[Assam] A workable micro-credit - Ms Chetna-Gala-Sinha

Sun Oct 1 13:25:20 PDT 2006

Using microfinance to empower women  http://www.hno.harvard.edu/gazette/2003/02.20/09-bridge.html

  In India's drought-prone Maharashtra state, east of Bombay, poor farmers are largely shut out of the nation's financial system. The reluctance of banks to lend to poor, sometimes illiterate, farmers often drives them to moneylenders, who charge annual interest rates in excess of 100 percent. With such high rates, default and subsequent loss of family land to moneylenders is common. 
  Amidst this unhealthy financial dynamic stand the state's women, who traditionally take no role in finance outside the home. Chetna Sinha is a Bridge-Builder and conference participant who is out to change that. 
  On Thursday (Feb. 13) Sinha presented the story of her fight to establish women's self-help groups, where the women pool their savings to create a fund from which loans can be made at reasonable interest rates. Those loans go to finance small development projects, startup capital for new ventures, emergency financing for families in difficult situations, and generally provide a financial resource for the whole community. 
  After a four-year struggle for recognition, in 1997 Sinha's group was finally granted a banking license from the government. Today, the organization operates in 126 villages, Sinha said, and has a loan repayment rate of 98.5 percent. That proves not just that the economic development strategy of giving out small "microloans" can be effective, but also that poor people are creditworthy. "For two days I have repeated this story, but it's such a good story I don't mind," Sinha said. "[Getting the banking license] was such a big challenge, but we got it." 
  Today, the bank has branched out to address other pressing social needs that Sinha said often affect a family's finances. The group launched an anti-alcohol campaign, aimed at intemperate husbands and started several dairies where women can put their skills to work despite high unemployment rates in the region. The group has also begun veterinary clinics to utilize the practical knowledge gathered by women in treating their own livestock and also to fill a need left by the lack of veterinary clinics in the region. 
  The group has also started a regular pension savings plan for members and has encouraged adopt-a-grandmother and adopt-a-girl programs to help with medicine or school costs. 
  The bank's work has had an effect far beyond the financial realm, Sinha said. Reports of wife-beating are down, which she attributed to the anti-alcohol program. In addition, she said, many women have taken pledges not to kill female fetuses, illustrating a greater feeling of worth among the region's women. 
  The bank, she said, has put women at the table as both economic players and as a resource for government officials seeking advice on local development programs. 

umesh sharma <jaipurschool at yahoo.com> wrote:          

 http://www.dnaindia.com/report.asp?NewsID=1033226
  Bus-School for illiterate women

  http://www.manndeshi.org/chetna.htm
  Her organization and profile

  http://www.news.harvard.edu/gazette/2005/02.24/12-bridge.html
  I met her here

Umesh Sharma
5121 Lackawanna ST
College Park, MD 20740 USA

Current temp. address: 5649 Yalta Place , Vancouver, Canada

1-202-215-4328 [Cell Phone]
Canada # (607) 221-9433

Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005

weblog: http://jaipurschool.bihu.in/   

  ----- Original Message ----
From: Chan Mahanta <cmahanta at charter.net>
To: assam at assamnet.org
Cc: MurthySudhakar <musu-infrasys at sbcglobal.net>
Sent: Saturday, 30 September, 2006 9:01:41 AM
Subject: Re: [Assam] Death by Micro Credit-2 - 06-0930

      The following is a response from my friend Murthy Sudhakar, (who does not usually address me as c-da:-)), whom I blind copied in on some of these discussions, because he has spent a number of  years studying these issues in rural South India, and has been attempting to make a difference with his InfraSys enterprise, with some small but fine successes.

  Highlighting mine.

  cm

  Dear C-da:

Thanks for including me in this discourse. Let me offer you some of my thoughts©share them as you see fit. I had read Sudhirender article earlier and he seems to have highlighted many problems with this industry in India (and perhaps in other poorer countries). In making my points let use cut and paste.

