Workers adopt credit pooling to beat funding woes

Ramesh Gupta has been running from pillar to post for the past six months to obtain a loan to meet fund requirements for his small hosiery unit, but in vain. Until he came to know about Nirman Bharti, a local co-operative microfinance group.

The group, which started just two months back with the objective of alleviation of the cash-starved small and medium enterprises (SMEs) from oppressive money lenders, has helped more than 170 members. When the banks are evading disbursal of loans to small traders like Ramesh, Nirman Bharti has written success stories of prudent and beneficial lending to numerous small units in the city.

The story began in September last year, when a small group of workers came together to pool small amounts of money for lending the needy members of the group. “There is no formal proprietor or manager of the group as we collectively carry out the working of our association,” said Archana, who recently took a loan of Rs 5,000 from Nirman Bharti.

The members are not aware that they are practising the renowned ‘microfinance’ principle of the Nobel Laureate, Mohd Yunus, but are happy to find out a successful way to beat the liquidity crunch.

“I approached all the banks for loan but they demanded collateral, which I was unable to pay in such times when business is going down,” said Ramesh.

“All of us have an equal say in the group and this makes the working transparent and trustworthy,” said Archana. When asked about the mechanism to ensure creditworthiness of the borrower and recovery procedures, she said if a particular member fails to pay the debts on time, the loss is automatically shared by other members.

“This keeps a check and puts a psychological pressure on the borrowing member to repay. We believe that any person keen to start or expand his business should be provided credit delivery,” she added.

The group holds regular meetings where the members who want to borrow put forward their proposal. After convincing the rest of the members, the amount is disbursed. Ramesh is happy that he has found a way out of the slow and harassing bureaucratic procedures for lending and also from the oppressive chains of illegal lenders.