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The Breakthrough Voice 4th January, 2022

Microcredit Schemes: Using Local Resources For Local Problems.

Rasheeda (name changed) is a microcredit member in an Indian village. She belongs to the Muslim community. Before she joined the self-help group, her husband bought a truck on credit and with insurance; however, he was not able to pay the installments. Consequently, the insurance company seized the truck, leading to a family crisis. Although her husband has many brothers, none of them helped the family. Rasheeda borrowed half a lakh from her brother, but her husband spent it on the, to quote her, “wrong things”. The situation was so severe that they did not even know how to get food.

When an NGO came to Rasheeda’s area, she joined the self-help group and took a loan of 25,000 INR. With this money, her child opened a tyre repair shop. Subsequently, the family situation improved. Moreover, the family managed to pay back the loan in two years with monthly installments of 1,600 INR. 

After this, Rasheeda took another loan of 11,000 INR to improve the shop with, for example, bigger machines. The shop ran successfully, and the family, again, paid the credit back. Once again, Rasheeda took a loan from the self-help group and her child opened a vehicle service center. As a result, this process brought about huge changes in Rasheeda’s life. She also feels very comfortable that the money is in a bank account so that if something happens to her, the NGO will give the money to her family.

Prior to joining the self-help group, Rasheeda only stayed at home.

Rasheeda’s religion prohibits banking on interest, and she only came to know about the possibility through the self-help groups and the banks. She thought that, “I take money with interest, but I cannot give the money with interest to another person.” Rasheeda is also not able to take loans for her own business because she believed that, in her religion, women are not allowed to work and should stay at home. She is not sure whether she could take up work at home for an income, such as stitching, but most women take loans to invest in the work of male family members. Traditionally (before the self-help groups), the family kept savings in pots. If there was a need for the money, the pot was taken out of its hiding place and was broken into pieces. However, when someone died, he or she took the secret of the money’s location with him or her.

Prior to joining the self-help group, Rasheeda only stayed at home. She was not used to sharing her stories or problems with others before the self-help group. Now, she came together with other women in meetings to discuss issues such as education, family disputes, health, children, rumors, and their own problems. Because she did not believe in her husband, she invested money in her child. In contrast to earlier times, she is now taking all the financial decisions because, as she says, “I have done a lot of good things, so he (my husband) trusts me.”

In contrast to earlier times, she is now taking all the financial decisions.

There are many different microcredit schemes available, each having their own advantages and disadvantages. One thing they have in common: financial improvement and women empowerment through microcredits do not hide the fact that the indigenous knowledge of female microcredit members is neglected to a great extent. Microcredits were traditionally used in India for a long time before NGOs picked it up and women discovered ways to save for their children and/or emergencies. Perhaps we are still a long way from its theoretical approach that indigenous knowledge can be integrated into overall knowledge, allowing women to participate in the microcredit business rather than just as recipients. Knowledge only grows when it is shared and exchanged, whether it is scientific proof, such as academic, or personal experience, such as indigenous systems. We can start doing so and acknowledge to ‘use local resources to handle local problems’, as one woman who receives microcredit suggested.

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