The Moderator wrote: It questions the rationale of Microcredit which lays a debt trap through micro-enterprise development as a substitute for meaningful economic development and fundamental changes in the economic policies. It does appear to take one's attention away from finding real answers to the very real problem of poverty.

  The moderator is right ©except©.It is unclear to me what % of the money lent actually goes to micro enterprise and what goes to consumer goods, medical treatment and other squeezes of life of the poor. I do believe the cover/pretext is micro enterprise and this is always what is highlighted. A debt trap it certainly is!

Sudhirendar Sharma writes: Further, there are no businesses that can generate profit after paying an interest of 24-36 per cent on capital investment.

  This is indeed true even for urban industries. Only the desperate will borrow at this rate for an enterprise. Please recognize that most loans from MFIs are a flat interest rate and not on the unpaid balance.

Sudhirendar Sharma writes: As poor take control of their destiny through soft loans, it becomes convenient for the government and the commercial banks to absolve themselves of their primary responsibility towards the poor.
C-da writes; If private profiteers and NGOs are doing the Govt's job, would you not want to know what the govt. is there for to begin with

  This is significant: As we know the philanthropy industry/racket is a huge industry. In the name of charity this industry thrives. Behind ALL charity is some guilt© an embarrassment that something is deeply wrong; that some amongst us suffer (structurally) and some of us who do not, are partly responsible for the state of affairs. This collective guilt makes us be "charitable" with our check books.. .and this is the fodder for the charity industry. Every rupee/dollar spent on charity reduces the coffers of the government (tax deduction) and also tends to absolve the government (which is us) of its(our) constitutional, ethical, moral or economic "responsibility towards the poor."

Sudhirendar Sharma writes: MFI pay little attention to the core concerns of the poor. For them the critical concern is to sustain services against emerging odds.

  He is right again.. when you loan to the large #s that the MFIs do, the primary concern will become the process and not the intent. The process is the disbursement and the collection of money. This supersedes the more important purpose of such loans the intent: improving lives/ micro enterprise etc.

Sudhirendar Sharma writes: Far from helping people generate wealth, easy credit is being used to encourage primary producers at the farm to become secondary distributors for consumer products.

  This is probably the most significant point he makes. Just like the easy access of credit cards to students and even the poor in the US (with exorbitant interest rates and annual fees and the minimum payment required) micro credits for the rural poor ignores Primary production and its related linkages. It is only through primary production by the poor can asset/ wealth building occur. But this requires a Policy Level Change and that mean the government ( a reminder- this is us) The Hindustan Lever's Shakti Amma scheme to distribute their products in the rural areas or Amway's MLMs do little for asset building. If I am allowed to plug - this is where infraSys <http://www.infrasys.biz/>www.infrasys.biz differs from Micro Credit/ Finance.

  Umesh Sharma writes: It shows that to make micro-credit effective the illiterate or naive farmers must become astute and worldly wise. Who will help them?

  It is my humble opinion, based on interaction with them that the farmers while they maybe illiterate they are not as naive as we have been led to believe.  They are more aware and conscious of the structural problems of the nation's policies and deficiencies that most of the urban middle class. They see through the preferential treatment that major industries get (eminent domain of land for industries, subsidies for corporations etc).

Umesh Sharma writes: then the same logic can work for stopping road travel and sea travel etc --becos people do die in traffic and travel accidents.

  The comparison (to the ills of micro credit) that would make the point would be the following: not stopping road and travel entirely©but the removal of stop signs speed limits , signals and all safety measures and regulations for the safety of travel.

Enough©  for now

anbudan

  sudhakar  infraSys  a company investing in rural India...for a change.  www.infrasys.biz        

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Umesh Sharma
5121 Lackawanna ST
College Park, 
(Washington D.C. Metro Region)
MD 20740 

1-202-215-4328 [Cell Phone]

Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005

weblog: http://jaipurschool.bihu.in/
website: www.gse.harvard.edu

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