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Medha Tai’s story of banking for the poor

By Shini Ashok, Ujjivan
Cross-posted from Ujjivan as a part of their on-going sequence on girls leaders in monetary inclusion

Dr. Medha Purao Samant Annapurna Pariwar
Dr. Medha Purao Samant Annapurna Pariwar

Dr. Medha Purao Samant, is likely one of the greatest identified figures within the areas of Monetary Inclusion. She has many accolades to her identify, “Entrepreneurs Worldwide Award for the 12 months 2003”, “Girls Leaders in Microfinance”, by Indian Faculty of Microfinance for Girls, “Adishakti puruskar” by the palms of Dr. Kiran Bedi. The latest being Microfinance India Award by Entry Help, within the class of Group Owned Microfinance Group of the 12 months 2014, however for her prospects and her staff, she is going to at all times be their ‘Medha Tai’.

Born to a household of social activists, Medha Tai was at all times inclined in the direction of the reason for ‘banking for the poor’. At some point she determined to formally finish a 12 12 months outdated profession in a industrial financial institution and commit her life to the trigger. She together with 9 different girls, who had been her first prospects, wrote the story of Annapurna Pariwaar. At this time Annapurna is a gaggle of 6 Non-Authorities organizations working in Mumbai and Pune for the city slum dwellers, with a imaginative and prescient of empowered girls in a sustainable household.

Shini: What was your inspiration behind beginning the microfinance unit? Was it your mother and father, each of whom had been broadly identified social activists? Or was it story of widespread girls like Shavantabai & Laxmibai who impressed you? Or was it the rest?

Dr. Samant: You realize, inspiration isn’t a at some point factor. It doesn’t occur abruptly. It’s a lengthy course of. It is dependent upon how you’re purchased up and in addition how your thought course of is formed alongside the best way. You develop a liking for one thing. You concentrate on it day in and day trip, it turns into your ardour. Cash turns into not necessary. You additionally want a consolation degree that this could be one thing you intend to do for the remainder of your life. It was the identical that occurred with me. I used to be working for a industrial financial institution for 12 years. I at all times knew that banks aren’t doing what they’re speculated to do. Within the latest years, Reserve Financial institution has been speaking about Monetary Inclusion, few years again the time period was Precedence sector lending, a lot earlier it was known as mass banking. It’s the standard wine in a brand new bottle. Each 10 years they package deal it otherwise. The ideology behind it stays the identical, to supply monetary companies to plenty. Anyone who’s poor would additionally want the identical monetary companies such as you and me. They want loans for enterprise growth, financial savings service to save lots of their small financial savings. They want insurance coverage protection for well being, life, household, property and so they want pension. The poor even have many different wants which might be non-financial. All of our initiatives come out of that understanding that poor will want all these companies. This isn’t only a dry mortgage program the place I give a mortgage and also you repay it.

I come from a household with a powerful social orientation; each my mother and father are social activists. My husband too is from a social background. So I at all times had a really supportive atmosphere round me. Most of our discussions at residence had been round these topics. That was one of many elements, on the different finish; my banking job was additionally resulting in frustration. Not that I used to be personally sad. It was a really rewarding job, it paid me properly and at my designation I used to be entitled to many different advantages. However I at all times felt that we weren’t reaching out to the poor. Our prospects had been properly educated elite individuals, who may stroll in and dictate their phrases. The vegetable vendor simply throughout the road was nonetheless borrowing from the cash lender. Everybody may see that. I too noticed it however I additionally understood their actuality of life and tried to assist them. That was the one distinction.

Shini: Such as you mentioned you give up a profitable profession on the financial institution to pursue a social trigger; you took this determination barely in a few months. What was the impetus behind this brave step?

Dr. Samant: It was an easygoing life, it supplied utmost consolation. At this time banking has additionally turn into a really demanding area, however that was 23 years in the past, banking job was not all that demanding. Although, I had give up in a few months after the primary mortgage, however truly the choice making course of had began a lot earlier. The considered ‘Banking for the poor’ was at all times brewing in my coronary heart. I had additionally mentioned with my household about my determination to give up the banking job and commit entire of my life to the poor. Microfinance was nowhere within the see then. It was 23 or 25 years in the past.

