SKS Microfinance's mission is to eradicate poverty by providing a comprehensive range of financial services to the poor - including life and health insurance. Journeys for Change visited a microcredit meeting in a village near Hyderabad, run by SKS-trained community members. The microentrepreneurs had gathered to make their regular loan repayments.

Biplab Das is a Director of Credit Suisse at its head office in Zurich, where he focuses on development and worldwide distribution of sustainable investment products. He writes this post not only as an expert in the world of microfinance, but also as an expatriate experiencing his native country in a new light.

Mr. Mogulaiah’s Branch – a slice of SKS Microfinance

About half of the road from the busy hamlet of Sadashivpet to the village of Yellaram (population ca. 6,000) is paved. The rest, as you make a sharp right turn, reveals the true nature of the land: semi arid, bit reddish, and coarse sand all over.

Aside from few patches of vegetables grown intermittently, the main crop appears to be cotton – small, somewhat scrawny plants decked with their open buds: a light snowfall in late November? – a fleeting thought ran through head. But the sheer absence of any cloud in the blue yonder, bright sunshine over our shoulders, and the truly agreeable temperature at this time of the year, brought us back to the realities of southern India.

By the time our air-conditioned vehicles reach the village square, some 30 or so women, most in their working clothes, have already assembled under the giant neem-tree by the schoolhouse.  Sitting cross-legged on the bare earth, they have formed a human ring in a manner that enables eye contact between any of the gatherers. Few members of the opposite sex huddle by the tiny kiosk – a rural replica of the holes-in-the-wall in most of the cities in India.

The ring, though, is incomplete: broken up at one end by a few clean mats – a makeshift provision for the fifteen foreign intruders on a journey to experience Social Entrepreneurship in India, plus Mr. V. Ramesh – the SKS Field Officer, as well as our charming hostess from the head office in Hyderabad, and our seasoned Branch Manager, Mr. B. Mogulaiah, appearing just for the occasion.

The rituals of micro-entrepreneurs

The session starts with a chorus of the SKS pledge by all participants – the naturally sharp edges of Telegu words seemed to have worn out by repeated recital of the same “mantra” week after week. Suddenly, on a single cue from Mr. Ramesh, one by one they approach the mat to deposit their weekly payments, and no sooner than he finishes counting the much used, rather tired-looking banknotes, return back to their spot in the ring. 

These women, as we all know by now, are the so-called micro-entrepreneurs, on whom the whole world has pitched its hope of alleviating poverty in the Third World. A small loan – not exceeding Rs. 11,000 (ca. £15) at SKS, allows them to buy two more cows, stock up their small kiosks, or buy more seeds for creating more illusions in those cotton fields.

Once the repayment is completed and the money tallied, Mr.  Ramesh – clearly, our man of the hour – carries on with the disbursement of new loans, acceptance of new loan applications, and announcement of loans approved for disbursement next week.

The ease and glitch-free smoothness of the entire process is in stark contrast to the ever-prevalent chaos of any main-stream bank in India, or even in countries like Italy. The women – each individual, and their respective group leaders, appear to have done all the homework they needed to complete before joining this gathering.  The meeting ends with the chattering, once again, of the SKS pledge, and most women rush back to their daily chores.

Backend operations

Back in the Branch, we get tea and biscuits, and hear more about SKS, while all the Field Officers – Rajasekhar, Brahmanand, Nagaian, Kashiram, Chiranjeevi, Anjaiah – seven in all, including our Ramesh, return from the field: each of them responsible for 20 or so centers, which translate to four such meetings each morning, five days a week. The rest of their daylight hours is taken up by various chores – training new recruits, data entry, record management, cash management, and planning for growing the business. No fancy Main Street branch, yet, the office – a converted three-bedroom apartment, is clean, files stacked neatly on few shelves, ample number of desks and chairs, a sole computer taking up half the space of one such desk. One of the rooms, with a double-bed, is reserved for visiting SKS personnel – field auditors and such.

With only ten-odd field officers and their trainees, 4,362 clients overall, and an outstanding loan portfolio of Rs. 2.9 crores, Mr. Mogulaiah’s Branch in the district of Medak in Andra Pradesh, the cradle of microfinance in India, is indeed a very small slice of SKS Microfinance.