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Micro Credit

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Micro means small & Credit means loan. Micro credit has been in existence from the time since money was invented. But it was just about 35 years back that Micro Credit was redefined by Muhammad Yunus, a Bangladeshi economist from Chittagong University. In 1974 he led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.

When Bangladesh was in the grip of a famine in 1976, Muhammad Yunus from his own pocket gave a loan of an amount equivalent to 27$ to 42 women so that they could either trade or manufacture & eventually stand on their own feet. And since then there has been no looking back for this man, who eventually pipped Rotary to win the Nobel Peace Prize. His Grameen Bank advances Micro Credit mainly to WOMEN and takes no Colatterals. Of the borrowers, 94% are women and over 98% of the loans are paid back, a recovery rate higher than any other banking system. In Bangladesh today, Grameen Bank has 1,084 branches, with 12,500 staff serving 2.1 million borrowers in 37,000 villages. On any working day Grameen collects an average of $1.5 million in weekly installments.

In Nagpur too the story was no different, the fleecing continues, probably on a bigger scale. For example at Mahatma Fuley market, the retail vegetable vendor here takes a loan of Rs. 90.00 every morning and in the evening returns Rs 100.00. Calculate the interest, you will realize how he is being fleeced. This prompted us in Rotary Club of Nagpur to do a bit on our part. Taking a cue from Muhammad Yunus, we decided in 2008 to advance Micro Credit to women slum dwellers. It is so heartening to report that since then till date there has been no default in repayment.

The modus operandi is simple. Our Slum Development Committee working in collaboration with Indian Institute of Youth Welfare (a NGO which works for women slum dwellers) identifies women who are in need of loan to either start a new business or to increase the turn over of their existing business. Their businesses could be as varied as selling saris, dresses, blouses, petticoats, imitation jewellery, offering cable connections, making & selling eatables like samosas, pani purries, buying mirchi – grounding it to powder & then selling it etc. These ladies who are from slums, buy on Cash in Wholesale and then sell on Credit to slum dwellers. The loan amount is just Rs. 5000.00 per lady. We take an application on a Rs. 10.00 stamp paper from the lady along with a Xerox copy of her Bank or Post Office passbook with 10 cheques/withdrawl slips of Rs. 500.00. There is a moratorium of 2 months and from the 3rd month onwards the lady starts repaying Rs. 500.00 per month for 10 months. Thus in 1 year the full loan amount is recovered. Sitting in our plush surroundings we may think that 5000 se kya hoga, but believe me, we are witnesses to the turnaround in the lives of these ladies. The majority of these ladies have been deserted by their husbands and have to earn to support themselves & their children. Having paid their instalments in time, quite a few are 2nd or 3rd time repeaters.

Since 2010 in collaboration with another NGO, Sanjeevani Bahudheshiya Sanstha we have advanced Micro Credit to AIDS affected persons. The problem with these persons is that firstly they do not get jobs easily and if they get jobs their health does not permit them to work regularly. So they prefer to be self employed and for this they require money.

Due to inflation this year onwards we have been receiving requests that the loan amount be increased to Rs. 10,000.00 per beneficiary. This is under consideration of our Micro Credit Committee headed by PP Gulab Mahant. God willing we may be able to generate funds & turn a new leaf in this endeavour.

PP Chandru Shahani

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