SKS – Microfinance Field Visit

We’ve been inspired over the years by the stories of how small loans can transform lives. We were fortunate enough to visit the field office of SKS in Ajmer very near Pushkar. SKS is the largest MicroFinance organization in India, serving over 4 million women with over $1 billion in loans. These small, 1 year loans, typically 10,000 rupees ($200) per person are made to groups of 5 women who are mutually responsible for the loans and must attend group meetings for disbursement and repayment.

We ventured to the roof of a concrete block house for the weekly meeting– where 30 women welcomed us, some with broad smiles, others with timid gazes from behind veils, and yet others with enthusiastic invitations to sit by them.

The ritual of granting and repaying the loan is purposeful… building trust, preventing fraud and teaching rudimentary skills such as establishing a signature. Most of the women are illiterate and this may be their first interaction with a financial institution. To receive a loan, all 5 women of the group plus the husband of the woman receiving the loan must be present. A voter registration card, a photo and assessment of family details are necessary to receive the loan. All of the groups (6 in this case – 30 women) come together each week to submit their weekly $230 rupees (about $5) payment of principal and interest. The chapter leader, elected by the women , counts the money in front of everyone. The SKS field loan officer updates the loan books for each group of 5 women. The chapter leader then presents the money counting each denomination of bills to the field loan officer. Payments are also made for compulsory and optional insurance. Finally the meeting closes with a pledge that they will repay the loans, use the money for productive purposes and help each other should the need arise. The high ritual creates common witness that the money has been paid. It was great to see how engaged the women were.

The women were incredibly friendly and welcoming, inviting us to join them for tea and food, asked us to hold their babies and crochet with them. They even offered us a gift, a head cover used by men entering Mosques. With the loans, the women are able to buy crochet thread and beads in bulk to lower their costs.

The branch office was almost as interesting… certainly not the personal connection we made in the field but… to see binders for the 149 centers in Ajmer and the many steps in the process to prevent fraud and insure that all payments are accounted for was eye opening. And.. SKS is known to have the most efficient operations in MicroFinance. It’s hard to believe that money can be made – even charging 15% interest. The entire process is so labor intensive. It takes 12 staff to service this branch. For many reasons, it’s hard to imagine MicroFinance – in this model working in the US. AN INCREDIBLE MORNING.