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The importance of micro finance as an effective vehicle of alleviating poverty, especially in rural areas through the empowerment of women is now widely recognised. There are several methods of operating a micro finance project. The successful experience of a public sector bank, without the involvement of either the Government or any non-government organisation (NGO) in India is discussed here. Some suggestions for further improvement, based on the experience of certain other similar projects are also made.
I
THE PROJECT
Origin
The Oriental Bank of Commerce (OBC), a public sector bank in India, had launched, on a pilot basis in May 1995, the Oriental Bank Grameen Project (OBGP), for providing micro finance services, in eight villages. Of these, two villages are situated in Hanumangarh district of Rajasthan State and six villages in Dehradun district of Uttar Pradesh (now Uttaranchal). The scheme was gradually extended by the end of March 2000 covering 64 villages in these two states (OBC, 1999). Dehradun district was selected for the in-depth study of the project.
The OBGP had focused on the lowest rungs of the poor such as destitute and very very poor families. The borrowers were organised in self-help groups (SHGs), each SHG consisting of five persons belonging, by and large, to the same gender, economic status, religion and social background. Presently, out of a total 450 SHGs covered by the project, as many as 447 were women SHGs and only 3 were men SHGs.
Women were encouraged to form SHGs on account of the following reasons: (a) Their repayment behaviour is excellent. (b) They are more trustworthy, sincere and committed. (c) Women members are extra conscious about the proper utilisation and do not hesitate to use peer pressures for proper utilisation and timely repayments. And (d) It is also interesting to note that male members of the family (like husband, father, brother) would not let down their female members (wife, daughter, sister) and often make extra efforts to arrange repayments in case of difficulties. In view of these virtues, women could easily raise funds from even moneylenders without difficulty. They are also known as the borrowers of last resort in the family. It is also well known that women are the first victims in case of any...