‘She’ Makes The Difference

Sunitha couldn’t figure what difference it would make in her life to be literate. Her repeated absence from the evening class had pushed the NGO holding the adult education programme in the remote Karnataka village to offer food for her children against her attendance. Three years on, she learned to spell her name and read Kannada. But that was no solution to her husband’s constant effort to bridge the gap between his income and the family’s needs.

Trying to do something on her own, she had started painting fabrics, and selling them in the nearby town. The few hundred rupees that she could make were spent on buying food and clothes for her children and she was left with nothing to buy fabrics again.

Sunitha stumbled upon a relationship officer from a microfinance company a few weeks later. He briefed the village women about collateral-free loans his company offered. She became a member immediately and took her first loan of Rs 10,000 to start afresh. The loan had come with a rider. She had to use the entire money on buying raw materials for her handicrafts. “That was my first lesson in managing finances,” she says. She followed the rules and resumed her unfinished journey as an entrepreneur and contributor to the family.

Most of the women grabbed the offer. But the microlender mandatorily enrolled them to sign up for a class in the weekends. They discussed one of the most important aspects of life – savings.

Microfinance Institutions Network (MFIN), the umbrella association for microlenders in the country, invests in developing films on credit awareness, which teach the borrowers the importance of saving money, and making timely repayment of loans. These films use characters and situations similar to those of the borrowers so that they could identify with the messages.

Banks are often out of bounds in a remote village like that of Sunitha’s and organised lenders keep off borrowers like her because they lack the required credentials and for their apparent uncertainty in repayment. The microlenders throw the lifeline for these people. The MFIs give them small amount of funds to realise their small dreams. MFIN has about 56 members, while the country has over 200 microlenders, including small and non-profit MFIs.

The borrowers, mostly from the base of the pyramid, have shown flawless repayment – in a stark contrast to corporate loans that have saddled big banks with huge burden of bad debt. The reliability of BoP borrowers is based on the premise that they continue to have access to small-scale financial services. Client centricity is evident from the microlenders’ ability to offer diversified services, lowering the cost of credit, despite doorstep delivery and adapting to the digital world.

Lessons in fiscal management has helped thousands of women to develop themselves as a financial contributor to the family, if not the main money-earner. Access to internet and smartphone penetration have helped develop a new breed of entrepreneurs who reflects the government’s push for women empowerment.

India, the world’s fastest-growing major economy, could be a lot smarter if only it treated its women better. The country could add up to $770 billion – more than 18 per cent – to its GDP by 2025, simply by giving equal opportunities to women, according to a report by the McKinsey Global Institute.

As women’s contribution to the country’s GDP stands at just 18 per cent, one of the lowest in the world, with only 25 per cent of the labour force being female, India’s economy also has the second-largest potential in the Asia-Pacific region from improving the gender parity, according to World Economic Forum.

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India’s Population 130 Cr (17% of Global Population)

Literacy Rate 74%

Financial Literacy 24% till 2020

NBFC MFIs RBI had registered 94 NBFCs to run MFI operations. MFIN has nearly 60 members.

Business Correspondents MFI representatives who visit villages to interact with people and educate them about financial benefits are now an army of 8,51,272.

Fintech Push Fintech companies are increasingly taking initiatives to make digital services accessible to rural India. Various government schemes like Direct Benefit Transfer and Digital India are aiding fintechs