A micro success story

People Like Them

Payable in weekly installments of Rs 100, the loan didn't cut too much into his earnings as an agricultural labourer. But it gave him the much-needed financial fillip that helped him and his household to improve the quality of their lives.

At the Mirzapur office of Cashpor, an acronym for Credit and Savings for the Hardcore Poor, one can hear lots of similar stories. And from the long line of hopefuls outside their doors, it's clear that many more of Mirzapur's economically underprivileged want to avail of the same opportunity as Meena and Lallu.

The result is that in the six years that Cashpor's been in Mirzapur, their client base has grown to 22,000. "We have about Rs 10 crore outstanding at the moment," said David Gibbons, executive chairman of Cashpor Financial Technical Services.

Credit for this, he says, goes to their women clients: "We were clear that we'd lend the money only to women, because they are more responsible, concerned about their reputations, and about their children's futures. Most micro finance schemes worldwide have found that women make better clients, " he said.

This has had the added effect of economically empowering women in areas with the lowest women's literacy rates. "Till we came along, the idea of getting a few thousand rupees was inconceivable for most women here. But today, many of our old clients walk with so much confidence!" smiles Gibbons.

Cashpor's repayment system is based on collective responsibility, effectively combining it's social objective with sound business sense. The women form small groups, usually of trusted neighbours or kindred, who have to collectively take responsibility for each member's loan.

"So if one woman is unable to pay a weekly installment, her group has to bear the burden. Even though we've encountered a little resistance to this, it has worked out for they really want to keep the credit line open," said Gibbons, "so far, in spite of two drought years, the repayment rate is pretty high at 95 per cent."

For their defaulters, Cashpor has a rehab program with a longer payment period and smaller weekly installments. "Plus, we propose to give them double the original loan amount after six months to help them rebuild their business," said Gibbons, who plans to cover the added credit risk with Cashpor's own profits.

The safest credit risk, Gibbons said, is animal husbandry (accounting for forty per cent of their loans) and the riskiest is trading, accounting for twenty five per cent loans. "We presently have the same loan periods for both categories, but are now thinking of reducing the term for traders," said Gibbons.

"A leading Indian bank wanting to get into rural micro finance has approached us for a partnership. They'll take the credit risk, we'll determine creditworthiness," said Gibbons. If their pilot project shows good profits, Gibbons and company will be able to reach out to even more households in Eastern UP.

But it's Cashpor's social objective that's paramount. "We offer an unprecedented opportunity to poor people," said Gibbons, "and our most significant achievement is that we've been able to allow them to dream of a better future. The new hope in their eyes is as rewarding as our actual profits!"