It was by no means a sudden determination, for the exterior world it regarded like that, however in my thoughts I used to be at all times planning. For others it got here like, you simply began giving loans and in a number of months left the financial institution job. It wasn’t that, it was truly only a trial; it was a check of group solidarity amongst these girls. We initially began with a gaggle of 10, one dropped proper initially; we needed to undergo an preliminary set again. However fortunately the remainder of them continued and took the accountability for one another. After the set interval of fifty days, we had been assured of one another. I used to be assured sufficient that this mannequin will succeed. It was only a validation. The choice was already made a very long time again.

Shini: Folks challenged your thought course of at each step, whether or not it was doing microfinance or selecting a cooperative construction of operations, what was your supply of confidence?

Dr. Samant: [Sighs] One in every of my board member was like, ‘Ohh my God! what are you speaking’. It was a time when there was excessive tide of microfinance, everybody was speaking about NBFC, and Co-operative construction regarded very unwise. It was a time when Indian Abroad financial institution was prepared to speculate 5 crores with us and our portfolio was solely 3 crores. It may have been a NBFC three way partnership. It was then after I mentioned no to the three way partnership and strongly stood behind my determination of choosing a cooperative construction. I needed to persuade my board members which took me a whole lot of time.

One factor that helped me so much all through the best way was that I used to learn so much, I exploit to analysis so much, now my eyes don’t allow me for voracious studying, however 10-20 years in the past, I learn so much. I learn concerning the RBI pointers, I examine cooperative legal guidelines, I additionally learn many a issues concerning the NBFC construction and what had been the loopholes and so on. I learnt from my father, to review all the pieces, all the professionals and cons of any determination earlier than leaping into it. My mom has the guts of an activist; she first listens to her coronary heart after which her thoughts. I feel I’ve bought the qualities from each my mother and father. A few of my choices look very fast, however I might have deeply studied and researched properly. I knew NBFC mannequin had flaws. NBFC couldn’t generate cash from poor individuals’s personal funds, so that you lose out on a chance to gather that small thrift and pool up a fund. NBFC should not have a restoration clause and one other weak point was that NBFCs shall be perpetually borrowing from others. So these had been 3 flaws I rigorously considered and got here to a conclusion. I additionally consulted some very senior bankers from the sphere. My father’s mates who deal with me like their very own daughter, due to this fact, I additionally collected numerous skilled opinions. Like one of many ideas from Shiv Khera leaders don’t do various things they only do issues otherwise‘. I’m not saying that I’m a really nice chief however I feel I’m a significantly good staff chief, and as a pacesetter you don’t suppose what the present pattern is, you consider what could be the very best for all. As time progresses, the world realizes the impression of the choice and appreciates why that call was necessary at that time of time. Each time I’ve taken a name of my coronary heart I’ve backed it up with thorough analysis and examine. Fortunately all of the trustees, board members confirmed sufficient belief in me and allowed me to go forward with no matter I assumed was right.

Dr. Medha Purao Samant Annapurna PariwarShini: Inform us the story of the magic cash.

Dr. Samant: Cash is cash. Good correct funding at correct time and at correct fee is what everyone needs for. However the distinction within the case of the poor is that they don’t seem to be solely poor they’re additionally illiterate. So for them it’s magic. There have been 9 girls who borrowed from me. That was a fifty day cycle, all the pieces I might ask them, like ‘chalo group banayenge kya, after a one and a half 12 months lengthy dialogue they mentioned ‘chalo banate hai’ any they pulled up 10 girls, one dropped out, now there have been 9 girls. They mentioned okay now we are going to maintain one another tight. I wished to lend them on their very own phrases, however they had been solely uncovered to the mortgage patterns as of the native cash lender, Anna. So if I requested them how a lot mortgage would they want ‘mortgage kitna chahiye,’ they mentioned “1000 rupees that’s enough for us.” How will you repay? 25 rupees every day, as a result of Anna does it that manner. They had been by no means conscious of the curiosity they incurred in the entire cycle. I simply did it as an experiment. We had been intently interacting on daily basis. It went on for 50 days and by the tip of fifty days the quantity was 1250, the mortgage I gave them was 1000 rupees. Out of the 1250, I saved Rs.50. I mentioned it is a service cost. I didn’t even need to name it as curiosity. I defined to them how these 50 rupees every may assist us rent staff or different associated bills. And the financial savings of Rs.200 could be for them. It was then once they mentioned, it’s the similar quantity we paid to you for a similar 50 days as we paid to Anna then how do we’ve these 200 additional, your cash is magical.

