| Is Sewa involved in micro credit? What are the interest rates? |
| Sewa Bank provides fully integrated financial services and not just micro credit. These include savings and credit services along with links to pension and insurance. |
| We provide 8 per cent interest rate on savings and our interest rates on loans range from 15 to 17 per cent on reducing balance method so the effective interest rate comes to 14 per cent. The rates may be a little higher because of the expenses of field work. |
| How is it different from other micro finance institutions? |
| It is very difficult to define micro finance institution in India because many trusts, co-operatives and non-banking finance companies provide micro finance. |
| However, unlike these, Sewa Bank also provides integrated financial services. Also, Sewa Bank is a formally registered bank regulated by the Reserve Bank of India as well as the state government. We provide credit of up to Rs 50,000. |
| The main difference is in our approach towards poverty removal. We try to free poor women from the clutches of moneylenders. We work as a reform institution first and then as a finance institution. |
| Sewa Bank organises awareness campaigns throughout the year to inculcate the habit of planning for the future in poor women. |
| What do you think would be the most suitable model for micro credit in India? Though the Grameen Bank model has been criticised, it seems to be the most common one here. |
| I do not fully agree that Grameen Bank is criticised for its system. Grameen Bank is the most successful model in the country because it provides door-to-door collection services. |
| This institution has made a much-needed difference in micro finance institutions. The problem is that Grameen Bank's focus is only on credit and does not include other issues like overall attempts to remove poverty. |
| But the bank's reach is tremendous and it has played a major role in spreading the concept of micro finance across the globe. |
| However, the most suitable model for India is one owned and managed by the poor themselves, which has an integrated approach towards poverty removal. The institution should provide integrated financial services in a sustainable manner. Sewa Bank has all these characteristics. |
| It is said that micro finance institutions cater to those above the poverty line and not below the poverty line... |
| I totally disagree. I can give you thousands of examples where families who used to eat once a day now own full-fledged businesses and have homes with water and electricity connections. Their children have access to education. For total poverty removal, a micro finance institution alone is not sufficient. |
| Even with micro finance institutions and self-help groups, the poor are barely able to sustain themselves. There is rarely any investment in training or support to make the credit takers good income earners... |
| Like I said earlier, only a micro finance institution cannot make miracles happen. There are many elements responsible for poverty. If a society really wants to remove poverty, the poor should be provided with financial literacy so that they can free themselves from the vicious circle of moneylenders. Most importantly, there should be a focus on policies. |
| I agree that there is a need for more investment in training and supporting the credit takers. Sewa Bank spends a lot of time training the poor and spreading awareness through campaigns. Sewa is not a mere micro finance institution, it is a movement by the poor. |
| So are micro finance institutions really good for poverty removal? |
| I would say that micro finance institutions cannot be the sole solution for poverty removal because there has to be proper government support. |
| Poverty removal must be approached as a social movement and not just as an institution. |
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