August 31, 1998

Resourceful tribal women set up banks to ward off unscruplous moneylenders.

By N K Singh

Moneylenders are an avaricious lot. They plague people no end. In Jhabua district in Madhya Pradesh, for instance, they not only demand killing interest on money they lend, they have also set up the Kangal Bank -- destitute bank -- to wrangle a fee from the poor farmers who approach them to keep their money safe. The impoverished rural folk have no other option but to accept this exploitative financial system. Till recently that is.

This summer, when 32-year-old Badli Bai wanted to marry off her daughter she did not approach the village usurer. Instead, the tribal farm labourer talked to other women in her village, Bhanwar Piplya, off the Indore-Jhabua highway. The next day she got a loan of Rs 2,000. "I could even give my daughter a goat," says a beaming Badli Bai. She has already repaid Rs 1,800 and needs to return Rs 740 more. Isn't the interest a trifle too high? "No," she replies with firm conviction, "it is only 36 per cent. The moneylenders used to charge as much as 120 per cent." And in any case, she points out, the money is going to her own bank.

Badli Bai owns a bank? She does and so do about 28,000 illiterate but enterprising tribal women like her in Jhabua. The only difference is that her bank does not have a building or a cash box. Not even an accountant or a ledger. It operates out of her hut, which she shares with her cattle. A simple notebook is used to maintain accounts. But it has the most important ingredient needed to operate a bank: money. In all, the banks run by these women have mobilised Rs 3.64 crore. Compared to the deposits in the formal banking sector -- the cooperative banks in the poor district have Rs 17.05 crore and the scheduled banks Rs 63 crore -- this is not a mean achievement.

Besides, success has come in a very short time. The informal thrift and credit groups were started only three years ago. These are so informal that they are not even registered. Explains R. Gopalkrishnan, co-ordinator of the Rajiv Gandhi Watershed Mission (RGWM), which promoted these societies: "The groups were not given a formal shape intentionally in order to keep them outside the purview of the co-operatives bureaucracy." It worked. An average group consists of 15 women, who meet every week to pool their savings -- ranging from Rs 2 to Rs 10. Jhabua now has more than 1,700 such groups. Their amazing success, says district collector Wasim Akhtar, has prompted even men to form such groups.

The banks have already advanced credit of over Rs 1.70 crore to its members, mostly farmers and farm labourers. The recovery rate is more than 90 per cent, higher than that of scheduled banks. The interest rates are high at between 24 and 36 per cent. But the tribals, long used to traditional usury, are not complaining. Says Lakma, who borrowed Rs 70,000 to partly finance a jeep, which she now runs as a taxi in Jhabua: "A moneylender would have charged an interest five times as high."

Most of the women go in for short-term credit, either consumption loan or for emergency needs, like an illness in the family. A few have also started business. Salina Martin and 11 of her friends from Rampura earned a profit of Rs 22,000 last year from the spices business they set up two years ago. Her group has already repaid a fourth of the Rs 20,000 loan and intend to repay the rest in a year's time. Peer group pressure prevents the women from defaulting.

However, the programme has its shortcomings. Some groups have deposited their money -- sometimes as much as Rs 2 crore -- in savings accounts in co-operative banks where it lies for long periods, resulting in huge loss in interest earnings. Why hasn't the money been kept in fixed deposits which yield a higher interest? Or why isn't a special interest scheme for the groups devised? There are no replies at the moment. But the way the resourceful women of Jhabua are going about their business, it won't be long before they get the answers.

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