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month. Starting with a loan amount of Rs.5,000 per member in 2008 they have now gone
on to lending up to Rs.50,000 per member.
In 2008 they charged an interest of 24% which was diminishing every month. After
meeting members of other groups in interactive meetings, they felt that they can reduce
the interest rate to 12%. It was at this point that they have realized that they have to
increase the corpus and hence increased the monthly amount saved. Often they
encountered members who found it difficult to save between Rs.100 to Rs.200 per month.
However these members realised the benefit of increased savings from the fact that it can
earn an increased income for them. They felt that they could buy or use this interest
income for a substantial product. They also felt that since these loans were used mainly
for tiding over consumption smoothing they felt that the interest rate could be reduced.
We find that initially they divided the interest income every two years but have of late
resorted to dividing the same every year.
Benefits of Savings
One of the main reasons they saved and increased the savings amount was to get the
interest accrued once in two/one years. They strongly felt that they were replacing the
local money lenders who charged interest above 100%. As a group, they felt that they
were taking care of the needs of the members and there was no incident of discomfort
among members while deciding who to give the loan to.
Since savings was very well catalogued by the animator of the group each individual in
the group knew how much savings they have and how much interest income they will get
at the end of the period.
