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Tool of empowerment for women

Poor and illiterate female clients pay back loans faster than men, writes Renuka Bisht.

india Updated: Nov 27, 2006 03:04 IST

SEWA Bank now posts profits in the millions. It presents a wonderful example of how poor, female and illiterate clients can keep properly managed microcredit enterprises solvent and more. But the social impact of this women’s bank cannot be captured in an accounts register. Consider Zebunissa’s story:

“Riots are our worse enemies. A mob attacked our houses. I picked up my children, my little plastic box and ran to the police station for protection. We stayed in a relief camp for a few weeks. While the police and the minister visited us, our houses were burnt and looted. The first thing that I did after being relieved from the camp, was to go to the SEWA Bank.”

The bank’s Managing Director Jayshree Vyas, who has recounted the above words, marvels: “Her precious little plastic box contained her deceased husband’s photograph and her SEWA bank pass book!”

The ability of poor women to use credit productively depends on broader socio-economic contexts. It is linked to their responsibility to sustain their families through unforeseeable disasters as much as the everyday jostling of meagre resources. As SEWA prioritises the needs of those who work, save and borrow rather than some inert blueprint of capital growth, it helped rehabilitate Zebunissa even though the pass book she had salvaged showed a loan outstripping her deposits.

Microcredit programmes are targeting women because their levels of repayment compared to those of men are significantly higher. Organisations like SEWA, the Working Women’s Forum (WWF) and the Annapurna Mahila Mandal (AMM) stress that this extension of credit has to be accompanied by supplementary support services. These can include educational, medical, legal assistance, and enterprise training.

Such investments both contribute to household well-being and improve women’s sense of self-worth. As a recent WWF report has pointed out: “Most of the (forum) women reported that they had gained greater respect, power and decision-making authority, not only within their homes but also within their communities.”

The lending entity also has to remain sympathetic to its clients’ consumption needs. Sometimes poor clients use loan capital to purchase food grains or to replace household goods or to pay school fees. As the founders of both WWF and AMM attest, consumption investments enable women to improve their ability to work and to increase their income over time. While the loan portfolio of AMM currently exceeds Rs 100 million, WWF now enjoys a distribution of over Rs 1,154 million. The success of these programmes shows that paying attention to the consumption needs of poor women “benefits” the empowering organisations as well.

Lately, however, a  section of the development community has been questioning the impact of female-targeted microfinance. Nirantar, a women’s resource centre, has been drawing media attention to “the rise in women’s indebtedness as a result of back-to-back lending, higher incidence of violence in the event of women being unable to bring into the family the credit that is expected of them, and the tremendous pressure on women to repay which can cause them to migrate.”  

Mathew Titus, the Executive Director of an association of Indian microcredit lenders called Sa-Dhan, concedes that  poor households can only uphold limited amounts of credit. At the same time, he counters the naysayers by pointing out that microfinancing offers the best possibilities for mitigating poverty. What the organisations highlighted here exemplify is that microcredit improves the lives of poor women and their families when it is accompanied by a broader structural commitment to their local needs.