Friends,
Here is a personal perspective communicated from one of our members, Mrs. Ranu Mahanti,
to motivate SEEDS' renewed effort with fresh approaches to the issue of micro-credit
for India. Comments, help and contributions are highly welcome.
--DP 07/23/2005
Ranu Mahanti’s Personal Experiences and Justification for Micro Finance Bank in Orissa:
Child labor, prostitution,
selling children for a few rupees, giving away the daughters to marry in
another state through unknown middleman, I have eye witnessed all the above
during my last eight years. No parents
will like to sell their children or send a child for child labor or encourage
the young daughters to get involved in prostitution. When the parents can’t
provide two meals a day to the family, what is the alternative? There are
multiple problems. Needs are vast and situations are different economically and
geographically from village to village. I have realized with time and
experience that all the social problems are intertwined and interdependent. I
also strongly feel that women can change the world in a better way. This is not
a biased opinion; it is my own experience.
The young girls need to be
occupied and trained in different trades with some vocation instead of sitting
at home and waiting to get married or getting involved in prostitution.
Instead, they can earn money for living in a dignified way. Financial
independence opens the door to opportunity, gives a sense of confidence and the
girls realize marriage is not the only option for them to survive in this
world. In fact when they are financially
independent, many men come forward to marry them, preferring an earning woman
over a non-earning one. Beside education, rehabilitation is extremely
important. Again, I find that the most difficult part is to identify livelihood
possibilities in the concerned localities and how to finance them.
For emergency or for any other
financial needs, poor people do not have access to the regular banks, because
they do not have any assets or credibility to get loan from a commercial
bank. The only choice left for them is
to depend on the money lenders at an exorbitant interest rate (120% or more per
year). In such a case, the burrower will never be able to pay back the
principal. They can barely pay the interest every month with great difficulty
with their limited income. This cripples their financial condition for the rest
of their lives. In the past, I have personally helped a few women to be free
from such loans through BISWA or with my own contribution.
For the last 10 years, I have
asked you for your kind support year after year for carrying out different
projects in Orissa to provide the “basic needs” to
the poor. I am truly humbled with your kindness and trust. Due to your help, we
have come this far. As the “basic needs” program expands into different parts
of Orissa, it will be difficult to support this program in the long term
through your charitable contribution. A
permanent solution to this problem is to start a Micro Finance Bank (MFB) in
Orissa. With time, it will generate sufficient funds to support the “basic
needs” program in different parts of Orissa. After
starting the bank, I will need your charitable support for about two more
years, then the proceeds from the bank will take over
the support of the program.
Why Micro Finance Bank?
Eradication of
extreme poverty and hunger: Micro finance helps reduce poverty through
increase in income, allowing the poor to build assets and reduce their vulnerability.
Promote gender
equality and women’s empowerment: Microfinance clients are overwhelmingly
female. Microfinance has been widely credited for empowering women by
increasing their contribution to household income, the value of their assets,
and control over decisions that affect their lives.
Achieve universal
education: Households that have access to microfinance spend more on
education than non-client households. Participation in credit and savings
programs has enabled many families to send several children to school at a
time.
Reduce child
mortality and combat disease: Microfinance contributes to improve
nutrition, housing, and health.
Why BISWA?
BISWA,
a Sambalpur based NGO, is promoting self help groups
(SHGs) and is providing micro credit to the poor
people, particularly women since 1994. (More than 5200 SHGs, total members almost 80,000). Now the stage has come when the micro credit program needs to
be institutionalized by forming a Micro Finance Bank (MFB) for providing better
service to the needy poor by mobilization of more resources. Although BISWA is
able to mobilize loan funds for lending to the SHGs,
these loans are purely short term and need to be repaid within a period of 12
Months to 24 Months. Further, this fund carries a higher rate of interest. As a
result, BISWA is not able to generate any surplus funds beyond meeting the day
to day expenditure requirements. To establish a MFB, BISWA needs Rs.2 Crores, which will be utilized as a deposit with the
Reserve Bank of India to meet the registration requirements. BISWA has already
generated Rs. 90 lacs and
needs another Rs.1.1 Crores (~$250,000) to meet the
RBI requirement to start a MFB. Under the recent laws of Govt. of India, BISWA
is eligible to borrow up to 5 million dollar as the External Commercial
Borrowing, which can also be repaid in dollars.
Besides BISWA’s extensive experience in Micro Finance, my personal experience with BISWA has been extremely positive. I am working with this organization since January, 2002 and have established the “basic needs” program in the rural/tribal villages of Western Orissa through our team effort. I am very pleased with the follow ups, accountability, hard work, and the progress.
Awards
Received for Micro Finance activities:
Certificate of Excellence from Planet Fiancé & ABN, AMRO BANK
Bharat Darshan Award from Bharat Darshan Group for 2004 as the best Social Worker
Award from CARE-CASHE program
Award from CITI Group for Micro Enterprise National Award