Sumita Bauri and her husband worked as daily wage earners in a village in Bankura in Bengal's Midnapore division. With the money they made, they barely survived. So, when a non-government organisation (NGO) tried to interest the women of the village in a football-making workshop, Sumita signed up.
Soon after, Sumita took a microfinance loan - as advised by her trainers - and started her own football-making venture. For some months things seemed to be panning out exactly as Sumita had envisioned. She made the footballs at home and the NGO collected these and took them to different cities, where they were sold.
Then one day the NGO withdrew support. The cost and effort of ferrying the footballs to the city proved too much for Sumita to sustain. Before she knew it she was back labouring in the fields. Thankfully, though, the denouement came after the loan had been paid off.
Basanti Mandal, a resident of Thakurnagar in North 24-Parganas, was not as lucky. She took a microfinance loan to buy a goat. Her plan: to pay it back after selling the kid the goat would in time give birth to.
Microfinance, however, doesn't work that way. You need to start paying your instalments within seven days of the disbursement of the loan.
So Basanti kept borrowing from other sources to pay all those instalments. By the time the goat had a kid, no one in the village was interested in buying it or the milk because like her, most families already had loan and goat. Eventually, she sold both goat and kid to settle the loan.
People like Sumita and Basanti help the microfinance industry - which largely targets women - maintain a 99.99 per cent recovery average, a golden figure in the world of loan recovery. But while these two could haul themselves out of debt, most borrowers cannot. At least, that is what Calcutta University (CU) researcher Tanusree Chakrabarty has observed from the study she conducted across four districts of Bengal - Bankura, Purulia, North 24-Parganas and Murshidabad - on behalf of the National Commission for Women.
"They take a microfinance loan from one institution and then another from another institution to pay the first one back," says Chakrabarty, who is also associate professor at CU's Women's Studies department. "Most of them do not calculate - or cannot - how much they are paying back," she adds, arguing that microfinance institutions take advantage of this gap.
She also points out that instead of using microfinance to start something that will earn them more money, most women use the loan to fund two-wheelers for the men in the family or a wedding. Microfinance institutes, typically bothered only about loan recovery, are happy to look away.
Ishita Mukhopadhyay, professor and head of CU's Women's Studies department, has issues with the easy availability of money, the consequent debt trap and the vulnerability of borrowers born of their lack of education.
Kapilananda Mondal is founder-secretary of social developmental organisation Vivekananda Sevakendra-O-Sishu Uddyan. According to him, it is awareness rather than education that holds the key. He cites the example of a young graduate from South 24-Parganas' Kulpi, who approached him for a loan of Rs 30,000 to set up an electrical shop.
When Kapilananda asked him if he had done his research - how many such shops were already there in his neighbourhood, how much money they made and so on - he drew a blank. What followed was a long chat about return on investment, and at the end of it the youth decided not to avail the loan.
Kapilananda, who has been disbursing microfinance loans through his NGO for close to three decades, believes that to empower the poor, it is not enough to point to easy finances and teach a new skill. It is imperative borrowers be taught where and how to sell it.
He does not hesitate to call out the bluff most ambassadors of microfinance are happy to perpetrate. "There is no improvement in the lives of 70 per cent of those who take loans. Yes, they may pay back, but that makes microfinance a success only for the banking industry." He is also loath to believe the 99.99 per cent figure.
Ashok Lahiri, the CEO of Bandhan Bank, does not share his skepticism for obvious reasons. "People in a debt trap will eventually be unable to pay the instalments of their loan. Our clients have not defaulted; that shows it is not the case," is what he has to say.
CU's Mukhopadhyay acknowledges that the scene here is not as bad as in Tamil Nadu where microfinance borrowers are committing suicide. "But we are on that path," she cautions.
The business of microfinance might be a brand success, but its social impact could do with a good deal of monitoring.
