Microcredit – a step up out of poverty

In August last year we formed a Self-Help Group in our village with the support of (FYF partner) PAHAL. I attended a training on how to run the group and how to save by making timely contributions and returning loans correctly. As a result we initiated a savings scheme and started keeping records.

Now that we have money saved we don't have to go to the moneylender and if there is an emergency such as total failure of our crops we can still buy food. Now we want to invest in new businesses  so that we can earn more income and don't have to migrate to Bengal. With extra investment,  we will be able to cultivate the fields better and plan to grow chilli, potato, onion and wheat." Bedi, Jharkhand, India

Guardian Angels

We have been working in partnership with the innocent foundation to develop our work in rural India since 2004.  Their fantastic support has enabled us to start vital new projects, including our work in Jharkhand, and expand our existing programme so that more vulnerable families have the opportunity to build a sustainable future. 

So, when we were invited to talk to the innocent foundation guardians about our work with savings and credit groups in India, we were delighted to share our experiences.

And, because it's pretty inspiring stuff, we thought you might be interested to read a bit more about it as well:

"Group ownership is vital"

We have seen the massive difference microcredit makes to people's lives, especially when it is community owned.

Over the past couple of years we have supported the formation of 226 Self-Help Groups in Jharkhand, India. These groups provide a forum for women to access training, loans and support.

One of the first stages of group formation is to train women like Bedi in group formation, financial management skills and record-keeping. This equips them to guide the group through the savings and credit process.

The group itself decides how much each member can afford to contribute each month, creates the terms of repayment, decides who receives loans, monitors repayment and sets up a bank account.

"Enabling the development of small businesses"

Group members take loans out from this fund at a fair and fixed rate of interest. As more loans are taken out and repaid, the fund grows and is able to support a growing number of business activities.

Our partners help to ensure that group members make the most of the loans by providing vocational and business skills training and supporting them to establish market links. As a result group members typically pay back the loan within 5-12 months and have healthy repayment rates of 95-98%.

"Developing skills and confidence"

Through this process group members develop real confidence in themselves and in what they can achieve.

In fact the groups aren't only about saving and credit. They are also a space in which women can address social problems in the community.

Our partners raise awareness among group members about the services people are entitled to. As a result, the women we work with are not only developing viable small businesses, they are also helping their communities to gain access to essential services such as clean water, healthcare and education.

For a further reflection on how we go about microcredit why don't you visit our blog.

Take a look at this video to learn more:

With your support we can help more women like Bedi to participate in Self Help Groups that will change their lives. Donate now.