Village Invest Advisor, Carolyn Baker, explains how the organizations handling Village Invest loans are structured in the words of the women who manage them.
Earier this year, I travelled to Duni village in Rajasthan, India with SRIJAN, a Village Invest partner and NGO, to meet the leaders of the Maitree Federation. This small group of women manage Village Invest loans for 32 village clusters, serving around 4,500 individual members.
It was winter and when I entered the veranda of the Maitree Federation building and the women were sat cross legged in a semi-circle, drinking warm chai (spiced tea) and discussing business. Over their saris, they wore cardigans. From the roof above, the local children stared down at us and waved. The treasurer, Feranti Devi was bent over her books, counting money and inserting entries into detailed lists. Each member of this group, a local savings and credit organization, pays regular subscriptions. These were what Feranti was recording. Membership subscriptions are paid at all levels of the organizational structure, from small village groups like this one through to the Federation, the highest level in the savings and credit organization structure.
The village women that govern the Federation have risen through the ranks of its detailed structures. That day, I was privileged to meet five village women who had made it as far as the board.
Empowering women to challenge traditional roles
As she wrote, Feranti laughingly told me that before she had joined her local savings and credit organization, she ‘couldn’t handle five rupees’ and that now she is ‘regularly managing transactions of up to five lakh (around $7500)’ and ‘dealing with’ banks and banking staff. Across from her Narbada, the Federation President, explained that her family were very traditional. Before she became a member of the savings and credit organization she was confined to her home. She didn’t even speak to her neighbors. Now, she has contact with the over 4,500 members of the savings and credit organizations, everyone knows who she is and greets her to prove it!
‘We are trying to free women from the confines of our tradition’
The women told me that being involved in the Maitree Federation has given all of them status and the opportunity to travel and learn. The Vice President, Mira, joked that when she had recently travelled to Jaipur the a train conductor was amazed that a ‘woman from the village’ was travelling alone. She told him that she'd probably travelled more than he had and that he should give her her ticket and move along!
As we settled into conversation, the women explained that the Federation is registered under the Indian Societies Registration Act which means that it can benefit from income from government schemes and can confer this income onto its members. It has 11 board members and four office bearers: President, Vice President, Treasurer and Secretary. The financial accounts are declared at an AGM, at which office holders are elected. Board member elections occur every three years when one third of the membership is up for re-election. Office holders are re-elected every two years.
‘Our vision is to free all women within the Federation from the trap of money lenders’
Mira explained that the Federation is a not for profit and laid out their current priorities:
- Capacity building groups
- Livelihood support
- Implementation of government health & nutrition programs
They also work hard to influence against common social problems such as school drop out, child marriage and alcohol abuse. ‘We want to make women more independent, with a stronger voice in their household’ Narbada told me, ‘we are trying to free women from the confines of our tradition that tie them to the house’. ‘Ten women can’t go against our traditions’ Feranti joined in ‘but 4 - 5,000 can’!
‘When the Federation was formed’ said Narbada, ‘very few women left their homes and interacted with people other than their families. They had no decision making power. Now women are advocates for the savings and credit organizations and sorting out social problems.’ Feranti continued, ‘we couldn’t raise one rupee of loans back then. Now bank managers approach us to give us credit!’ ‘We can resolve our own issues ourselves now’ Mira added ‘if there is a problem in the savings and credit organizations the Federation can arbitrate’.
A history of managing microfinance loans successfully
I asked whether they received a salary and the women enthusiastically explained that the Federation had not originally been able to offer stipends, but can now pay modest salaries. The office holders and board members receive a fee to cover their expenses on a per project basis. The Federation generates income to cover this and other costs through loan charges, bank commission and running capacity building/training workshops. ‘The Federation has an important role in building the capacity of its leaders’ one of the board members, Nirmala described ‘our structures must have rules and regulations. It is our job to make these and share them’.
I turned to Feranti and asked if she could be kind enough to describe the loan management process for microfinance loans. She told me that she completely understood the importance of the question and put her books aside temporarily to describe it.
When a savings and credit organization member seeks a loan, they must submit a proposal to us, the Federation managers. We check the proposal is accurate and verify the history of the applicant. The village organization submitting the proposal must act as guarantor, so that if the woman doesn’t pay, they will make the payment on her behalf, so they must be confident that the woman is in a position to repay. Village clusters and individual savings and credit organizations cannot register with banks, it is all done through the Federation and we issue the women with a contract. Once the loan is made we visit the woman to ensure that the loan has been used for the purpose stated and that she is not having difficulty repaying. The contract normally also includes an individual nominee who is liable for the money if the woman can not repay. If the family can’t repay, then the village organization will repay as a last resort. Loan money is returned monthly via savings and credit organizations to the Federation.
‘The Federation has received and repaid 100% bank loans of up to 70 million rupees ’ Kajori another board member chimed in.
Maitree Federation: what the future holds
I also learnt that the women have ambitious plans for the future, from extending their geographical coverage to all the areas of the districts where they are currently working to building their own purpose built training centre. The Federation wants to ensure that 100% of its members are trained in money management by 2020.
‘In our 2020 strategic plan, we have plans to open our own vegetable market and begin distribution of cattle feed under the Maitree brand’ Sumitri, another board member described. ‘Our vision is to free all women within the Federation from the trap of money lenders, but to do that we need to start receiving and making loans of higher amounts’ added Narbada.
As we made our farewells, the women proudly told me that recently a Government livelihood scheme had been set up locally offering grants rather than loans, ‘none of our members left to join it’ they said.