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Women’s participation in financial system facilitated India’s first urban self-help


By Moin Qazi*
I vividly remember my moment of epiphany. It was a balmy afternoon in early 1996 in Warora, a small township in northern Maharashtra. I was posted as a manager of the local branch of my bank, the State Bank of India.
Like any other day, there was a crowd of unruly people queuing outside and creating a commotion. I was busy doing my daily tasks when I was interrupted by my assistant who said that a group of women was waiting to meet me. I peered through the glass and, without giving a thought, I gestured them in.
Though dressed in discoloured flimsy saris, the women appeared relaxed and confident as they walked in nonchalantly. I beckoned them to sit. Without beating about the bush, their leader struck an immediate chord. She boldly announced they had come to take a loan to set up a small business. Although it was the early office hour, and not the right time for too much discussion, I decided to hear them out. I lobbed a few soft questions at them. They answered them confidently.
Finally, I fired some fast ones, “How will you repay the money? It is not a government dole. Every pie has to be returned. Do you have any collateral to offer as security?” Their expression became taut, with an uneasy smile playing on their faces. The women turned to each other-groping for answers. One of them firmed up and interjected: “We can offer the strongest security which our neighbours would confidently vouch for.” What was it? “Honesty”, she replied with a pride and twinkle in her eyes.
The content of their pitch was that if I trusted them and gave them a chance, won’t let me down. These women represented the aspiring generation of lower- income communities that was trying its luck with innovative development opportunities that were being aggressively promoted, both by the government and the banking sector. The chirpiest in the group was the demure and petite Veena Raut, who later assumed the stewardship of the group. Young and university-educated, she was the unlikely face of the future of these women most of whom were poorly educated.
It had become clear to our generation of development practitioners that one crucial piece of economic empowerment of women was access to financial services. This was also the time when, if you asked somebody about the most promising innovation for women’s well-being, the answer would invariably be ‘microcredit’.
Microcredit had emerged as a powerful tool for harnessing the entrepreneurial impulses of the impoverished — particularly women. It was based on the extension of small loans (microloans) to a group of people-more particularly women -who typically lacked collateral, steady employment and verifiable credit history; yet they could ensure hundred percent repayments by using peer pressure.
Group loans to women were highly popular, and we had received good results in rural areas. They had already given us a hint of their potential. However, the urban groups were not as socially cohesive as their rural counterparts. The credit and repayment culture in a village is strong as a default of a loan results in a reputational slur. There is no such culture in urban areas where majority of low income residents do not have permanent habitations, and most of the population in this segment is a floating one.
But the idea had excited me a great deal, and I was thus keen to try it with women in Warora. I happened to represent State Bank of India in the first batch of bankers who were associated with India’s home-grown model of microcredit that was launched around the turn of the nineties. It was popularly called ‘Self Hep Group-Bank Linkage.’
Women’s participation in the financial system can have significant benefits in terms of economic growth, greater equality and societal well-being. When women are empowered as economic actors, the benefits touch everyone. Access and usage of financial services are levers for increasing women’s participation in the economy. They enhance their self-confidence and place financial decision-making power in their hands resulting in large development payoffs.
In short, financial inclusion enables women to smooth consumption, ensure security, increase saving and investment rates, lower financial risks and facilitate new livelihood and income opportunities for the family. It enhances the financial resilience of low-income women.
Although I was a little apprehensive, I decided to follow my instincts and decided to take a chance to do business with urban slums. I visited these women in their homes and was impressed by their determination and solidarity. Their cautious approach could be mistaken as a lack of confidence, but with time, I understood them better.
I still remember the first meeting. The room was partially illuminated by a fluorescent light covered with years of accumulated dirt The portraits of divinities jostled for space on a worn-out shelf with fading photographs of parents and grandparents on reverential display, all stained by ash scattered from the incense burned daily.
The meeting started with a traditional group song, in husky melodious expression with a staccato rhythm. Though my Marathi was rusty and the women’s dialect was different from what I was used to, I could discern the theme of the song: unity, self-help, trust and the poor banding together to help each other.
It was very touching and an apt beginning for the group meeting. One of the verses of the song went like this: “Nothing is stronger, or more embedded in the marrow of our bones than the need to save for a rainy day. It is not written in words, it is written in our hearts”.
After a few meetings, in which I addressed all their queries, the group was formally launched. It was christened Priyadarshini Mahila Udyog, with Veena as its head.
With the help of the district administration, I secured a grant for a two-week Entrepreneurship Development Programme (EDP) for basic training in finance and cash flow and development of relevant and managerial skills; business planning; technical training related to the production of goods;asset-management;book-keeping and inventory management; preparation of business plans for loans; and storage and warehousing. This incubation helped them refine their overall confidence and interaction skills.
I decided to devote each Sunday for a month, to help the group establish its business. From this moment onwards, it was about creating a brand and standing out from the rest. The group decided to not focus on one single product but create a range of products under a single brand. The capital which the loan afforded was enough to purchase adequate machines.
The nearest industrial township was in Nagpur from where we got the gadgets and machines designed. We would travel to Nagpur by jeep in the morning and return to Warora in the evening. A few visits helped crystallise our plans.
We decided to purchase scaled-down versions of the equipment used for manufacturing food items for school children. One of the industrial units supplied a modified popcorn manufacturing machine suitable for local needs. It could be operated on petroleum gas. To spread the word about their brand, a local printer agreed to supply polythene packets in bulk with the group’s logo branded on them.
A candle manufacturer had just one standard mould. He later helped them acquire several moulds from Mumbai, for fancy candles which won the unit a strong brand in the district. The Municipal Council of Warora solved the marketing issue with bulk orders for chalk sticks, candles and broomsticks. The local grocers offered to serve as retail outlets for the unit.
The Hindustan Petroleum Corporation provided priority connection for LPG, and the Municipal Council provided a shop in its commercial complex at a fair discount. The State Electricity Board provided a priority electric connection.
Veena later graduated to become an assistant in the government’s development administration and is now a Village Officer heading the administration of a large village in Yavatmal district.
The group has since been shepherded by Minakshi Wankhede, who also doubles as a home guard with the local police authorities. Her association with the local police has boosted the business in various ways. Minakshi’s leadership augured well for the group. She lacked Veena’s capabilities, but the consolidation of business took place during her leadership.
The group managed it finances skillfully and judiciously, practicing austerity and frugality. As the capital increased, it became capable to diversify its services. It acquired machines for manufacturing vermicelli and camphor balls and in their spare time, the women would engage in tailoring works. The entire group was anchored in passion and each member continually inspired others to do more.
Soon, a flood of accolades followed, with Priyadarshini Mahila Udyog even being felicitated by the prime minister.
The group also bid and won the tender for supplying mid-day meals to school children. Earlier these contracts were being influenced by local political leaders, but repeated complaints of insipid food and unhealthy cooking conditions forced those involved in it to take a step back. The women-led group seized this opportunity and it now supplies mid-day meals to over 1,000 children, ensuring dignified employment for a dozen women at the same time.
Cooking begins at 9 am in the industrial kitchen, which is a tarp hung on four posts, jabbed into an empty patch. An all-female crew prepares giant vats of savoury rice and lentil porridge. Workers cook several kilograms of rice, curry and vegetables in giant steel pots. They stir curry with paddles the size of oars. Amidst the sounds of clanging metal, I often found the women hard at work.
During one of my visits to the schools where these ladies served the meals, the teachers complimented me for the excellent quality of food. Earlier, they had to throw away half the supply on account of its insipid taste, I was told. Now, there were no leftovers. Children also brought tiffins to take some food to their homes. When they ate nutritious food, their attendance also improved.
With its exponentially rising graph of success, it was just a matter of time before they were recognized. A flood of accolades followed, with the group even being felicitated by the prime minister.
The latest success is the sanction of an outlet of the Public Distribution System (PDS), the government programme that provides subsidised food grains to the poor. The honesty of the group members is reflected in the happiness of consumers; they get the full eligible ration on time and at fair rates. This has helped customers of other PDS outlets too. As in all spheres, benchmarking improves ethical practices.

