Taking the cooperative spirit of microcredit a step further

One of the best qualities microcredit was the improved relationship between the lender and borrower compared to traditional banking. That relationship that was based on working together to improve the borrower's life and to later repay the loan seem to have gotten lost somewhere. Now, there is an effort developing to take the cooperative and communal spirit that was once featured in microcredit a step further.

Again, the Inter Press Service brings us a story of a microcredit cooperative that is a part of this effort. A group of women in Bangladesh. have pooled their savings together first, then borrow against it later. The women work together to make sure the loans a payed back, otherwise their savings are gone. Writer Naimul Haq tells us of the Pally Bikash Kendra cooperative.

Unlike the traditional microfinance arrangements where credit comes from external sources or development partners, the local NGO Pally Bikash Kendra (PBK) has taken a different approach where beneficiaries themselves generate and save money to help small businesses survive.

Called "Self-Help", the programme was launched four-and-a-half years ago in the wetlands of Mithamoin in Kishoreganj district in central Bangladesh, less than 150 kms from the capital Dhaka. Today, the 317 women’s groups operating in the area have a combined fund of roughly 15 million taka or over 200,000 dollars.

Twenty-eight-year-old Bishan Chkraborti is one of hundreds of beneficiaries who virtually had nothing at the beginning but, after joining the "samity" or group, now runs her own business raising cygnets and selling adult swans at a local market.

Four years ago, her eight-year-old son had to drop out of school, since she could not afford the boat fare to take him to the only primary school in the 200-hectare swampland. "I had no income as my disabled husband could not work. We lived in a tiny one-room bamboo-shed home," said Chkraborti, who comes from Puran Borgadia village.

Now she has a bigger house with a tin roof, mud floor and bamboo fence. She also grows vegetables and sells them to locals with a slight profit margin. Her son is also back in school.

The Self-Help programme, designed for very poor women, is a simple system based on the discipline of raising and saving money, creating small funds to be loaned out to beneficiaries at negligible interest rates.

Every samity is made up of about 15 women – mostly the landless, widows, beggars and divorced – who deposit 10 taka (13 cents) every month when they meet for discussions to approve fresh loan applications. In those meetings, they also discuss what to do with the loan money, how to use it efficiently, and other social issues that affect women like education and health.

"We don’t have any defaulters," said a proud and confident Padabi Rani Das. "If a member fails, we all fail. We don’t let anyone fail as we have a system of helping members overcome their difficulties."