Day 74 - Kolar, Karnataka

Face to Face with Microfinance Clients

Further, for Kolar, feedback from clients during the qualitative investigation by the study team
reveals that the multiple borrowing level of 3-4 loans per client in the area resulted from
several individuals having taken on the task of forming groups and inviting MFIs to lend to
them. Later these individuals used their influence with the clients to get commissions and
kickbacks, or to appropriate entire loans of group members [proxy borrowing]. The following
sections discuss the views of the Kolar Anjuman and multiple borrowing and other issues that
reinforced the adverse factors resulting in the crisis. 
Excerpts from "Competition and the Role of External Agents - 
The Delinquency Crisis in Southern Karnataka"  by EDA Rural Systems

Suresh Krishna, CEO of Grameen Koota who organised the Shodh Yatra at Kolar with his clients

Shodh Yatra at Kolar on 13^th April 2011: Schedule

Timings		Time required	Events	Mode of Travel
From	To
9.30 A.M.			Assembly at Bangalore International Airport-Arrival Area
9.30 A.M	10.45 A.M	75 Min	Travel from Bangalore Airport to Kolar(via Devanahalli, Vijaipura, H-Cross-distance  about  60 Kms)	By Car
10.45A.M	11.00 A.M	15 Min	Starting from Govt. Hospital and reaching  Prashanth Nagar	By walk
11.00 A.M	11.30 A.M	30 Min	Interaction  with Microfinance clients
11.30 A.M	11.45 A.M.	15 Min	Starting from Prashanth Nagar  and reaching   Noor Nagar	By walk
11.45 A.M.	12.45 P.M	60 Min	Interaction  with Microfinance clients
12.45 P.M	1.00 P.M	15 Min	Starting from   Noor Nagar and reaching Galpet	By walk
1.00 P.M.	1.30 P.M	30 Min	Interaction  with Microfinance clients
1.30 P.M	1.40 P.M	10 Min	Starting from Galpet  and reaching  Karanjikatte	By  Car
1.40 P.M.	2.10 P.M	30 Min	Interaction  with Microfinance clients
2.10 P.M	2.15 P.M	5 Min	Starting from  Karanjikatte reaching  Pathrakartara Bhavan	By Car
2.15 P.M	3.00 P.M.	45 Min	Lunch at Pathrakartara Bhavan
3.00 P.M	4.00 P.M	60 Min	Discussion with  LDM Mr M R Raju and DDM-NABARD Mr Jayaprakash Samudre at Pathrakartara Bhavan
4.15 P.M	5.00 P.M	45 Min	Discussion with DC Kolar Mr Manoj Kumar Meena IAS, at DC Office
5.15 P.M	6.15 P.M.	60 Min	Sharing thoughts with MFIs Staff Members
6.30 P.M	8.00 P.M	90Min	Discussion with Mr Zameer Ahmed President, Mr Mohd.Saifulla Secretary and other Office bearers of Anjuman-e-Islamia
8.00 P.M			Departure to Bangalore	By Car

Comment from Samit Ghosh, Founder and CEO of Ujjivan:

Dear Friends & Colleagues,

Just back from a day of Vijay Mahajan’s Sodh Yatra in Kolar town.  It’s been a couple of years since the Anjuman Committee banned Muslim  women from repaying MFI loans or availing new ones. It was terrible to see the plight of these women today. They are either back in the clutches of local money lenders or sitting idly in grinding poverty. In stark contrast the other women in the town are peacefully going about their existence and building up their enterprise. These have dark lessons for the poor women in neighboring Andhra who are suffering the same plight because of the State Government fiat.

Learnings from Kolar field visit  –  T. Navin, Manager, Social Performance Management, BASIX

1. An MFI when it enters an area apart from studying the livelihood and financial landscape of the area should give equal importance to understand the socio-cultural situation of the area. The local cultural practices, religion, regional and caste identities & hierarchies could have strong influence on the people and could influence MFI operations. E.g., the influence of religious institutions – Anjuman in Kolar.
2. When an MFI starts working in an area, it could threaten the existing power equations in society. E.g., when women from minority community started coming out from the household to attend centre meetings, the men felt threatened and religious institution felt un-Islamic activities taking place
3. When the existing power equations get threatened, the affected do take the help of religion to maintain existing power equation. E.g., in Kolar the men approached Anjuman-e-Islami and requested them to ensure that MFIs stop lending to women
4. An MFI should be aware of the fact that while in some instances conflicts are important if it contributes to the empowering process of the vulnerable, it should also be aware that sometimes conflicts could result in greater repression and control within. E.g., conflicts that arose within the minority community among women and husband were not resulting in empowering the women but were contributing to greater repression on women within the family. In such instances the MFIs could take a back step.
5. In situations when an MFI finds it difficult to deal with conservative sections, it should be willing to take ‘one step forward and two steps backward’ keeping the larger goal of financial inclusion. E.g., in Kolar discussion on the immediate problem of stoppage of recovery and lending operations was addressed through dialogue with Anjuman. While temporary compromise was adopted as a strategy – these on the other hand opened doors for loan recovery and lending and also include back minority women in financial inclusion program in future.
6. An MFI should be aware of its limitations. It cannot take up the role of social reformation and and hence should not confront with socially conservative section though not necessarily support them if the influence of socially conservative section is stronger. It should be remembered that the reformation movements happen from within the religious communities. E.g., the renaissance in India – when reformation movements within Hinduism were led by Raja Ram Mohan Roy, Vidya Sagar etc.,. the changes happened only through social reformers within community.  Confrontation to the extent possible could be avoided given the scope of “MFI”.
7. Women wish to get larger loan (according to their capacity) from minimal MFIs rather than smaller loans from multiple MFIs. They feel that having multiple memberships means attending many more centre meetings spread over many days. E.g., if women have memberships in 3 MFIs, she needs to attend the meetings thrice in a week – instead they prefer a loan as per their capacity from a single MFI.
8. Over lending and multiple lending negatively affect the Microfinance Clients. While the larger goals of financial inclusion are important, it should not be at the cost of overburdening the clients resulting in over indebtedness – which can negatively influence the people’s livelihoods. E.g., in instances when suicide takes place (either due to direct or indirect affect of MFIs), the earning source of the family is lost which affects the whole family.
9. Temporary stoppage of loan repayment does not necessarily mean that clients do not wish to repay back the loan and wish for additional loan. E.g., minority women felt that per se they were not against loan repayment or taking another loan cycle. Instead they were only worried about the negative repercussions it had on them e.g., being questioned by religious institutions and the men within their family.

Mail from Suresh K Krishna

| Managing Director | Grameen Financial Services Pvt. Ltd., 

Dear Vijay:

Thank you for giving me the opportunity to be a part of your shodh yatra. It was wonderful spending a whole day with you. I hope we were able to meet your expectations for the Shodh Yatra.

It was a pleasure organizing the day. Even though we had done several meetings like this in the past, this visit gave a lot of insights to the situation of the people of Kolar.

It was sad to see the suffering of many of the women who now have to depend on the financiers who are charging exorbitant interest. The most inspiring movement for me was that many of our defaulting borrowers were requesting for restarting the services (offcourse with lot of changes).

The key learning for me have been that we should have been sensitive to the local sentiments and should have built better relationships with Anjuman and others in the local community. The meeting of Vijay and Anjuman was a great break through and will pave way for a new beginning.

As discussed I will initiate the ICL’s for the muslim men and work with Anjuman  to release the loans by the mass wedding Anjuman is organising. Will keep you posted.

With regards

Suresh

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