We are currently running more than 100 microcredit groups in Rajasthan, with plans to expand in the future. Through these groups villagers can take out loans to buy medicine, school uniforms, seeds, livestock, fertilizer, and so forth. The majority of our groups are for women, as we see them as an important vehicle for women's empowerment and social change. Through the expansion of their economic power with the loans provided and through discussion of their rights and decision-making abilities, the women come to believe in "apni shakti," their own power. Hence the other name we use for these groups: SEGs, or Self-Empowerment Groups. The dual goals of improving the economic condition of the villagers and empowering women in all spheres of life are integral to the purpose of these groups.
How the groups work
LSS's field workers will first an initiate a conversation with members of the village in which they want to work. After this they will come back several times to discuss the benefits of such groups, and usually the village decides to allow the start of a group. Once this is done, the field workers meet with the women who come to the group and tell them about the purpose of the groups. Then the women discuss amongst themselves and decide the parameters of the groups: when and for how long the group meets, how much each member contributes to the group's central fund each month, how long the length of loan should be, what the rate of interest should be (more on this below) what the penalty is for late payment, etc. The basic idea of our groups is that women come together monthly and contribute a set amount, say Rs 50, to the central fund of the group. From the central fund the members of the group can take loans for the purposes mentioned above and others. The women who takes a loan has a set amount of time, say 3 months, to pay it back with interest. Interest is charged at some annual rate, say 24%, to grow the groups’ funds. I must emphasize that the interest is not being charged by any bank and is going directly into the groups’ central fund, so it is benefiting the members by expanding the amount of credit they have available.
A penalty is implemented for late payment, say 10 Rs per thousand rupees loaned per day. This is of course to insure timely payment of the funds. Provisions are made for uncontrollable circumstances, such as a poor monsoon that wipes out any gains that might have been made from a purchase of seeds. In such a case the group members decide collectively what should be done. Usually an extension of the loan period is given. In our experience it has never happened that someone could not pay back the money some how and the groups can always reach a consensus on what to do in such extenuating circumstances. The handling of these issues through group discussion show how discussion and deliberation amongst the women is at the crux of the group operation.
As mentioned above, besides the economic benefits of these groups, they are vehicles for social change. For the two hours that the group meets, the members discuss issues that face them and are open to discussing these issues with the NGO workers. Discussion can range over topics such as the importance of sending girls to school, to the importance of voting, to the exercising of their rights, e.g. the use of those government programs that are available to them without paying bribes, and so forth. Additionally, the women become more aware of their own power through such discussions, realizing that they have the ability to make certain decisions (e.g. when their daughters get married), the ability to do basic book keeping and hence become economic caretakers of the family (this is surprisingly powerful), and much more.