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Banking on each other

With no irrigation, and money-lenders charging 100 pc interest, a village in Solapur decided to set up a bank of their own, with the only asset they had — grain, reports Abhijeet Kulkarni.

mumbai Updated: Oct 07, 2009 01:22 IST
Abhijeet Kulkarni

Datta Ghumre lost his father even before he could pronounce the word properly. Unable to cultivate their land, his mother scrubbed floors and washed dishes to support him and keep him in school.

Every so often, she would bring home clothes and books her employers had discarded, so Ghumre would have some ‘new’ things to wear.

Today, 36-year-old Ghumre has a government job and owns a 2-acre irrigated plot that netted him Rs 3 lakh last year — all thanks to an innovative cooperative initiative started by his village elders nearly five decades ago.

Darfal, a hamlet of about 4,000 people situated about 500 km from Mumbai, set up a grain bank in 1960 to help out farmers who needed loans and to save them from the exorbitant interest rates of up to 100 per cent charged by local moneylenders.

The bank has been the driving force behind the village’s prosperity.

And Ghumre is one of its many beneficiaries.

“I would have been nobody without the bank,” admits the primary school teacher whose father was one of the first members of the bank.

Darfal’s grain bank was set up in 1960 under the leadership of then sarpanch Tukaram Shinde. Since there was no irrigation network here until recently, leaving agriculture dependent entirely on rainfall, the idea was to build a bank of grain and then loan it out to members whenever they were in need of cash, at low interest rates.

The initial loan, the interest and even the bank’s three employees’ salaries are all paid in jawar.

After Ghumre’s father’s death, the bank ‘loaned’ grain to the family, which they sold for the extra rupees that helped Datta stay in school.

“When I needed additional help to pay for the final year of my D.Ed course, the bank even gave us a loan of three quintals instead of our eligibility criteria of 1.5 quintals,” says Ghumre. “We sold the extra grain to pay for my course and I have never looked back.”

With the extra grain that the bank earned in interest, it funded village projects like repairs of the local school, the construction of a library and a modern crematorium. It even donated funds during natural disasters like the Killari and Bhuj earthquakes.

As the bank’s ‘holdings’ went up, so did the standard of living in the village.

It has also ensured that migration of villagers to bigger towns and cities has remained low, even during the severe droughts of 1972 and ’82.

Sixty-six year old Arvind Bagal, who has served as bank secretary since 1970, points to the surplus of jawar as the main reason why very few people fled the village in 1972. “Jawar is the staple food of people and even cattle in this part of the state,” he says. “Since we had large stocks of jawar, no one had to worry about food during the crisis.”

During this crisis, the bank also waived all interest on its loans.

Since 1990, the bank has even been giving cash dividends to shareholders and its holdings have been growing steadily, since yield in the region has improved after an irrigation project was completed in the region.

While there are some concerns that dealings in cash will corrupt the bank, chairman Dnyandev Ubale says the objective of the initiative is still clear. “Even this year we haven’t sold grain yet as we were fear a drought situation. Everyone supported our decision,” he says.