bring the bank some profit, cover the risk of lending capital and cover the cost of administering the loan.

However, there are customers that both need tiny loans and are high risk borrowers. These potential customers are not likely to be part of the traditional financial system, may not have a credit history, collateral, and may not look like good candidates for a regular bank loan. Additionally, if the loan is small enough a regular bank may have no interest in processing it as administrative costs may turn out to be higher than the return on the loan. 

As a result, these customers tend to obtain loans from informal sources, such as the local moneylender. Micro-lending institutions come in to fill this gap and extend financial services to those customers.  In issuing loans, micro finance institutions use traditional social structures and higher interest rates to mitigate risk from such customers. These institutions lend to groups, which means that both administrative costs are lower per capita and overall loans tend to be larger overall. Microfinance institutions’ interest rates are higher than traditional banks to mitigate higher risk customers who often lack collateral. The majority of beneficiaries are in rural areas, where traditional banking services are far from villages and are part of close knit communities. Lending to a group within a close knit community provides social pressure on individual members of the debtor group to pay on time. Groups that fail to repay communal micro-loans do not get new loans, thus hurting the long-term prosperity of the group. As in the case of Grameen Bank, groups applying for loans go through months of financial planning courses, mitigating non-repayment risk further. 

While this is not the case in India, in some parts of the world, microfinance institutions take bank deposits, thus giving poor communities a way to buy into the success of the micro-lending institution. If groups that borrow from a micro-lending institution also have savings accounts, they give themselves a strong incentive to pay back their loans. Failure to repay a loan will not only mean a denial on the next loan, but also a higher chance that their lender will go out of business. If a micro-lender goes out of business, the community’s savings held at the same bank disappear with the lending institution. From a business development perspective, providing financial services to a group of people previously not part of the financial system, not only gives more income flexibility to this group, but brings a previously untapped source of customers for micro-lending institution – in other words more customers is good for business. This leads to a question, are MFIs in this line of work for the good of the people or business? 

Microfinance: India

After a number of nationalizations of India’s banks, the Bank Penetration and SHG-Bank Linkage Program was created in order to both maximize the increase of the reach of banking services to remote areas and incentivize people to use state banking services instead of more informal traditional financial sources – moneylenders.  The program succeeded in bringing financial services to remote areas and in fostering economic development. 

Andhra Pradesh of the late 1980s emerged as the poster child of success of this government program. This state worked together with the Indian government through SGH-Bank Linkage Program and the National Bank of Agriculture and Rural Development, NGOs, as well as the World Bank towards economic growth. As a result of this success Andhra Pradesh became birthplace of India’s robust microfinance sector. Ultimately, nationalizations and banking policy prior to the reforms of the 1990s resulted in preferential treatment of public sector banks and SHGs. 

In my next post, I plan to cover the development and growth of India’s micro-lending sector and how India’s regulatory framework promoted lending and growth within this sector.

Sources:

1. 1.      Gupta, Poonam, Kochhar, Kalpana, and Panth, Sunjaya. “Bank Ownership and the Effects of Financial Liberalization: Evidence in India.” IMF Working Paper. 3 March 2011 <http://www.imf.org/external/pubs/cat/longres.aspx?sk=24695>
2. “India: Demand for Financial Services.” Economist Intelligencer Unit. Main Report: Finance 2010. <http://www.eiu.com.proxy1.library.jhu.edu/index.asp?layout=displayIssueTOC&issue_id=187333003&publication_id=690002069> 
3. Kannan, Ramya. “State to Shield Women From Microfinance Institutions,” The Hindu. 8 March 2011 <http://www.thehindu.com/news/states/tamil-nadu/article1518093.ece> 
4.  Pankaj Kumar and Ramesh Golait, “Bank Penetration and SHG-Bank Linkage Programme: A Critique” Reserve Bank of India. 19 June 2007. <http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2029> 
5. Rai, Vineet “India's Microfinance Crisis is a Battle to Monopolize the Poor” Harvard Business Review Blog , 4 November 2010. <http://blogs.hbr.org/cs/2010/11/indias_microfinance_crisis_is.html> 
6. Rhyne, Elizabeth. “On Microfinance: Who's to Blame for the Crisis in Andhra Pradesh?” Huffington Post. 2 November 2010 <http://www.huffingtonpost.com/elisabeth-rhyne/on-microfinance-whos-to-b_b_777911.html >

Nayagan: The Godfather Tamil-style

I recently discovered that love of the Godfather I spans oceans and continents and in fact, imitation is the highest form of compliment. A. and I saw the movie Nayakan recently. Nayagan, written and directed by Mani Ratnam in 1987, tells the real life story of a Bombay don named Varada. Varada hails from Tamil Nadu and sympathetically depicts the struggle of South Indians living in Bombay. Narayan gained rave reviews and was wildly popular in India and won an Oscar for Best Foreign Language Film in 1987. 

