Credit - Planning for our future
When a waste-picker needs extra money for festivals, family occasions and funerals, it is very difficult for them to get loans from banks. Usually, the malwari is at the door to help but at one thousand rupees to be repaid in 10 days at 10 rupees per day, no questions asked, home delivery and home collection. Amounts this high are usually paid by waste-pickers out of fear of losing the malwari’s trust. He will have to pay his malak (master) from his pocket. He is an employee after all, he is just doing his work.
However, now waste-pickers have their own credit cooperative bank - Kagad Kach Patra Nagri Sahakari Pat Sanstha (KKPNSPS).
In 1997, self-help groups were being formed in Pune, the members of KKPKP decided to get together and save Rs.10 every week. Soon there were 80 such groups of our members. There were several hurdles - most of the members were illiterate and couldn’t be signatories; people left their homes and went off to villages for long periods of time, during which nobody could operate their accounts; men spent off all the money that their wives worked very hard and long to save. Furthermore, there were problems with banks as well.
The credit coop is open to only the members of the sanghatana. KKPNSPS is actually a savings linked credit coop with more than half of KKPKP as a part of it. Members began with saving Rs.50 each per month and now save Rs.100 each. They get their savings back when they ‘retire’, usually, when they are too old to work. Each member has to save for six months before they can get a loan. Two other members of the coop have to stand guarantee for them and these members cannot get a loan till the person they stand for hasn’t paid back. Generally a member get three times their savings as loan. Now they also have a credit record so some of the rules are less strict if we have borrowed and paid back on time.
The interest rate on the loan varies depending upon the bank rate. They are currently paying 12 % as interest and 12% as contribution to the Social Security Fund, especially for family emergencies.
Malwari hatao paise bachao!
Not all union members are in the Credit Coop. Some years ago we tried to find out why. It is not that they do not need money. Waste-pickers often save small amounts and buy a little gold that they can pawn in times of need. We started the Malwari hatao paise bachao (boycott moneylenders) campaign and when we started making lists we found that hundreds of our members had pawned their gold and were paying large amounts of money to the jewelers. Typically, the jewelers would advance 60 percent of the value of gold or silver at interest rates of 5 and 10 per month, respectively. This was done even by goldsmiths and sometimes even grocers gave loans against gold. The members offered to redeem the pledged gold through the union after ‘persuading’ the moneylender to lower the interest to 2% per month. We told our others members at the Annual General Meeting itself it was possible only if they were willing to take clear stands against the pawnbrokers and moneylenders.
The members could repay the sum to the union at the same rate of 2% per month and take their gold when the loan was cleared. Well-wishers supported the campaign through interest free deposits of Rs.2,00,000. The campaign was immensely successful and within a period of two months gold amounting to Rs.1,80,000 belonging to 44 members was redeemed and placed in a safe deposit vault in the bank. No police intervention was required. As the word spread, no serious resistance was encountered from the pawnbrokers.
Attempts to institutionalize the initiative through banks failed because the paper-work was too cumbersome and time consuming.
However, now waste-pickers have their own credit cooperative bank - Kagad Kach Patra Nagri Sahakari Pat Sanstha (KKPNSPS).
In 1997, self-help groups were being formed in Pune, the members of KKPKP decided to get together and save Rs.10 every week. Soon there were 80 such groups of our members. There were several hurdles - most of the members were illiterate and couldn’t be signatories; people left their homes and went off to villages for long periods of time, during which nobody could operate their accounts; men spent off all the money that their wives worked very hard and long to save. Furthermore, there were problems with banks as well.
The credit coop is open to only the members of the sanghatana. KKPNSPS is actually a savings linked credit coop with more than half of KKPKP as a part of it. Members began with saving Rs.50 each per month and now save Rs.100 each. They get their savings back when they ‘retire’, usually, when they are too old to work. Each member has to save for six months before they can get a loan. Two other members of the coop have to stand guarantee for them and these members cannot get a loan till the person they stand for hasn’t paid back. Generally a member get three times their savings as loan. Now they also have a credit record so some of the rules are less strict if we have borrowed and paid back on time.
The interest rate on the loan varies depending upon the bank rate. They are currently paying 12 % as interest and 12% as contribution to the Social Security Fund, especially for family emergencies.
Malwari hatao paise bachao!
Not all union members are in the Credit Coop. Some years ago we tried to find out why. It is not that they do not need money. Waste-pickers often save small amounts and buy a little gold that they can pawn in times of need. We started the Malwari hatao paise bachao (boycott moneylenders) campaign and when we started making lists we found that hundreds of our members had pawned their gold and were paying large amounts of money to the jewelers. Typically, the jewelers would advance 60 percent of the value of gold or silver at interest rates of 5 and 10 per month, respectively. This was done even by goldsmiths and sometimes even grocers gave loans against gold. The members offered to redeem the pledged gold through the union after ‘persuading’ the moneylender to lower the interest to 2% per month. We told our others members at the Annual General Meeting itself it was possible only if they were willing to take clear stands against the pawnbrokers and moneylenders.
The members could repay the sum to the union at the same rate of 2% per month and take their gold when the loan was cleared. Well-wishers supported the campaign through interest free deposits of Rs.2,00,000. The campaign was immensely successful and within a period of two months gold amounting to Rs.1,80,000 belonging to 44 members was redeemed and placed in a safe deposit vault in the bank. No police intervention was required. As the word spread, no serious resistance was encountered from the pawnbrokers.
Attempts to institutionalize the initiative through banks failed because the paper-work was too cumbersome and time consuming.
