Shri Mahila Sewa Sahakari Bank Ltd.,

Shri Mahila Sewa Sahakari Bank Ltd.,
(Experience of providing Financial Services to
poor women workers working in the informal sector)

A. HISTORY :
Women workers in Ahmedabad city, realized a need to start their own financial Institution, which can provide them financial services as per their needs by using suitable deliverable mechanism, they (4000 women) contributed their own capital to start a Co-operative Bank – Shri Mahila Sewa Sahakari Bank Ltd. in the year 1974.

B. CATAGORIES OF INFORMAL SECTOR WORKERS :
Workers who do not have regular salaried income or regular employment, but are working on their own like,

(a) Vegetable or fruit vendors or petty vendors and small shop owners.
(b) Home-based workers like bidi-rollers, garment makers, embroidery workers, artisans, block printers.
(c) Laborers like agriculture workers, construction workers, head loaders, maid servants, hand- cart pullers, paper pickers.

[In India 93% of the total work force is working in the informal sector, where majority of them are women]

C. ECONOMIC AND WORK PROFILE OF WOMEN WORKERS IN THE INFORMAL SECTOR :

(a) LONG WORKING HOURS :
Normally, their day start very early in the morning and they work for 12 to 15 hours a day. E.g. Vegetable Vendor starts her day at 5 a.m. and ends her work at 9 p.m.

(b) LOW AND IRREGULAR INCOME :
Majority of them earn on daily basis, and that income is also not very regular. E.g. Construction worker waits at the corner of the street every day, loading for work for that day or Agriculture workers get work only during agriculture season.

(c) LACK OF CAPITAL :
Small traders and manufacturers do not have required capital for their business and they have to borrow capital at very high interest rate from informal financial sector.

(d) LACK OF PRODUCTIVE ASSETS:
Low level of income and scarcity of capital they hardly can build productive asset for their economic activity and often they have to us rented or hired assets.

(e) MORTGAGE, PLEDGE, SALE EXISTING ASSETS :
In case of emergencies, when they need money they either pledge or mortgage their assets like ornaments or land or they have to sell these assets.


(f) INDEBTEDNESS :
Lack of capital, assets, low level of income and irregularity of income, force them to borrow money, often at exploitative rates.

(g) POOR WORKING CONDITIONS:
Home-based worker work in their home, which are very small, without much facilities or laborers have to work in very risky conditions e.g. construction workers.

(h) POOR LIVING CONDITIONS:
Majority of them live in slums, chowls or in kucha houses where even basic amenities like water, sanitation and electricity are not available.

(i) LACK OF SOCIAL SECURITY BENEFITS:
Since they are not working in the formal sector, they do not enjoy social security benefits like Provident Fund, Pension, Health Insurance, Workers compensation, Sick leave, Maternity benefits etc.

(j) ILLETRATE:
Because of all these unfavourable conditions, poor women are caught in the vicious cycle of poverty and vulnerability.

D. OBJECTIVE OF SHRI MAHILA SEWA SAHAKARI BANK LTD.:
Main objective of Shri Mahila Sewa Sahakari Bank Ltd. Is to help these women to come out of the vicious cycle of poverty and vulnerability by providing them much needed financial services and helping them,

(a) To come out of the clutches of exploitative moneylenders.
(b) To build their own savings.
(c) To build their own assets and capital.
(d) To rescue their mortgaged/pledged assets.
(e) To minimize their risk and vulnerability.
(f) To learn proper financial and business management.

E. EXPEREINCE OF THE BANK:
(a) Capital Formation Process:
From our experience of providing financial services to achieve the above mentioned objective we have realized that there is long process of helping poor to build their own capital and assets.

Capital Formation Chart:
Stage 1: (1) Credit to help them to come out of the clutches of Moneylenders.
In majority of the cases, it was found that they had borrowed of very high rate and major portion of their income is going towards payment of interest. When credit is given to them to repay this loan, they save a lot on interest, which is an increase in real income.

E.g. When Rs.5000 is borrowed @ 10% per month, she is paying Rs.500/- per month as interest. When a loan is given to pay Rs.5000/- @ 12% p.a. she has to pay only Rs.50 as interest, which helps her to save Rs.450 per month which she can repay as principle and come out of debts totally.

Stage-2 : Building Savings :
Our experience shows that poor women have basic instinct for saving. They save under the mat or with neighbor or in the backyard. This if motivated and facilitated, will enable women to save in Bank.

This facilitation is door-to-door collection, designing product as per their cash flow, E.g. daily Savings for Vegetable Vendors.

Stage-3 : Building Business :
They need working capital to expand business small amount of credit, but frequent credit would definitely suitable for expanding their business.

Stage-4 : Buying Assets:
After little expansion in business, they are ready to buy assets – either for using own assets rather than paying rent on it, or for buying machines instead of doing work manually.

