Spandana set to empower 10 lakh women in 5 yrs

Micro finance institution disbursed Rs 195 cr to 1.75 lakh needy women last fiscal

Spandana, a micro finance institution (MFI) which offers innovative financial solutions to poor women in the slums and semi-slums of villages and towns in Guntur, Krishna, Prakasam and Visakhapatnam districts, is targeting to cover 10 lakh women in the next five years.

The six-year-old organisation has also expanded its operations to the slum areas in the state capital. Its volunteers began their survey of the slums in Hyderabad on Monday.

Speaking to Business Standard, G Padmaja Reddy, director of Spandana, said: "Our team, comprising 320 dedicated volunteers and executives, is determined to reach out to 2.5 lakh poor and needy women and disburse Rs 220 crore to them during 2004-05. Already 1.75 lakh women have received financial assistance to the tune of Rs 195 crore from Spandana during 2003-04. We extended our services to 40,400 women in 2002-03 and our advances stood at Rs 26.5 crore," Padmaja Reddy said.

"The poor people are reliable, credit-worthy and bankable. This has been the secret behind the success of Spandana. The banks will neither give loans to poor people nor will they collect meagre savings like Rs 5 or 10 from the poor right at their doorsteps. Unlike banks, Spandana extends these two important services to poor women, and the loan recovery rate has been an amazing 99.9 per cent."

Sidbi, ICICI, IOB, HDFC, UTI and ING Vysya Bank are providing funds to Spandana for disbursement among the poor women, Padmaja Reddy said, adding, "We want to extend our services to 10 lakh women in the next five years and empower them economically with Rs 5,000 crore."

Spandana started its operations in Guntur in 1998 by extending financial assistance up to Rs 2,000 to a poor scrap iron buyer-seller. As banks and NGOs were averse to giving loans to rag pickers and vegetable vendors, the Spandana volunteers raised Rs 40,000 by collecting old newspapers through a door-to-door campaign.

They struggled for three years until Small Industries Development Bank of India (Sidbi) sanctioned Rs 1 crore to Spandana. Later, ICICI followed suit by sanctioning Rs 1 crore.

Thanks to its innovative financial solutions to solve the economic problems of poor women, Spandana finally won recognition from reputed credit rating agencies like Micro Credit Ratings International (MCRILL) India and Crisil.

Since then, there has been no looking back for Spandana, which has earned the wrath of many a moneylender by pushing them out of business. However, it remains to be seen how Spandana volunteers would tame the moneylenders in Hyderabad.

She said that the institution had covered 890 slums in villages and towns during 2003-04. "This year (2004-05), our volunteers have so far covered 1,140 slums through 22 branches in urban areas and 20 branches in villages in the four districts. In 2002-03, we covered 317 slums through 17 branches," she said.

Spandana has developed its own programme of identifying the beneficiaries. First, it selects potential areas among slums after a thorough survey. A number of awareness meetings are held with interested women.

Later, these women are clubbed into clusters of 10 members each. The members of a group stand guarantee for any member and if that member defaults, the other nine members would be held responsible and accountable for her loan amount. These groups would be given adequate training in Spandana programmes.

Later, recognition tests would be conducted for the groups. The groups, which pass the test, would be recognised as eligible for financial transactions.

Spandana offers four products each under savings and loans categories. The savings products are Siri savings, Sphoorthy Savings, Sneha Savings and Dream Savings. The loan products are general loans, infrastructure loans, educational loans and star borrower loans.

While Spandana pays 9 per cent interest for savings under Siri, which is a loan-cum-savings scheme, it pays no interest for savings schemes. The member should deposit 10 per cent of the loan amount as collateral.

Sphoorthy is a flexible savings product to help members buy durable goods and essential commodities at 15-20 per cent less the cost than those in the open market. Sneha is a loan-linked savings scheme. Loans are rotated among the group and sanctioned based on auction. Dream savings scheme inculcates the habit of savings among the members' husbands.

"General loans are given for income generation and business purposes, while infrastructure loans are given for construction of bathrooms and toilets. We extend education loans to encourage poor women to send their wards to schools, and Star borrower loans are for more credit-worthy clients. About 90 per cent loans have gone into income generation schemes," Padmaja Reddy said.