In light of the Nobel Peace Prize award to Dr. Yunus and Grameen Bank, I wanted to share more about this incredible microcredit movement.
I wrote this in January of 2004 after returning from a expedition to India for Unitus. I am a co-founder of Unitus and currently serve on the Unitus Board. Unitus is a Global Microfinance Accelerator, helping Microfinance institutions grow faster as they serve the poor, primarily through the use of microcredit loans.
A Magical Loan Closing Under a Full-Moon in India
January 12, 2004
I had never witnessed a financial transaction quite like this one. It was a warm magical evening, right at twilight, and a big full moon was rising over the central Indian plains above us. We sat on the dusty ground, barefoot, observing the wondrous scene before us. We had removed our shoes as a sign of respect before entering into the circle on a small patch of open land and we sat down to watch these women pass their test and finalize the organization of their group, in preparation of completing their financial transaction.
We sat in front of a house in a little village of several thousand outside of a little town called Medak, which was several hours away from Hyderabad in central India. The house was a simple structure, made of hand-cut stone, with water buffalo dung used as plaster to patch the holes and smooth the walls. The roof was a thatched roof of reeds and grasses. There was no electricity in the home and we had small lanterns and the light of the full moon to illuminate the scene before us.
The five women sitting facing us were completing the fifth day of training in order to borrow small loans from SKS, an Indian Microfinance Institution, which had received funds from Unitus, the group we were with. An officer from this microcredit bank had traveled the 10 kilometers along a small dirt road to meet with these borrowers to test their readiness to enter into a loan with SKS.
Testing the comprehension of illiterate women of a financial transaction
The testing consisted of several steps before the loan transaction could be completed. One of the first steps was that each woman had to sign her name. Nervously each woman came forward to show she could sign her name. Later, when it was time to finalize the transaction, she would have to sign the loan documents as well. We didn’t think it was that big of a deal, until it was later explained to us that none of the five had ever written their name before. It was especially meaningful to later enter into one of their homes and find their name written over and over again in chalk on her mud floor as she had learned and practiced writing her name.
Next, one of the five began to recite their pledge to the bank. As she spoke each pledge, the other four would repeat in unison the pledge. This pledge would be recited at the beginning of every meeting they would hold with the bank. In the pledge, they promised to attend each weekly meeting without fail, to pay back the loans in weekly installments, to help the needy in their group, to abide by all the rules of the group and to use the loans to uplift their family’s economy.
The SKS Branch Manager who was conducting this testing sat on the ground facing of the five women. She got out five pebbles from a bag and laid them on the ground in front of her and told the women that the pebbles represented each of them. Over the next few minutes she rearranged the pebbles into different groupings as she asked them a series of questions. She would ask questions and the group in unison would answer back. It was almost musical to hear the questions and the beautiful voices of the women responding back.
Sandia, the Branch Manager, asked them a series of questions that included the following:
Who do the stones represent?
“They represent our group,” was the answer.
What does the group want to do?
We want to borrow money.
Even though each of you will get money from your loans, who is responsible for paying it back?
All of us are responsible.
What if one person doesn’t make their weekly payment?
The rest of us have to pay for her.
What happens if the group doesn’t have the money to cover their missing payment?
The group can borrow funds from their group savings account to cover it.
What does this group need to do each week?
We need to meet with the loan officer and make our weekly installment payments.
What happens at these meetings?
We make our principle payment, we make our interest payment and we make our savings deposit.
What is required for this group to be successful?
We must trust each other, support each other and keep our commitments.
