“The loan has given me a reason to get out of the house…to learn,” says 38-year-old Savita. “Earlier, my mother-in-law wouldn't let me go out of the house. But now since I have learnt stitching from the micro-credit, I have started earning at least Rs. 100 a day. I guess that makes her happy too,” she adds.
With a loan of Rs. 12,000, Ms. Savita learnt stitching and is now earning up to Rs. 100 a day. Ms. Savita is one of the 1,18,000 customers of the Mann Deshi Women's Co-operative Bank. Her story was one of the success-stories that U.S. Treasury Under-Secretary Lael Brainard heard on her day-long visit to the Mann Deshi Foundation.
The association began when Chetna Sinha, founder of the foundation, met U.S. President Barack Obama on his visit to India in November 2010.
“Women investing in businesses with money lent by women is an exciting model. There is a lot that we can learn from such innovative models. It is creating financial literacy and opportunities for many,” Ms. Brainard said while interacting with the media informally. “This learning will forge a deeper relationship between India and the U.S., and help foster financial inclusion.”
According to a representative of the U.S. Treasury Department, attaining “financial inclusion” is one of the big goals for the U.S. One way to do that, probably, is to capture the rural markets in countries such as India, and venture into micro-credit which is proving to be a hugely successful ‘business' model. However, the problems of the Indian poor do not seem to end. Following the reports of micro-credit customers committing suicides in Andhra Pradesh because of coercive methods to recover loans, besides high interest rates, the Government has taken steps to improve the transparency and governance surrounding the arena of micro-finance.
Using the loan for personal purposes under the pretext of “productive activity” is another practice that has resulted in the micro-finance model failing to alleviate poverty. According to the Microfinance Information Exchange (MIX), a loan of Rs. 20,700 crore has been availed by micro-credit customers in India, each availing an average loan amount of Rs. 7,000. Narrating the way Mann Deshi Bank works, Ms. Sinha said the process of monitoring loans had been embedded in their working, so as to make sure that the money was going for a ‘productive purpose.' The rate of interest given by the bank was between 12 and 15 per cent, she said.
Both these measures were exactly what the Government appointed T.H. Malegam Committee had recommended.
“No external organisation funds this. The deposit is entirely from what the women have saved,” Ms. Sinha said. This dismissed criticism that the funding promoters were mostly the ones to benefit, rather than the customers, she said.
