A little women’s bank shrinks the world

About ten years ago Archana Rasal’s husband left her. That could have been the end of the story of the woman from this village in Satara district, part of Maharashtra’s drought belt, where land has to be coaxed hard to produce a morsel at the best of times, and where poverty has been a perennial companion. But she was determined to make a new beginning in something that generations in her farming family had never attempted: her own little business.

Like countless women in penury before her, she fell back on two things: hope, that came free, and a sewing machine, that cost money, which she did not have. She got a little help from the Mann Deshi Mahila Sahakari Bank, which itself was in its nascent stage.

For her startup, she got a loan from the bank to buy a sewing machine. “I had nothing when I started out,” says Archana. “Today I give employment to nine other women.” Since the first loan, Archana has taken several more from it, and repaid each one of them on time. Her latest loan – Rs 20,000 – has helped her own a tailoring shop. Like all well-established businesses, hers too has diversified. Other than tailoring, she runs a cosmetics shop too.

Mhaswad is full of success stories of women empowerment, of unknown women making good in life, where making good means just a little more than being able to live in dignity, being the breadwinner, being their own masters. But above all, the biggest success story is that of the cooperative bank itself.

It all began with a non-governmental organisation (NGO) called Mann Deshi Mahila, started in 1994 by a Yale graduate, Chetna Gala Sinha, and friends. As the name suggests, the bank is for women, by women and of women. It could have been content with doing the standard NGO thing – get government and private money and hand bits of it to women who need it, and then go out again to beg for more money.

But it decided to be more than a dole-routing agency. It set up a bank to micro-finance women to help them become self-reliant and, if possible, turn them into entrepreneurs. By the time the bank began, Bangladesh had gone beyond the micro-finance experiment and made it a huge success in rural areas. But in India no commercial bank, big or small, would touch a customer seeking a Rs 100 loan, and micro-finance was still only a fashionable term debated in economics classes.

In a sense both Archana’s business and Mann Deshi Mahila Sahakari Bank have grown together from their infancy 10 years ago. Set up in 1997, it got the Reserve Bank of India’s licence to run as a full-fledged cooperative bank in 2007, the first rural financial institution to be so honoured.

What began as a small experiment in this little village has since spread elsewhere in Maharashtra. Today the bank helps women in Satara, Solapur, Sangli, Raigarh, Ratnagiri and Pune districts. Its turnover last year was Rs 20 crore and net profit a little over Rs 4 lakh. The bank has 11,000 members, 97,000 customers, seven branches -- which together do about 7,000 transactions daily -- and about 100 agents.

With a 98 per cent loan recovery record, ‘default’, ‘write-off’ and ‘bad debt’ are words hardly ever heard in discussions in the offices of the bank. With most loans given and taken on unsecured basis (that is, without a collateral), the near-perfect repayment record could be any other bank’s envy.

The growth has been rapid, “thanks to hassle- free loans that we give our customers in just one day,” exults Vanita M Jadhav, manager of the Satara branch.

Vinita Jalinder Paise is one such customer who received a loan in just a day to start a paper-cup making business. “Before that, getting a loan from a regular bank to buy a machine seemed impossible. Even travelling all the way to the district headquarters (Satara) did not help,” says Paise. Ultimately, the Mann Deshi Sahakari Bank branch in Mhaswad, just a few steps away from her home, came to her help.

There has been no looking back. From one machine, she has gone on to 11 and become an employer of six other women. In 2006 she received the National Women Empowerment Award from the prime minister.

The agents have done wonders. They act as the bank’s ambassadors and collect repayments in small amounts (at the most Rs 100). As starters, such small repayments against small loans are, as Jadhav says, “good enough for us”. The branch begins receiving repayments almost from Day Two.

This way, the customer is happy, so is the bank. The bank’s lendable resources come from commercial banks, which lend it money at 7.5 to 8 per cent in fulfillment of the government priority sector lending policy. Customers get money at 14 to 16 per cent against collateral such as property or livestock, or at a much lower 10 per cent against gold. For unsecured loans, the rate is 18 per cent.

Memberships help build its reserves. Anyone asking for a loan has to become a member by paying 2.5 to 5 per cent of the amount sought.

Success has brought in its wake others who want to help – and in the process make the most of the cooperative bank’s network and goodwill.

HSBC Bank closely works with Mann Deshi Udyogini, an unconventional business school run by the NGO for rural would-be woman entrepreneurs who are mostly unlettered. “HSBC Bank is an important partner in our initiative. Some of its pilot projects are also outsourced to the cooperative bank,” says founder Sinha.

Deutsche Bank regularly offers technical support to upgrade of functioning of the cooperative bank. Axis Bank gives ‘at par’ cheques that are used as demand drafts by the cooperative bank. It also handles and channels all foreign grants from the Bonita Trust of the UK and the Deshpande Foundation of Boston to the Mann Deshi Foundation. Tata AIG Insurance provides health and life insurance cover to customers of Mann Deshi Mahila Sarkari Bank. Together, these partners provide a wholesome experience to the cooperative bank’s customers. “We are doing well,” says Rekha Kulkarni, its chief executive officer.

Hopes are that it will do still better. From seven districts now, the bank expects to cover the whole of Maharashtra in five years. The bank has helped develop women as bread-earners in the drought-stricken villages where the loss of one crop could mean the end of a life. “Our easy loans have really eaten up the business of money lenders,” says Kulkarni.

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