Asha for Education

“To empower the poor and underprivileged women to become economically self-reliant by providing cost effective and need based livelihood financial services in a financially sustainable manner”

SAMRUDHI adapted the pioneering Grameen Bank (Bangladesh) approach to local modification. It lends to five-member groups of women and designates the group member the ultimate guarantor of each of its members. If one member does not repay, no individual in the group is eligible to receive another loan. Default member’s loan has to be paid by remaining members of the group.

The keys to this approach include:
• Social Collateral. The poorest do not have physical assets that can be used as security. Instead, borrowers organize themselves into groups that take collective responsibility for repayment of one another's loans.

• Doorstep Banking. Providing financial services in the villages enables the rural poor to collect that day’s wages and avoid the costs of travel to mainstream banks. The illiterate poor are also unable to complete loan applications, which often require several trips.

• Customized Products. SAMRUDHI designs loans with small, weekly repayments corresponding to wage structures, consumption and income generating loans to prevent emergency “distress sales,” and small first loans to inculcate credit discipline and collective responsibility. Interest and loan repayments are made equal for easy comprehension.

• Focus on Women. SAMRUDHI works exclusively with women because they are the most marginalized among the poor and because they tend to invest the majority of their income into the household and for their children. Women also typically undertake small, manageable activities.