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Chetna Gala Sinha (right) helped set up the Mann Deshi Mahila Sahakari Bank in Satara, Maharashtra |
Neglected by conventional banks, low-income women in Satara have set one up themselves. Not long after Chetna Gala Sinha came to the drought-stricken region of Mhaswad in western Maharashtra to marry a farmer and prominent local social activist, she began putting her university degree in finance into action. Local women, she observed, were wearing themselves out in subsistence livelihood such as growing grapes or selling vegetables. In 1992, Chetna, who grew up in a middle-class family in Mumbai, began organising the women into self-help and savings groups that helped them share technical knowledge, lower their costs through bulk buying and manage their money better. But she quickly realised that the women also needed business loans, but conventional banks wouldn't lend because of their low income. So in 1994, she applied for a licence to run a bank on behalf of 500 rural women. But the Reserve Bank of India rejected the application. Reason: Except for Chetna, all the women identified themselves with a thumb print and, according to an RBI official, directors of a bank had to know how to read and write. Not to be discouraged, Chetna, who is in her 40s, set up literacy classes that ended up going beyond simple word recognition. “Thanks to their keen interest, they were also taught how to calculate interest on principal,” she recalls, “We gave the proposal again three years later and at the office, the women boasted that they could calculate the interest of any principal amount without a calculator and challenged the officer to do the same.” The experience forged what has turned out to be this all-women-run bank's underlying premise: If rural women with little-to-no education are to break the cycle of poverty, they need more than a few small loans. The Mann Deshi Mahila Sahakari Bank (the Mann Land Women's Cooperative Bank) started with 500 women and $15,000 in their credit pool. There was no outside funding and it took three years for the bank to become completely sustainable and bring in profits. Today, it has more than 1.4 lakh clients and deposits of over Rs 3.78 crore. Entirely managed by rural women, the bank operates seven branches in Maharashtra and Karnataka. It charges an interest rate that is far lower than those demanded by local loan sharks and ploughs its earnings back into the community in many ways, including a low-fee trade school and low-cost insurance programmes. Moreover, it sustains the same kind of women's self-help groups among low-income borrowers in related enterprises such as dairy vending, tailoring and grape growing. One of the bank's major functions is to act as a buyers' collective for these groups, to help lower costs. Bank employees or members of the voluntary board of directors monitor the groups and help them get projects — such as dairies for milk vendors that guarantee members a better price — off the ground. Mann Deshi started a school in January 2007 for rural illiterate women that offers courses in their areas of work. The students, who are mainly vegetable vendors, milk vendors or casual labourers, are eligible for loans from the bank and have used the money to establish or expand businesses. The average loan amount ranges from Rs 1 lakh to Rs 1.5 lakh and is repaid over five years in weekly or monthly instalments. Some loans, however, are as small as Rs 250 and get repaid in a day. A woman might go to the bank to finance the purchase of food-storage containers or an umbrella to shelter her wares at the market. While some microfinance institutions in the country have run into scandals for mismanagement and fraud, Chetna says the bank is scrupulous about accountability, with internal audits every three months, a yearly audit by the government's cooperative department and an inspection by the central bank every four years. Other than loans and a savings account — which the bank requires all its borrowers to open to promote savings — there are other services as well. There's a pension scheme where clients aged 18-55 can save on a weekly, monthly, quarterly or yearly schedule. A one-of-its-kind ‘e-card' programme was launched last year for women who did not wish to share their account details with their husband for fear it might be misused. The plastic card displays the woman's name and photograph, while a micro-chip stores all her financial information. The card instantly allows the bank's field agents and clients to view savings account balance, loan account status and repayment history. For all its innovative approaches that enable rural women to increase their financial capabilities, the bank routinely gets official commendations. One depositor also received the equivalent of its 2006 ‘Woman of the Year' award from the Prime Minister. The recipient used a loan to start a tiny paper cup-making business that today supports her family of 19. Besides running her own business, she now helps train other women entrepreneurs. Another client, Aruna Gaikwad, is proof how a small bank loan can take the borrower a long way. Three years ago, as a labourer in other people's fields, Aruna used to earn less than Rs 25 a day. She got a loan of about Rs 1 lakh to start her own vegetable retail business. Her daily income doubled immediately and today she makes almost Rs 450 a day. Aruna says she had tried to get a loan from conventional banks but was turned down because she had no property as collateral. “When I finally got the loan, it was the first time I saw such a big amount and I haven't spent a single rupee unproductively.” In 2005, Aruna began to serve as a co-guarantor for 15 other vegetable vendors who have taken Mann Deshi loans. Now, she looks to the future of her 13-year-old daughter. “I would like my daughter to get a job where she can sit on a chair,” she says, “and not squat on the road, vending stuff.”
HBL
