Joint liability: Rural Assam's lesson in self-reliance

After training for a year at the Assam Textile Institute in 1980, Nilima Deka, a resident of sub-urban Guwahati, set up a weaving machine at home.

It was bad news for Nilima as soon as she began. Deka's attempts to finance her business found her slip into a trap of money lenders. Her financial position deteriorated to such an extent that she eventually had to shut down her business.

However, all was not lost. Micro credit from Nightingale Charitable Society "" a non-governmental organisation (NGO) engaged in lending activity to the poor and the deprived since 2001 "" helped Deka restart the business, stalled for more than two years.

Today, Nilima Deka's weaving business is flourishing.

Nightingale Charitable Society (NCS) does business with 106 self-help groups (SHGs) and is in the process of forming joint-liability groups, the model the society introduced recently.

The joint-liability groups will be fully operational from March 2008, giving a new dimension to micro-finance activity in Assam. These groups are aimed at reducing the risk factor involved in micro-finance lending. Under the model, there are groups of loan seekers. One of the loan seekers in such a group is granted a loan at a time, while the rest are guarantors and ensure the loan taken is repaid.

The joint-liability groups model, prevalent in other parts of the country, reduces the risks of non-recovery substantially.

The NCS discovered this model when it undertook a six-day training-cum-exposure tour to Andhra Pradesh recently, sponsored by North Eastern Development Finance Corporation (NEDFi), Ministry of Development of North Eastern Region and Indian Institute of Bank Management, Guwahati.

Mantu Nath Sarma, Secretary of the NCS, says they are in the process of forming the the groups, which will initially have four members, and will start lending in a month or two.

Though the amount of transaction NCS has done till date is hardly comparable with those in Andhra Pradesh, Sarma said, the newly acquired know-how and skills would surely make a whole lot of difference. With prospects looking brighter now, NCS is planning to expand and will shortly have a branch office in the countryside.

NEDFi, Apex Bank and Indian Bank are some of the banks that provide credit to the organisations engaged in micro finance activities in Assam. Though private sector banks have not been involved in such activities in this part of the country, talks are on with ICICI and HDFC banks, said Sarma.

Pratap Chakravarty, president of the NCS, is motivated by the Nobel laureate Mohammad Yunus' model of Grameen Bank and feels it can bring about a revolution among the deprived masses.