Molding Future With Micro-finance
Mallika, aged 26 looks like a very calm, normal house wife at first sight, but knowing her more throws an amazing entrepreneurship abilities in her. Mallika’s house is filled up with more beautiful idols and toys made of mud and paper pulp.
They make their livelihood by moulding idols and selling them to the wholesale dealers in and around Puducherry. It is their ancestral profession and continuing till now for many generations.
Mallika shared that “We were economically challenged after the marriage. We tried a lot to mobilise Rs 25,000, from our known sources for the investment in the business. But all our attempts remained unsuccessful”. She further added “In early 2011, when I heard that our neighbours were about to form a JLG of Ujjivan MFI, I informed my husband, my intention to join the group,….he was initially quite reluctant and hesitated that there would be too much formalities and guarantee to get loans”.
Selvarasu intervened and said “…but to our surprise after my wife gone through some financial literacy trainings, we were able to get a first loan of Rs 15,000 from Ujjivan, without any collaterals, just with mutual guarantee of other group members, as they knew our credentials very well”.
Mallika said that this was the best decision they have made, which led them to avail and repay Rs 2.5 lakhs from Ujjivan and felt proud that they became eligible to get individual loans as well.
Selvarasu ambitiously told “…this is not enough, we are still in need of around 5 lakh rupees to meet growing business needs and to establish our own retail outlet,… but we have no other option other than reaching out to the local moneylenders, who charge 5paise to 10paise” (i.e., 60% to 100% interest per annum).
When asked about their ability to service a loan of 5 lakh rupees at such high rate of interest, Mallika replied “in this business we normally make net profit of Rs 25,000 for every Rs 50,000 additional investment in two months’ time ….we also employ 3 to 4 employees throughout the year ….hence the only limitation is lack of money …as all our relatives are also in the same business, they are also in need of investment all the time and hence it is difficult for us to help mutually too…”.
When told that MFIs will not lend more than 1 lakhs normally, she said “we have heard recently that Ujjivan going to become a small bank soon and if that is the case, why can’t they lend us more…as we a have long established credit history with them.., won’t they ?!!!” with confident smile.
This substantiates the move of RBI choosing more MFIs at first place while granting in principle approval for Small Finance Banks. This small change in banking landscape will not only bring hope of small entrepreneurs like Mallika but alike her in all the corners of the country.