For a Tamilwood movie, the plot line comes across as fairly realistic, dance numbers are kept to a minimum, and the film clocks in at around 2.5 hours; a fairly short movie. A. and I watched it for three reasons, cultural exposure, Tamil language comprehension, and last but not least entertainment. I did not understand a thing, except when the dialogue switched into Hindi and I picked out an odd Arabic word or two. Believe me when I say, picking up one or two Arabic words which made it into Hindi, probably came out to about five words during the span of 2.5 hours.

I did however discover that as the movie progressed, the main character grew to resemble Marlon Brando in the Godfather. As Varada, the main character, got older he adopted Don Corleone’s mannerisms, speech patterns and even pitch of the protagonist of the 1972 American hit. Varada moved his arms and head in the same way that the Godfather. As Varada got older, his cheeks acquired the same puffiness as did his American predecessor. I read somewhere that Marlon Brando stuffed his cheeks full of cotton balls to affect his tone and speech as his character in the Godfather got older. The pattern of Varada’s speech grew to mimic Don Corleone’s, especially in scenes where he helped members of his community or met with other Indian gangsters. As Varada took on mannerisms of Don Corleone, the music changed as well – traditional South Asian background music took on Southern Italian themes. I found the transformation most intriguing and fun. Unfortunately for the couple that shared the viewing pleasure of the movie with us,  I started calling out references to the Godfather in the last third of the movie – not sure they appreciated my enthusiasm. 

If you are interested in watching this movie, it is available via Netflix, subtitled in English. Happy watching!

Tamil 101: Week 1

Below are a few impressions and thoughts on my first week in language class. I am in a class of five smart and capable professionals and we study with three wonderful instructors for five long hours each day. Whoa, I thought six hours of Arabic a week was more than I could handle; now I am up to 25 hours a week. This is definitely an intense and unique language experience. 

I can best describe my language abilities in two ways; extreme natural ability combined with a terrible work ethic. I enjoy language study and possess an innate ability to pick up subtleties of inflection, pronunciation, and grammar, however I am a terribly lazy language student – I just don’t study enough to capitalize on my natural talents. My husband is the exact opposite, language study is hard for him, he does not really enjoy it, but he has a serious comparative advantage over me – man he works hard! He sits there and studies for hours and all the hard work pays off in big ways. I marvel at his commitment and hard work. I wish I was more like him in that respect.

Tamil is hard, really hard. The alphabet has lots of vowels and consonants. Both letters are somewhat hard to pronounce. In the vowel section, there are distinct vowels for long and short sounds; such as e and eee, u and uuu, o and ooo. Tamil also has some sounds that we take for granted in English, but don’t assign distinct characters to; like ay and aw. There are five N characters/sounds, all distinct according to my instructors, but tend to sound the same towards hour five of language class. There are also three distinct L characters/sounds, and at least two R characters/sounds. Did I mention that in Tamil, you don’t read in a linear fashion? When combined with consonants, vowels look completely different than in the alphabet. Tamil uses punctuation very sparsely, making this language one of the most rapidly spoken languages in the world. Lastly, at least to my ear, Tamil sounds a bit tonal. I think technically, Tamil does not fall into a tonal language category, such as Cantonese, Mandarin, or Korean, but it sure sounds tonal to this student. 

I succeed in using every major and minor muscle in my mouth, leaving my mouth and jaw tender and painful at the end of each day of class. I think I met my linguistic match. I will need to work a lot harder than in the past. At the end of this week I asked my husband, “so when you first started learning Tamil, did you feel like you somehow ended up in a special education class?” He responded, “Yes and what’s worse is that I felt like I belonged there.” I think that just about sums it up. Although, I am currently sitting in the back of the short bus, but am enjoying (almost) every minute of language study.

