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Monday, Sep 30, 2002

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Trust these women to disprove debt trap fears

Rasheeda Bhagat

Members of a self-help group in Salem district engaged in the manufacture of silver anklets.

SALEM (TN), Sept. 29

IN the well-lit and neatly kept house in Karpannur village on the outskirts of Salem town, a group of 19 women are working meticulously converting silver wire into chunky anklets. The house belongs to Meghala, but the enterprise is collectively owned by the group, which under the self-help group (SHG) category has qualified for a loan of Rs 2 lakh from Indian Bank under its micro credit scheme.

Meghala, the group leader, is pregnant with her third child, is undergoing regular medical check-up and though full term pregnant, is able to go about the task of managing the finances and working schedule of the group. She manages the cooking and her husband Chinnadurai, who earns a living by taking on the marketing chores for the SHG, helps out with the children.

"But I can't wash clothes, and have employed a woman from the village to do that, and I pay her a monthly wage of Rs 100," she says.

Chinnadurai is happy to work for his wife's group, going out to acquire the raw material, handing over the anklets for finishing touches and delivering the finished product to cities in the region, including Chennai and Bangalore. On days he has work, the group pays him a daily wage of Rs 70, plus the cost of travel and food. The house has electricity, with a couple of tube lights... ("this job requires precision and is quite taxing on the eye, so good lighting is essential," she explains), a colour TV set, adequate furniture along with household implements like a food blender.

The women have acquired finance at 12 per cent interest on a diminishing basis, and already repaid over half of the loan, well ahead of schedule. Rangarajan, Indian Bank's Lead District Manager, Salem, explains that though the monthly instalment is Rs 3,000, most of their monthly instalments have been higher, with two being Rs 9,000 and Rs 14,000.

"They do so in order to avoid the interest component. Now their balance is Rs 1.09 lakh, and as this particular group was eligible for a subsidy of Rs 1 lakh under the Swarna Jayanti Gram Rozgar Yojana, which amount we have with us, we will adjust that against the balance and after paying another Rs 9,000, the loan would be closed." And the group would be left with a personal saving of Rs 55,890, with which they can once again go in for an additional loan of Rs 2 lakh.

So would they go in for another loan? "Of course," says Meghala, with confidence. "We will expand our business, make more pairs of anklets, and get more famous".

`Famous' they already are, and Meghala proudly displays a huge photograph of President A.P.J. Abdul Kalam buying a pair of anklets from her at an exhibition held in Chennai last year.

"He was not President then, but this picture is helping us immensely," she says.

A photocopy of the picture carried by a popular Tamil daily is shown at the check posts between cities, when Chinnadurai is accused by the police of carrying "stolen silver anklets". "They can harass only people like us. But when he shows this picture and tells that the President of India has been our customer, he is immediately let off", says the woman with a grin.

The group employs a couple of men, paying them a daily wage of Rs 75, for the more muscular part of anklet making, "even before we formed this group and got bank loan, we had been working for years, getting a daily wage of only Rs 25," says Dhanam, a group member.

But Meghala and the other women are extremely secretive about the real income they make, and are not unlike the millions in this country who understate their income! It is with much prodding that you can find out the extra money they make by selling the silver waste as scrap.

"But then there are so many aspects of anklet making for which we have to keep aside a huge sum," she says. Like giving the anklets bits of green, red or blue, and polishing the finished product.

So why don't they buy a polishing machine?

When she says it costs Rs 75,000 the Indian Bank manager chips in to say that the bank will lend them the money.

At which point the woman cuts in, "Oh yes, why wouldn't you lend us the money. We repay it with interest and well before time. But we have to look at the profitability too and will do it at our pace."

Meghala's two daughters are studying in St. Joseph's school, in the Tamil medium section. She has no charm for English medium and says that knowledge of Tamil would be enough for them in Tamil Nadu.

As you find success stories in various groups and beg to be given an example where the scheme has failed, Meghala points out that in the neighbouring Selathampatti village two members of an SHG had "misused a sum of Rs 48,000. But with pressure from other members the group was able to recover Rs 43,000. This happened because they were not conducting proper meetings and keeping accounts".

It is in this aspect that a strong NGO presence and intervention is essential for the success of this programme. In Ayodhyapattinam, Salem district, Community Services Guild is the co-ordinator for a cluster of 65 groups.

It organises meetings for the groups and trains the women to maintain accounts. It also runs computer classes for some of the women's children at a quarterly fee of Rs 750, and 42 students have already enrolled.

Rina Chacko, the bank's rural development officer attached to the Ayodhyapattinam branch acts as a liaison officer between the SHGs and the bank.

She has been encouraging the women to get mobile on bicycles and "some of the younger women have also bought TVS 50 mopeds with loans. Today these women have the confidence to come to the bank's branches and demand what belongs to them. That is the transformation that micro credit has brought about".

The women are doing more than that. They collectively participate in gram sabha meetings and take the panchayat heads to task for bad roads, street lights not burning or ill functioning schools.

R. Venkataramanan, Circle Head of Indian Bank, Dharmapuri, says that when this scheme started in the district in 1989 as IFAD (Integrated Finance for Agricultural Development), "it did not succeed too well for several reasons. The banks were lending directly to the women and there were certain conditions on what activity to choose, how much profit to expect and the like. But once the NGOs came into the picture, the whole scene has changed. Today, the women have the freedom to decide collectively which member will get what loan for what activity. The scheme is totally flexible and hence successful. We have financed over 1,000 groups and the repayment is 100 per cent".

Indian Bank Chairman, Ranjana Kumar, told Business Line that though micro credit had resulted in the transformation and empowerment of rural women, "the task before us is to keep them focussed, enlarge their activity and see that they grow. They've given us evidence that they can manage their economic activities very well. But as bankers, we now have to see rural women in a new light, and give them opportunities for further growth".

For the doubting Thomases who claim that "micro credit is a macro mess" and that it is resulting in a huge debt trap for women, who eventually default, AGM of Indian Bank, Salem, M. Kanakasabai says, "Group dynamism prevents these women from defaulting. These are homogenous group of almost equal economic status and the group knows the absorption and repayment capacity of each member. Debt trap can result when you thrust upon them finance without seeing and assessing their credit absorption capacity and have outside interference. But not when the NGO is present, and the group manages and decides the quantum of loan".

K. Francis, Director of the Integrated Village Development Programme, an NGO that is working with 2,257 SHGs in Dharmapuri district is more forthright.

"Talks of debt traps are made by experts who sit in ivory towers without visiting the field. The total savings of our groups is Rs 13 crore, which has been revolved up to Rs. 49 crore. So where is the debt trap? These women's strength is their own money. Tomorrow if the bank pulls out, they can say: Okay, we can manage on our own. That is real empowerment".


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