I defined to them. ‘That is our cash, it’s a must to protect it. It’s our capital.’ For me these phrases had been magical. While you say it’s mine individuals should not have possession, while you say it’s ours anyone and everyone would defend it. There on, each time they included a brand new borrower or member, they might clarify to the brand new member all the pieces, issues such as you can’t skip installment, that is our cash, and for those who don’t pay we are going to sit in entrance of your own home. It was easy arithmetic. 50 rupees isn’t a small quantity for those who put apart that as a capital, a gaggle capital then you definitely construct on that. It was a great experiment. For them the cash was magical, for me it was the thought which was magical.

Shini: Such as you simply talked about, it has been outdated wine in a brand new bottle, whether or not it’s known as monetary inclusion or mass banking. Given the brand new reforms within the sector, what do you suppose how a lot of a task microfinance can accomplish?

Dr. Samant: MFIs have a really huge function. Now most MFIs are turning into banks. Although I’ve not deeply studied the construction, nonetheless I really feel that for those who flip right into a financial institution you can be doing restricted microfinance and three or 4 limitations shall be at all times pertinent.

  • Banks have SLR and CRR circumstances to be met. So 40% of the funds will go in the direction of SLR and CRR, even when these limits are a little bit relaxed, it is going to nonetheless be round 35-40%. Nonetheless you should have solely 60%.
  • Banks aren’t allowed to provide unsecured finance. Solely 15% of the portfolio could be unsecured. Then Microfinance portfolio shall be restricted to fifteen%.
  • There are additionally tax limitations

Subsequently, I really feel that any good MFI shouldn’t flip right into a Financial institution. That is purely my private opinion, as a result of in the event that they flip right into a financial institution then you’ll transfer away from the aim of economic inclusion. At Annapurna, until this second it’s our determination that we don’t need to turn into a financial institution. I don’t know tomorrow what new modifications may are available in however I’m positive we can accommodate these modifications and have the ability to embody the society. Microfinance means finance for the poor. We should always not have our personal objectives. The banks or the cooperative banks can’t attain out to the poor by the very construction. Good MFIs I feel could be good cooperative societies, so the construction by itself turns into extra conducive.

Shini: Annapurna facilitates its prospects and different girls within the society with some very attention-grabbing awards like profitable entrepreneur, greatest mom and social achievement award, even the very best father award. What’s the motive behind such awards?

Dr. Samant: You possibly can always remember that we work with the very poor girls, who’re by no means appreciated by their very own households and the close-knit society they reside in. Who will have a look at her and say ‘Ohh!! My God she is an excellent mom’? Everyone seems to be busy with their very own each day struggles of life. And it’s a deep seated want of any human being that somebody ought to respect. Somebody ought to say ‘that you’re doing a extremely good job’, it provides them a way of pleasure. And while you respect and felicitate a number of girls in a crowd of 20000 girls, you name them on the dais. They really feel a lot empowered and taking a look at them, the others within the crowd are impressed and need to win it for themselves. Yearly, after the AGM, round 1000-2000 girls need to come and shake my hand and contact me, simply have a look at me and say ‘tai we’re so pleased with you’. Subsequent 12 months I’ll win that award. I feel that may be a very huge emotional want that we deal with right here. Although we’ve a scholarship program the place we cowl single girls, however there are such a lot of girls who’re single who’re struggling, there are some whose hardships by no means recover from even after getting their daughters married. Typically, the husband would ill-treat the daughter or at instances there are instances of sudden deaths, these daughters return again residence. These moms should be appreciated. They really feel empowered.

Even males, in truth we’ve only a few males debtors. However even amongst them we’ve seen this class and it creates a huge effect. Let me share an expertise. There was a male borrower, who was an auto rickshaw driver, his spouse suffered from psychological sickness after her third supply. She died after delivering the 4th child. He selected to not remarry. He confronted a whole lot of hardships, he was doing many a factor for his kids, however there have been additionally instances, when he additionally shouted at them, instances when he resorted to alcohol. However nonetheless we selected to provide him that award; he was so overwhelmed that not solely did he cry on the stage. The identical very night time he known as the LSO and department supervisor spoke to them for half an hour and cried he repeatedly mentioned ‘thus far ever in my life nobody has ever informed me that you’re a good father. At instances, I knew that I used to be being a nasty father. I yelled at them. I knew they had been motherless, I really feel dangerous for them however the place else would I take out my frustration. Mera seena chouguna ho gaya hai’.