In other news, the Hebrew class is right around the corner. During a break, I started chatting with the students in Hebrew. They started asking me if I was one the teachers. Score! My Hebrew is still alive and kicking, hidden somewhere in the recesses of my tired brain.

First Day of Class!

Mechanical pencil – check, mostly pristine notebook (somehow a number of different “to do” and shopping lists already invaded its pages) – check, lunchbox – ok I am way too old for that. I am ready for my first day of class.  I love language class and I am really excited to start. For months now, I’ve been keeping my fingers crossed that a space for me will materialize in the next Tamil class. On the other hand, the “to do” lists might’ve crept into the pristine notebook I’ve been saving for the occasion, because, let’s be honest, “space available” is not much to hang one’s hat on and I did not want to hope and rely on a space opening up in a language class too much. Nevertheless, I’m in a class and I start tomorrow! 

Speaking of things like “hanging one’s hat on (something),” “raining cats and dogs,” how are we supposed to understand idioms? I did not grow up speaking English. I immigrated to the US when I was nine. The combination of my age, natural linguistic ability (which in my case comes paired with its evil twin; language study laziness), and excellent hearing got me absolutely no accent in English. In fact, I do well with pronunciation in other languages as well.

I sound like I was born in the US; I can affect a slight British accent, a pretty authentic Brooklyn accent, sometimes a light Boston accent and oh yes, while living in Israel, I did a pretty authentic Russian accent in Hebrew. The Russian accented Hebrew requires a quick digression. Anyone American that has travelled abroad knows that an American accent usually translates into “wealthy American” in most languages. Since when I lived in Israel, I was living off my savings from a former NGO job and tutored an American diplomat in Russian for an hour once a week which got me 70 shekels (20 USD), I did not want to sound American = wealthy. Therefore, I affected a Russian accent while speaking Hebrew, and in Israel a Russian accent usually translates into; new immigrant, not so wealthy.

However, I’ve never stopped wondering about idioms and how the hell did they enter speech? “Raining cats and dogs” how does that even make sense? In Russian you have an equivalent to “raining buckets,” but in Russian you say roughly “raining out a bucket.” In Hebrew you have what translates to “waste of time,” if you had to guess you would say this might be a bad thing, right? Actually, you say “haval ala zman” (waste of time) after you spent time doing something great. This makes no sense, just like a heavy downpour described as “raining cats and dogs.” As a language nerd, idioms have always held a special place in my heart. I hope to add to my collection very soon.

Partner Employment

As I read, “once you get on that plane and leave the US, your professional career is over” in a cautionary tale blog entry about EFM employment, I cringed. This, I have to admit, is my deepest fear right out there, in the real world, exposed. My professional career is over? Really, damn, I feel like I barely started…at 4 AM as I can’t sleep it seems even scarier. It is dark outside and the post about employment options that I was planning to re-read and publish tomorrow morning seems much more upbeat than I am feeling at the moment.  This quote ranks towards the top of the “shudder” list along with a senior staffer at my old consulting firm telling me that I was unqualified to work in the Indian market with the exception of “teaching English to businessmen and writing press releases for an Indian firm interested in breaking into the US market,” whoa really? There is no place in the Indian market I can use my international economics degree, hard to believe right?

Those are words which are much more powerful at 4 AM than they are in daylight hours, when I feel much more confident about my abilities to forge my own way. During one of our Shabbat dinners, a friend, with whom I spent the last two years studying in one of the top and toughest international economics programs in the country suggested that “well if you can’t find a job, India is I hear a great place to start a family.” While appreciate all the time taken to offer me sage advice, I will make that rather important decision with my own husband. 

My friend and I went to the same grad program, took identical classes and the difference between the two of us? He was one of the very few of my classmates that passed the oral part of the Foreign Service exam. For one reason or other, some of the smartest people in my grad program and I did not pass the oral assessment stage, at which point I decided to strike out on my own – since besides acquiring a number of stellar analytical, writing and quantitative skills, what SAIS taught me is that this world is a big place with lots of options. My friend also sent a calendar that the Chennai EFM husbands put together outlining their daily pursuits, because he thought it was really funny. 

