Many of us believe that rural Indians fall prey to the debt traps of selfish money lenders because of their lack of knowledge of banking systems, loans, etc, or in other words, of an alternate modern, safer route of obtaining finance for small business ventures.

It's easy to believe in something when you know no better. In truth, that's how Chetna Gala Sinha's journey in village Mhaswad of district Satara (Maharashtra) started too.

Real problems need real solutions

During her student life, Sinha was an active youth participant of Jayaprakash Narayan's national movement for the rights of the poor and underprivileged. On a visit to the region while she was studying for an economics post-graduate degree from Mumbai University, the well-meaning Sinha determined to ‘teach' the villagers about issues they should be willing to face, and solve. A few lectures later, she was approached by a middle-aged woman who said, "Do you see those mountains? Our problems are as big as them. I am happy that you care to think about us, but you cannot solve our problems. Go back and continue your studies."

The words left Sinha speechless. Evidently, there was no need to teach the villagers about their problems and possible solutions, as they knew better - mere rhetoric would solve nothing, and generic solutions were ill-suited to their living and working conditions.

Nevertheless, the interaction left Sinha determined to do something substantial to assist these impoverished people.

Providence strikes

Years later, it was to this very area that Sinha relocated from bustling Mumbai city after her marriage to Vijay Sinha. Interestingly, for this gutsy woman, love struck during a campaign for labourers in Bihar where she met her farmer and co-activist future husband.

In village Mhaswad once again, Sinha was to first build on her prior experiences before she embarked on her social ventures. A family farming misfortune led her to apply for a bank loan to start goat farming. The bureaucracy she faced was exhausting, yet nothing came of it - the loan was refused. This triggered another realization - if she found the going so difficult, what would banking be like for an uneducated villager?

The experience served to firm up Sinha's resolve to do something to remedy the situation. After all, fellow villagers had by now nick-named her educated Tai, Tai meaning elder sister in Marathi. It was almost as though a mantle of responsibility had been placed on her able shoulders.

Mann Deshi pension scheme launched on 23rd March, 2007 by Madam Usha Thorat, Deputy Governor, Reserve Bank of India, Mumbai,

Innovative methods garner more support

Having heard about the wonders of micro-financing, Sinha was drawn to establish self-help groups (SHG) to encourage small savings that would be used to finance members' small-scale business ventures. When she shared her thoughts with around 200 women, they rallied around the idea.

As Sinhas' understanding of the ground realities grew, she adopted innovative means to steer the venture forward. In 1992, when she started a general co-operative society, she ensured that it offered loans-in-kind and accepted small daily or weekly savings, unlike all local banks. This feature addressed a major problem of its women clients - any money they took home was squandered by alcoholic, abusive husbands as a result of which families were bound to a lifetime of poverty. But no longer - women were now saving as they chose, as much as they chose.

Facing, and extinguishing competition

The society was a grand success but this only prompted Sinha to raise the bar still higher. Consider ideation as an entrepreneur's response to a challenge. Often, the bigger the problem, the more far-reaching is the solution. So too, Sinha figured that a bank would make it easy to mobilize more deposits and this would translate into more loans. Her new target was now no less than the establishment of an all-women co-operative bank.

But a co-operative bank would meet political opposition from day one - as politicians ruled the roost of other local co-op banks. Naturally, they wouldn't take kindly to a new endeavour, and that too, one run by illiterate women. The womens' illiteracy posed another problem - the RBI was highly unlikely to sanction an application signed by 840 thumb impressions! Nevertheless, Sinha forged ahead - she trained the women in banking, simple calculations and to sign their names.

When the group finally met the CGM of the RBI, they were brimming with confidence, and more than willing to be tested in interest calculations, albeit orally. Six months on, their faces were all smiles as they were confirmed founder members of India's first rural, all-women financial institution, the Mann Deshi Mahila Sahakari Bank.

A socially creative business

Alongside adopting innovative methods devised earlier - like weekly and fortnightly loan repayments - the bank quite literally banks on its members' determination to uphold their collective credibility. In many cases, it has replaced physical collateral with social collateral, as SHGs are permitted to guarantee their members' loans. The women go all out to ensure the SHGs reputation stays intact by helping a floundering member if the need arises.

Sinha's interest in social causes is weaved into other innovative ideas launched by the bank. For instance, to prevent men from selling their family property or leaving their wives, the bank has introduced a clause that makes it mandatory for a husband to declare his wife as a co-partner in property prior to her obtaining a loan. This rule has helped no less than 600,000 women gain a share in family property. Local authorities have reaped the benefit too and responded well - once they realized that property taxes get paid in time when women are co-owners, Maharashtra's revenue department determined to include women's name on stamp paper for joint registration of immovable property.

These novel approaches have paid off - the bank boasts of a recovery rate of over 96 percent which has led other local banks to seek partnerships for assistance in loan recovery.

Partnerships aplenty

Today, Mann Deshi has partnerships with organizations working in the government, the corporate and the social sector. For instance, the Deshpande Foundation and Ashoka Innovators formed a partnership with Mann Deshi to create a Mobile Business School for rural women in Karnataka state. Intel Technology India (Bangalore) very kindly provided laptops for this mobile business school. Similarly, HSBC Bank partnered Mann Deshi to create a Business School for rural women, beside which it is also offering it low-interest refinancing loans to pass on the benefit of low-interest, micro-loans to clients.

SIDBI (Small Industries Development Bank of India) has offered Mann Deshi grants in-kind of hardware and software, as well as support for its ISO Certification process and capacity building programs. Mann Deshi's partnership with Gram Swaraj, a non-banking financial institution, allows it to offer micro-finance to women in Karnataka while still complying with RBI restrictions on expansion.

Further, while the UTI Mutual Fund has also formed an active partnership with Mann Deshi to create the first pension scheme for rural micro-entrepreneurs, partnerships with the Life-Insurance Corporation of India and Oriental Insurance Company have enabled Mann Deshi design an insurance scheme for its employees and shareholders.

Another novel partnership is with Harvard Business School's Gyaana Group - this has helped generate an interest in Mann Deshi among students and young American entrepreneurs.

Exemplifying rural entrepreneurship

Today, the bank has 48,000 members, over 70 percent of which belong to backward castes, and assets worth rupees 9 crore. In keeping with its original charter, it continues to give out loans, but only through women. In entrepreneurial terms, the Mann Deshi Mahila Sahakari Bank is a standing example of the fact that if innovation and sound business principles are part of a business equation, quoting Sinha "banking with the poor isn't necessarily about going into losses."

Socially speaking, the bank and its sister organizations have been recognized as exemplary of how far one woman backed by the immense will of many others can go to transform the lives of many. Over the years, Sinha has collected the Microfinance Process Excellence Award 2006, CII-Bharti Women Exemplar Award 2006, Jankidevi Baja Purskar Award 2005 and the Ashoka ChangeMaker Innovation International Award 2005. But perhaps the truest mark of her success is the outstanding woman social entrepreneur award that Vanita Pise - a bank loan recipient- received from the CII in 2006.

There's a lot that could be said about Pise's struggle and victory, and about many others, but that as they say, is another story! 

Charu Bahri is a freelance writer and author of two books. She also writes funding grants and software for a charity working in the health sector. 

Issue BG81 Dec 07

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