Wise banking the way to go

WISE bank makes no profits; it doesn’t want to. It is run as a no-profit-no-loss outfit. And in order to cut costs, the bank has a Spartan establishment, reports Utpal Parashar.

Uma Upadhyaya’S husband died some months ago. She soon realised his pension was not enough to see the family of three through. That’s when Uma turned WISE.

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She approached the Women’s Initiative for Self Employment Bank, signed up as member and took a loan of Rs 5,000 to start a small Chinese stall. Today, she has moved on, and now runs a kitchen at a restaurant set up by WISE.

“After my husband’s death, I was finding it difficult to make ends meet. But the loan from WISE Bank was crucial in helping me become financially secure,” said Uma.

The bank is an initiative by a voluntary outfit called WISE, which gives vocational training. But soon they realised the women could not get loans or money to start an enterprise.

“As getting loans on easy terms was acting as a deterrent for most women, we started the WISE Bank in September 2006 to help them,” said Kiran Rawat, one of the founders of the bank.

Like the women it trained to be independent, the bank decided not to take loans to start. Founder members and a few others put in their own savings to form the corpus. Today it has 128 account holders.

And here is the best part — the loan carries an interest rate of just 1 per cent (simple interest).

WISE bank makes no profits; it doesn’t want to. It is run as a no-profit-no-loss outfit. And in order to cut costs, the bank has a Spartan establishment — no building, no furniture or fancy ATMs.

And it works.

“Unlike fears expressed by established banks, we found that all our members pay installments on their loans on time and instead of keeping the amount idle we immediately give it to other members,” said Rawat.

Most of the bank’s members are involved in a range of activities such as bakery, catering, restaurant, pickle-making, fruit-processing, dairy products, goat-rearing, bee-keeping, candle making and manufacturing soft toys.

Harbanswala Nirmala Nainwal says the bank helped start a new phase in her life. “When I decided to buy a buffalo, the loan was given to me without fuss and at low interest rates,” says 40-year-old.

She borrowed Rs 4,000, bought a buffalo and started a small dairy. Nainwal makes between Rs 2,000 and Rs 3,000 a month, which has enabled her to repay the loan. Now she wants to expand her business with another loan.

In order to stay in touch with account holders, meetings are held at four different locations every month and issues relating to finances, loans and loan recovery are discussed.

“Since our loan amounts are not more than a few thousand rupees, we have been able to cater to most of our members and have disbursed Rs 1.25 lakh till date. Word of mouth publicity from members has helped,” said Rawat.