EFM unemployment is not a joke. Out of a high 40^th percentile, the exact figure escapes me, of EMFs that want to work, only 25 % actually find employment. The overwhelming majority work at US missions abroad, while a much smaller percentage works in the local economy, bi-lateral employment agreements permitting, while an even smaller group telecommutes and runs online businesses from their homes. Local economy employment requires work permits, work permits take time. 

I seemingly achieved the impossible; I got a job offer to work in a local office of an American firm. I worked really hard to find the said job. Since August of last year, I have been talking to just about anyone that would listen that I was moving to India and I was interested in finding local professional employment offside the US mission. Personally, I feel that the local mission does not currently offer employment that fits my professional goals. I talked to friends, family, and former classmates asking for contacts and advice. My hard work paid off, I got an offer through an alumni contact. I feel incredibly lucky and grateful to the alumni and co-worker that helped me make that happen. I am in a privileged position, but I’ll leave you with this (as I hope to get back to sleep); spouse and partner employment ranks towards the top of concerns of those considering and entering the Foreign Service. Although one of the reasons that you see so many single income families in the Foreign Service (meaning one partner is in the FS the other takes care of the family) this is the only government service where you can afford to have a stay at home partner, but the other reason is that it extremely difficult to have two professional careers with one of them within the FS. Ok, I said my piece, time to get off the soapbox, and wake up confident that in fact the job offer will be there tomorrow and when I get my work permit from the Indian government. Good night and thanks for listening.

My husband discovered Eretz Nederet!

My dear husband loves reading a rather large number of blogs and newspapers, so when I told him I started this writing endeavor, he asked for the blog’s address added it to his Google – reader; that’s true love folks.  Last week he stumbled across a skit from a show called Eretz Nederet and emailed it to me. I love Eretz Nederet! It is highly irreverent, makes fun of everyone and everything that goes on in Israel. Eretz Nederet (ארץ נהדרת), which translates to “[our] wonderful land” is Israel’s version of Saturday Night Live. Even some of my religious friends enjoy this Friday night show through the wonder of Tevo, which allows a person to pre-program to record a show at a later time. Eretz Nederet airs on Friday nights which is when Shabbat (or the Sabbath), the Jewish day of rest, begins. Observant members of the community refrain from doing any work, including using electricity, phones, and writing. Thus watching Eretz Nederet on Friday nights is not an option, but here is where Tevo comes to the rescue: Tevo turns on and records the show automatically on Friday night without prompting the religious person to break Shabbat by using electricity. Pre-programming of electrical appliances before Shabbat which starts at sundown allows some, but not all, people within the religious community to use electricity while observing Jewish Law.

Like I said, I love Eretz Nederet. I am ashamed to admit to how many hours I wasted on youtube looking at sketches. I justify the wasted time on the internet, by telling myself that this is the best way to maintain Hebrew comprehension. If you are interested, some skits found on youtube have English subtitles. Last week, A. love of my life surprised me by forwarding a skit about Israelis in India. If you searched for Tamil you likely narrowed our future post to two candidates, Sri Lanka and India. We are going to live in South India where there are approximately 50 million Tamil speakers, who are mostly concentrated in one state.

I want to give you a little bit of context for the skit A. sent to me and why, even though I think I have seen this skit 100 times, I still find it really funny. If you are a Jewish-Israeli citizen born or naturalized, and live in Israel past your 15^th birthday, I believe, you will automatically be drafted to serve in the Israeli Defense Force (IDF). Women serve for 2 years and men for 3 years. After a soldier completes his initial service, he or she will remain on reserve duty every year for 6 weeks, I want to say until the age of 45. I think the service times have been reduced, but I don’t remember the exact figures. If you are a woman and get married, you are released from reserve duty altogether. After the service, young Israelis work to save up money to pay for a six month to a yearlong trek abroad.  In droves 22 year old Israelis flock to South and East Asia and to a lesser extent to South America. Israelis love trekking through India and visit in very large numbers every year. This skit pokes fun at Israeli tourists in India. Unfortunately, I could not find a version of this skit with English subtitles. However half of it is in English and is very funny even if you don’t speak Hebrew, if you are interested click here. I think the funniest part said in Hebrew is that the girl keeps telling her friends that certain things are not “politically correct.”