We even have greatest entrepreneur award. They’re good examples of how one can turn into a great entrepreneur. There’s additionally a whole lot of social accountability linked up with what they do. You’re additionally creating job alternatives for others. All our members have a look at them as their function fashions. We even have social awards for ladies who exit of their strategy to combat towards societal evils like dowry, inter-religion, inter-caste marriages, and remarriages – divorced or single mom. So these girls are felicitated. Such instances are distinctive instances however they do exist within the society. We’re not solely simply giving awards we’re additionally creating a worth system, encouraging inspiration. These small issues go a great distance in empowering individuals. Giving solely loans isn’t empowerment, it’s only monetary empowerment however these actions assist social empowerment.

Shini: 99% of the staff in your group are girls. A few of them have been related to the group with as a lot as 19-20 years, how do you handle to encourage them and hold them so motivated?

Dr. Samant: I really feel that there’s a slight distinction between a girls lead group and a male lead group. I contemplate Ilaben as my function mannequin. The group lead by her ‘SEWA’ can also be very comparable in these parameters. In a girl lead group you create an atmosphere and tradition for ladies. It’s skilled, it’s promising, nonetheless it’s not that demanding, that their private life takes a again seat. There are two roles each lady has to play. One is the productive accountability and one is the reproductive accountability. A girl has to separate her life between these two duties. Productive is the sphere out of residence, skilled satisfaction, however she additionally has to handle her household. I feel I’ve created a conducive atmosphere at Annapurna. We don’t rent MBAs, there are solely MSWs. They need to have knowledgeable life with a coronary heart for poor. She Introduces me to Syamala, who heads the day care undertaking, has been with the group for 13-14 years. The undertaking is her child. She is blissful doing it. She has an possession feeling. Everyone seems to be blissful doing what they’re doing and so they have a piece life stability. I deal with my members with a whole lot of respect and I feel that flows down. At Annapurna it’s a complete no no to shout at anybody or communicate indecently. We’ve a whole lot of dialogue and dialogue so everybody feels very accountable. Everybody has a set function communicated to them from the beginning. They’ve a 30 day planning. I at all times search opinions from my members, if we may do one thing this fashion or that manner, then collectively we determine what we need to do. My father at all times spoke to me in that manner. He at all times handled us with a whole lot of respect. He simply confirmed us the professionals or the cons of any determination and left the choice to us. That manner we had been at all times chargeable for our personal actions. It’s a character trait of a person, however as they’ve been with me for lengthy, so they could have picked up issues on the best way. They’re at all times part of determination making. I feel this stuff may have saved them concerned.

Shini:  Transparency is likely one of the values that you’ve clearly communicated as an necessary worth for a company or enterprise mannequin, what are the others in line with you?

Dr. Samant: Democracy. It’s on the core of all the pieces. Whether or not it’s your buyer or your worker or every other stakeholder. At Annapurna, each has a vote, nobody can maintain a share price greater than 10000 rupees. Voting alternative stays the identical for anyone. I really feel although India has superficially accepted the democratic precept, however in our coronary heart we nonetheless like dictators, who inform us what to do. I used to be born and purchased up in a democratic environment and I really feel that given a selection each human being will take a smart determination and if in case you have democratic rules at your coronary heart, you already know that everybody is equal and everyone seems to be entitled to the identical respect. So these are on the very core of Annapurna. Everyone seems to be properly revered and nobody, no matter their designation or expertise, is regarded down upon. I actually get upset if I hear something like that. I’ve at all times insisted that I can’t have a closed door cabin. My room isn’t air-conditioned as a result of my LSOs are all working within the slum. Even at Annapurna, the primary workplace was in my home and we had an workplace below a tin roof and I used to sit down below the tin roof. There’s openness, openness in accepting one another’s choices. In case your aim is about like I need to achieve this a lot turnover, this a lot goal then the aim will get diluted. At Annapurna, there are benchmarks set for every LSO however they determine their very own targets. These targets are additionally evolving. Subsequently Possession additionally turns into an necessary worth.

Shini: Annapurna Pariwar has a holistic strategy catering to the wants of girls on the lowest strata of the society. There’s microfinance, there are Day care facilities, and there’s medical health insurance, financial savings, working girls hostels, micro insurance coverage, and training scholarships. Are there any future plans?

