Community Microfinance
Women workers in Delhi’s informal economy contribute to roughly 80% of the capital’s growth. But while the city’s development rides on the back of women workers, poor women themselves struggle to rise out of economic deprivation. Women are unable to break out of poverty because they lack access to fair capital, appropriate financial services, and economic opportunities.
Since 1999, SEWA Delhi microfinance program has enabled women to be financially included and independent. The aim is to ensure that members have access to savings and loans, particularly for working capital, and are prevented from exploitation by moneylenders. In 2007, SEWA Delhi opened the Mahila SEWA Urban Cooperative Thrift and Credit Society – a financial institution run by poor women, for poor women.
Mahila SEWA Urban Cooperative Thrift and Credit Society
SEWA Delhi has been a platform for poor women to establish an independently registered women’s run and tailored financial institution called the Mahila SEWA Urban Cooperative Thrift and Credit Society in 2007. This self-managed cooperative provides women with and saving schemes and access to large amounts of credit. As women have ownership over the organization, all the financial services are dynamic and needs based to suit women workers of the informal economy.
Achievements
- Total cooperative members: 7,686 women
- Total savings (excl. share capital) (2016): Rs. 4.8 Cr
- Avg. saving per member: Rs. 5,738
- Cumulative loans given (2016): Rs. 19 Cr (6925 loans)
- Financial literacy trainings (2016): 36 trainings (500 members)
SEWA Cooperative has recently introduced two new loan services: Group Loan and Short Term Loan.
Group Loan is given only to new members who organise themselves in a group of minimum 5 members with a leader. All the new members must pay the admission fee, share fee, and mandatory savings. The loan limit for the group is 75000 Rupee, and for the single member is 15000. Group members will be the guarantors of each other and will ensure that loan instalments are paid on time.
Short Term Loan is given only for employment purposes. This loan serves as a supplement for members who are already availing a loan and who have no overdue instalments to pay. A member can avail maximum up to Rs 10,000 (Rupee Ten Thousand), and loans can be given only in multiples of Rs 1,000. The loan must be repaid within 6 months at a monthly interest rate of 2%.
- Credit is not easily available: Poor women cannot provide traditional forms of collateral, and are thus excluded from many loan programs. Moreover, illiterate women often find that they cannot cope with complicated loan procedures designed for middle-class clients.
- Transaction costs of borrowing are high: Standard loan applications take time to process, and poor women lose precious daily wages trying to obtain loans.
- Transaction costs of using savings facilities are high: Transportation to the bank, in addition to wages lost while going to the bank, also pose a cost.
- Formal features of the banking system clash with women’s needs: The rigidity of loan terms and the lack of timeliness of formal credit, in particular, further negate the effects of low interest rates.
- Photographs and SEWA Delhi Union id card as ID because illiterate women cannot sign forms
- Door-to-door service as poor women cannot afford to make regular trips to the bank
- Flexible, women-informed, and creative financial services and policies
- Savings: Members can choose from a range of savings schemes depending on their requirements that include daily, weekly and monthly savings. Savings can be done through compulsory deposit, recurring deposit, fixed deposit or optional deposit.
- Credit: The co-operative offers regular loans to the members at a declining interest rate of 1.5% per month to be repaid in 10 installments. Gold loan is a secured loan that has been added to the portfolio of the co-operative following member demand. A gold loan up to Rs. 15,000 is to be repaid in 10 months, Rs. 15,000-Rs 30,000 in 15 months and Rs 30,000- Rs 50,000 in 24 months at a declining rate of 1.5%. Another product known as the emergency loan, where up to Rs 10,000 is offered to members within 24 hours is to be repaid in 4 months at a declining rate of 2%.
- Bank saathis (Agents) who go door to door or to members’ places of work to collect savings, loans and interest dues
- Loans up to Rs. 1,00,000
- Gold loans on mortgage of gold jewellery
- Trainings on financial literacy
