Nirantara Micro Finance Program

Trip Start Jul 26, 2008
Trip End Sep 27, 2008

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Flag of India  ,
Friday, August 22, 2008

Nirantara is a fairly standard Grameen Bangladesh Model replication with the exceptions that their solidarity groups are 10 women and each village organization is two or three solidarity groups or a total of 20 - 30 members in each weekly village meeting and the members of each village organization are responsible (the other members must pay if one of their members defaults) for each other's loans.  Grameen Bank Bangladesh has solidarity groups of 5 and typically 8 solidarity groups in each village organization - or a total of 40 members in each weekly village organization meeting and members are not responsible to repay other members who defaults loans. (They used to be responsible for each others loans).  The India replications are more like Grameen I - the Grameen Bangladesh's program until 2002 then like Grameen II - which is Grameen Bangladesh's program since then.  Grameen II has more flexibility.  It appears that, like Grameen Bangladesh, it may be best to start micro finance programs with less flexibility and then when programs mature and micro finance loan officers and managers become more competent - it may then be wise to add flexibility and more products.

The photos sequence you through the loan and repayment process - and many of the forms/reports involved.

With Nirantara - first loans are always $200 are for income generation (self employment) and for basically one year.  Typically all loans are given out to all 10 members in a solidarity group at the same time.  If one member is not there for the dispersement, typically all loans are held up.  Because Nirantara is a new MFI and must achieve sustainability, interest rates are currently 30% declining balance - with an objective to get to 20% when critical mass is attained.  After the successful repayment of the first loan (which is one year) borrowers qualify for a $300 second loan.

Weekly meetings are typically 15 minutes in length and focuses almost entirely upon the leader of each group paying the weekly amount for each of the borrowers in her group, each individual record book is updated, the master list is updated, money counted, etc.  The 10 members of each solidarity group meet the night before the village meeting and the group leader collects all the individual payments in preparation for the next days meeting with the Nirantara Loan Officer.  Other MFI's that I have visited have had 30 - 60 minute meetings with more repetitive statements, education on a variety of subjects of use to borrowers, etc.

The most fun is always the dispersement and I had the privilege of handing out the loans to two different groups.  All loans are first handed to the group leader and she in turn passes it on to the individual borrowers.  This meeting is typically a long meeting with lots of final review of all documents and each member of each group signing off on all loans in their group.

The loan officers meet with their villages organizations from 7 to 11 in the morning.  By 11:30 or so they are all in the office counting the money and filling in the summary information on the master chart.  By 1:30 PM one of the loan officers puts all the money in a pouch and heads off to the bank - where the money is normally in the bank by 2 PM.  By 4 PM the Bank electronically confirms all of the deposit and the Branch office reconciles the days books.  This is all a very precise and cross checked process.  There is absolutely no room or opportunity for someone to do some devious with the money.

Nirantara currently has 30 employees, 18 of which are loan officers and is staffing up as funds and critical mass allows.  Nirantara is nearing 5,000 borrowers in less than two years and targets having more than 500,000 borrowers by 2013.

Nirantara serves the poor and very poor.  It is not yet in a position to serve the destitute and will not loan to the non-poor.

Niranjan and Nirantara have established a good reputation in the community with many connections and supporters in the microfinance community.  They compete with other MFI's, Self-Help Groups (subsidized by the Government) and Cooperatives.

The future of Nirantara and its work in serving to poor seems very bright and I look forward to staying close to Niranjan and this operation and helping in whatever ways I can.  I will be participating in their upcoming planning process - albeit remotely.
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