Fast forward to 2018

Twenty years have been a long period for women from varying religious, linguistic and caste hues to remain under a common umbrella. Life for them has changed in other ways too. They recall those days when they were rag-pickers and made a scant living by segregating and selling papers, plastics, metal and other scraps. They suffered scorn for being in a contemptible profession, but even in today’s better times, they face displeasure, the reason now is more modern–economic envy.
The younger members left the town after getting married, while some retired. Of the original group, only three members remain–Minakshi Wankhede, Shashi Narole and Zaibun Shaikh. Though age has mellowed them, the youthful glint is palpable. Their resilience is quite visible. ”We have poured our entire energy into this enterprise “, muses Minakshi. The results have been rewarding. These women now have improved dwellings; their children lead better and healthier lives, and they have investments in the form of bank deposits and plots of land.
I have marveled at the group’s incredible journey from stultifying poverty to community-wide respect which has great lessons for me, as for the larger society. The best part is that they are described as “hard-working, rigorous, ambitious and respectful women.” Stories like these of resolute perseverance grit, determination and dignity to escape the enduring grasp of poverty are what inspire and motivate us in our role as development agents.
By tenaciously plotting the contours through up cycles and down along the economic ladder and negotiating rigid social norms, the women have shaped a heroic trajectory and gained greater voice and visibility in their communities. They serve as a prime example of how economic security can be so transformative for women and their children.
That picture of my first encounter with these women is one sliver of my memory that remains green and verdant till day. It refuses to fade. It is experiences like these that keep renewing our trust in poor but honest and heroic women. Two words sum up their epic saga: resolve and resilience.
Women are a low-revenue segment on account of their preference for small-ticket, low-cost products. But they prove to be loyal and profitable clients when treated with respect and served with appropriately-designed products.
They may be more risk-aware than men and take longer to make decisions but they make firm decisions, and when they do, they tend to be more trustworthy and reliable customers than men. Financial service providers need to ensure fees are not prohibitive and design tools to make their engagement with financial service providers friendlier, safe, affordable and convenient.
What sparks change for people living in poverty? It can be or use of a mobile phone in a remote village. Most often, it is a personal vision, grounded in hope and courage. Whatever the spark, these agents of change are candle lights for their community.
Putting the right supporting structures in place can make the ecosystem for female entrepreneurs more congenial fostering a culture of equality. The poor need to be given a chance to fulfill their own potential .If we can inspire people around the world to think differently about what it makes to be poor then we will have made a real impact. Entrepreneurship is a powerful path to reducing poverty and creating financial independence which is modern society’s strongest currency.
The founder of the Grameen Bank of Bangladesh and recipient of the 2006 Nobel Peace Prize, Muhammad Yunus believes that the most powerful way to eradicate poverty is to unleash the untapped entrepreneurial capacity of the impoverished.
“Poverty is not created by poor people,” he says. “It’s created by the system we built. Poor people are like a bonsai tree. You take the best seed from the tallest tree in the forest, but if you put it in a flower pot to grow, it grows only a meter high. There’s nothing wrong with the seed. The problem is the size of the pot. Society doesn’t give poor people the space to grow as tall as everybody else. ”

*Member of NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women

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