For almost 20 years after her marriage, Sanyogita, a Dalit from a small village in Saharanpur, Uttar Pradesh, was not allowed to step out of her home. A class VIII drop-out, she yearned to do something worthwhile. Soon, rising economic pressure opened a small window for her. She became an ASHA (Accredited Social Health Activist) worker and was paid an honorarium.
While she commanded a lot of respect in her village, her family was not happyas she was on call at odd hours. Things changed last year. Sanyogita became a member of a microfinance samooh (group) in her village. She quit work as an ASHA. Her family had no complaints about her new job, as she could get loans.
“I took a loan of Rs 10,000 to buy a buffalo, and had to pay back a total of Rs 11,184 through weekly instalments. But my family is happy as we are now into milk trade. I stepped out of the home after 20 years of marriage, but now there is no looking back,” she says. Sanyogita was here with a group of women from her village as well as from other States, such as Bihar, Madhya Pradesh, Bengal, Karnataka and Rajasthan, to share their experiences on how starting their own small business, such as goat and buffalo-rearing, tailoring, making pickles and handicrafts, had given them confidence and ‘status’ within the family and outside.
The idea behind the interface was to showcase the ‘positive effects’ of microfinance on the lives of these women, said a Sa-Dhan representative.
Women form a big chunk of the un-banked population in India’s remote rural areas who have no option but to depend on moneylenders, even if it means paying high interest rates. The banking system has failed them by demanding collateral in a society where a woman has neither land nor property in her name.
“Regional rural banks and other models have a great limitation in reaching out to people in the rural hinterland. The financial inclusion hard talk is putting pressure on banks, but they are not being able to reach out, especially to the 150-odd backward districts….this movement is trying to fill that void,” Jagadananda, Chairman, Sa-Dhan, said.
According to one estimate, there are about 3,000 microfinance groups lending close to Rs 20,000 crore to 28 million people.
The large profit margins and rapid rate of growth of the sector has now attracted corporate institutions.
Self-regulators However, there has been a cloud over microfinance groups, especially after a spate of suicides by women in Andhra Pradesh who were unable to withstand the coercive recovery methods.
This is when the Reserve Bank of India stepped in and decided to grant the status of self-regulatory organisations (SRO) to industry associations of microfinance institutions operating as non-banking financial companies.
The move is to make sure that these institutions follow prescribed guidelines.
Jagadananda, whose group Sa-Dhan is applying for SRO status, blamed high transaction costs for the high interest rates (sometimes even up to 60-80 per cent).
He pins hopes on the pending microfinance Bill in Parliament as well as implementation of RBI guidelines, to bring down transaction costs and, in turn, interest rates.
However, with political parties and some State governments opposed to certain provisions of the Bill (it is with the Standing Committee) and the term of the 15th Lok Sabha ending in mid-2014, it remains to be seen if the Bill will see the light of day.