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Saturday, February 11, 2012

From Poverty to Samruddhi - A Microfinance Solution

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Poverty remains one of the biggest challenge India is facing today. Unfortunately the number of poor living in abject conditions by any normal standard, is much more then the population of most of the continents. We all know about it, we all discuss about it and sometimes we even give some donations, but very few of us actually go on to soil our hands in mud and clay, work towards solving this problem.

One organization working silently to eradicate poverty is Samrudhi Microfinance Society. Microfinance is an effective tool to combat poverty. It helps people to help themselves. By providing small loans to low income women entrepreneurs Samrudhi aims to help several communities to get rid of the vicious circle..

Samrudhi Microfinance Society, recently launched an updated website - We Care India. The new website allows individuals like me and you to extend micro-loans through their websites. These loans are repaid back to the lender in around 12 months. I find this concept far better then blind donations. The lender can track the progress of the borrower online. Samrudhi helps the borrowers in several ways, so as to ensure that they pays back the loan in time.

Samrudhi is currently participating in an online contest organized by Global Giving. If Samrudhi can raise $4000 through Global Giving contest page here they will be listed on Global Giving website permanently. This will provide much needed online exposure to Samrudhi. If Samrudhi is successful they will also get matching grants from several corporate in UK and USA. I hope readers of this post will appreciate the work of Samrudhi and will help them to win the contest.


It's very difficult for most of us to realize how much interest people in rural India or urban slums pay to get cash so as to buy household items or to run their small business for few days. Banks or other financial institutions are not interested to even open account for such truly needy and hardworking people, because of the risk involved. So these men and women are left with no other option but take small loans (e.g. Rs.100/day- Rs.5000/month etc) from these lenders, also known as loan sharks.  I remember having a conversation with vegetable seller in my town. She told me she lends Rs.100 in the morning and returns back Rs.120-Rs.130 in the evening or next day. Loan sharks are omnipresent in India.

Lack of access to funds has multifaceted affects on the lenders, borrowers and the economy. Such transactions generate black money in the process, which loan sharks keep in the form of cash or gold. My guesstimate is that around $ 8-10 Billion black money is generated by this exercise. Secondly such high interest loans comes with high pressure including life threats. Several people are unable to repay such high interest loans from loans sharks. Some of them breakdown and abandon their families, some unfortunately ends up committing suicides.

Other organizations, I am aware of working to combat poverty in a sustainable manner having Internet based loan facilitation model are Rang De and Milaap.



14 comments:

  1. very laudable initiatives by these orgs and yes the lending/borrowing is a vicious cycle that has taken lives. micro finance is the need of the hour

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    1. Thanks for the comment Sujatha. Hope RBI works out something quickly to salvage microfinance in India.

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  2. Nice move by that org ..but do you think that these things will eradicate poverty ???

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    1. Hi Sheril, Microfinance definitely has helped millions of families to earn their future. In short term as well, I believe it has helped many to survive through the present..

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  3. It was really a nice read. You stepped deep into the core and highlighted the problems where we are struck in. We really need to pull ourselves out from this and should work for the betterment of everybody's cause.

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    1. Thanks for the comment Anshul.

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  4. Informative and worth considering. Thanks Nitin!
    amitaag.blogspot.com

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    1. Thanks for passing by Amit. Hope many other consider participating in this campaign too..

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  5. I think we need more organisations like this. We need to work out a model and fix a target. Educating them would go a long way in eradicating poverty. Thanks for sharing this Nitin...

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    1. Agree Saru. Hope our government agrees with us too...

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  6. That is really commendable!

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    1. Yup Sunil. Hope you will share it further..

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  7. As am a finance student, its nice to read your blog..

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    1. Thanks Ruchi. I hope you like other posts too.

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