Medium term credit for buying assets is very suitable to a small experienced business.

Stage-5 : Housing Loans :
After they have expanded their business, they do want to improve their living condition, housing credit, small amounts for repairing, extending house or adding services like water, drainage, toilet building or getting electricity connection is very popular.

Stage-6 : Linking with Insurance :
Though they build their business, assets, capital by using Saving and Credit Services, and coming out of debts, often circumstance beyond their control like sickness, death of a family member, flood, cyclone, fire riots etc. disturb their economic life and all capital assets and savings built gets eroded and again decapitalization process starts. To avoid this erosion, they are linked with Insurance companies.

F. SUITABLE DELIVERY MECHANISM:
Because of the different type of profile of thess women, the financial service delivery mechanism which needs to be used should be different, than the delivery mechanism normally used for other educated economically middle and higher-class clients. This will be useful for achieving the overall objective of financial inclusion.

(1) Door to door Service:
Majority of poor workers work is manual work in the field, that too for long hours. They do not have enough time to go to Bank to deposit money specially when the amount is small. It is also not economical for them to travel far to deposit small amount by spending on transportation and time when their work is labour intensive and their presence is required in the field. E.g. if a Vegetable Vendor wants to have Rs.10/- and takes a bus to go to a Bank pays One Rupee. on bus ticket and two hours in completing the transaction, he losses also income for two hours.

But at the same time if that small amount is not saved, (collected) it will be spent and will not be able to save or repay loan.

Hence it is important that money is collected, when it comes in their hands from their own place and if possible frequently.

Sewa Bank has appointed, trained and authorized women leaders from the same area and trade to collect from their doorsteps on daily basis. These leaders are called “Bank Saathis” and are given commission for collection of Savings and loan repayments when and where they have money in their hands.

(2) Simple Procedure:
Majority of them are illiterate and can't fill in all complicated forms. There should be simple procedure for opening accounts, withdrawals, applying for loans.

(3) Need hand holding :
They need hand holding in banking operations for depositing, filling forms, sometimes ever calculating money (currency notes).

The Bank has appointed a team of 'hand-holders” to help them in Banking operations.

(4) Collateral-less lending:
They can't provide physical collateral. So their saving performance (Regularity of Saving, even a small amount) loan repayment performance could be considered as collateral.

Poor pressure could work as good collateral. Sewa Bank takes recommendation (Moral responsibility) from leaders, over and above personal guarantees.

(5) Frequent and continuous contact:
The only solution for succeeding is keeping in regular contact with the members – Sewa Bank does appoint field workers, who are assigned specific areas and clients with whom they have to remain in constant touch and be their real friends.

(6) Client identification:
The best identification of a person can be done by their neighbours or traders and business relations. For identification of a new member, field inquiries particularly in area where they live and in the area where they work.

Normaly they can produce “Election Card” which also can be a good identification tool.

G. SUITABLE PRODUCTS:
Approach of Sewa Bank in designing products is to look at their “Life Cycle” financial needs and design financial services and products accordingly.

Basically there are three financial and one nonfinancial service designed by Sewa Bank i.e.

(1) Savings - Financial Service - Direct
(2) Credit - Financial Service – Direct
(3) Insurance - Financial Service – Direct

4. Financial Literacy:
Within these services – there are different products based on life cycle needs.

Savings: For consumption needs which can be planned.
(a) Daily saving Scheme for suitable collection where collection is linked with cash flow.
(b) Monthly Recurring for Festival for One year.
(c) Monthly Recurring for Emergencies for One year.
(d) Monthly Recurring for Education for One year to five year.
(e) Monthly Recurring for House repair for Three years.
(f) Monthly Recurring for Marriage of children for Five to Seven years.
(g) Monthly–collection for old-age-linked with UTI.

Insurance for Emergencies linked with Insurance Companies.
(1) Life (Husband and Wife)
(2) Medical (For Family)
(3) Accident (Husband and Wife)
(4) Loss of Assets (Flood, fire, cyclone, riots)
(5) Maternity.

Credit for,
- Working Capital Short term
- Buying Assets Medium term
- Buying Assets Medium term
(a) Water connection
(b) Building toilet
(c) Getting Electric connection.
(d) Extension of House
(e) Repairing a House.

- Repayment of Old loan Medium term.
Objective : (a) Help women to change their attitude of living on day to day basis t and think about future and life cycle needs.
(b) Build their financial knowledge and skill.
(c) To help women to manage and plan their financial life.

This is to provide by
- Giving classroom trainings.
- Giving individual counseling.
- Organizing financial camps.
- Organizing special campaign.

Tools Used : Class room lectures
- Videos.
- Games.

For Sahakar Srijan