Dr. Samant: I’ve no future plans, none of this stuff I had deliberate. That is as and when it got here forth. I don’t know if we’ve coated all of the wants, I do know that we’ve coated all of the wants expressed by our prospects. We’ve coated most wants which had been doable. A number of the wants had been additionally like, you are taking us to a pilgrimage. We mentioned we’ve given you sufficient confidence now you may go forward and arrange a gaggle of fifty. We’ve not addressed these wants that may very well be addressed by them on their very own. Virtually talking, I’ve no plans for the long run. However I have no idea what want may come up of their conditions sooner or later. I solely know that I’ve created a conducive atmosphere the place we take heed to our prospects once they categorical one thing. I settle for that this atmosphere was institutionalized, techniques and construction, had been put in place by me, we did create channels of communication from high to backside. For members there are group conferences, group consultant conferences, AGM, Board Conferences the place there are buyer illustration. We harnessed the tradition of listening. We listened. We pay attention very rigorously. Even once they (prospects) aren’t saying something, they’re saying one thing. Even your knowledge and figures let you know {that a} specific scheme that members aren’t appreciating or shifting away from. I actually have no idea what I or the group will do tomorrow. Like Mahatma Gandhi mentioned, “If I say one thing about any matter in the present day and the identical matter 4 years later, it’s best to contemplate the latter one to be right.” I simply throw mild on issues; it’s not a plan for the long run. It’s what the shoppers say and what the info has to say. I don’t know what my members will say tomorrow. Whether it is doable, we’ve sufficient sources we are going to do it. I’m positive even after me I’ve created sufficient pool inside that they may proceed to take heed to the shoppers actively and take choices collectively in a democratic manner which is able to assist the poor.

Shini: Girls’s day across the nook, do you’ve gotten any message for the ladies?

Dr. Samant: To be sincere, Girls’s day has turn into only a tokenism. I really feel very unhappy about it. I don’t really feel like celebrating it anymore. My mom began Annapurna within the 12 months which was celebrated as a world girls’s 12 months on the ladies’s day. eighth March 1975. Many individuals don’t even know the background of Girls’s day. It began in USA, when a gaggle of girls working as tailors demanded equal rights, work hours and glued wage. Then it slowly percolated to Germany. However in the present day it has taken a distinct which means. Day-after-day in society needs to be everybody’s day. Day-after-day we should always take care of males, girls, kids, senior residents, animals and atmosphere. It’s a world the place everybody ought to peacefully coexist. All of us want one another and it’s also important for the ecosystem. There needs to be an egalitarian society the place everyone seems to be fortunately residing. I really feel that on daily basis, all twelve months, needs to be this fashion. Although a girl is the central level and the connecting dot however everybody within the household must also be blissful.

Submit Script from Jolly Zachariah, Chief Working Officer, West Area, Ujjivan

Regardless of 20 plus years of worldwide banking expertise I used to be a novice to Microfinance again in 2008. I used to be entrusted with the startup of the Ujjivan enterprise within the Western India. Samit e-introduced me to Dr. Medha Purao Samant, a broadly acclaimed livelihood practitioner and pioneer in bringing Microfinance to the slums of Mumbai and Pune. It’s been 7 years for the reason that first assembly with Dr. Medha Samant, for me a memorable one. Armed with many questions, and a way of uncertainty about what I had got down to obtain I visited the Annapurna workplace at Warje, Pune for my scheduled assembly. I couldn’t assume something in my effort to try to perceive as a lot as attainable concerning the buyer section Ujjivan was dedicated to serve. Personally, I knew little concerning the section and even much less concerning the challenges that I used to be prone to face on this endeavor I had dedicated myself to. Dr. Medha assiduously answered every of my questions and as an earnest pupil, I imbibed all of the data from her experiences, understanding how useful every of her sharing was. She had me to talk along with her colleagues who shared their processes and experiences with me freely.

My subsequent assembly with Dr. Samant was after I was invited to talk with a gaggle of NGO MFI practitioners in Pune. Ujjivan at the moment had a small presence in Pune with a number of branches. It was enriching experiences for me to satisfy and have interaction a bunch of enthusiastic professionals dedicated to the reason for working for the underprivileged. It additionally was my first view to the variety of thought amongst practitioners who served the underprivileged on what may be the very best different. My discussions with Dr Medha helped me respect that fixing a difficulty as giant as that of ‘poverty alleviation’ required many fashions to be explored concurrently. I’m in debt to Dr.Medha Samant for serving to me contextualize a few of my early ideas on a buyer section I had restricted insights on, and freely sharing from her many experiences.

Shini Ashok and Dr. Samant

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