07 / 1994
The Colombo Distict Women’s Thrift and Credit Cooperative Society Limited popularly known as the Women’s Bank was set up in Sri Lanka with the aim of developing in urban poor families, a women centered savings and credit programme.
The programme was initiated by two NGOs, the Praja Sahayaka Sewaya(PSS)and the Kantha Sahayaka Sewaya(KSS).
To begin the credit scheme, the target population forms itself into groups. The groups operate autonomously for the first few months mobilising savings of their own.
Later the group is admitted as a member of the Women’s Bank and loans are made available to its members.
The loan scheme in the Women’s Bank works in 4 stages.
First the members are able to take loans from their own savings in the group. As the loans depend on the savings of the members who are poor, the loan amounts are very small, with a maximum borrowable amount at Rs. 100 repayable in a minimum of 5 months. The group has the discretion of deciding the loan amounts. These loans given from the members’ savings are called emergency loans and the sizes of the loans are decided at group meetings based on available savings. The emergency loan is a short term loan and repayment in full must be done within a short time.
In this system a default in repayment would cause severe hindrance to the working and the sustaining of the programme,but defaulters are rare as it is one community borrowinf their own money and each member is responsible for the effective working of the credit scheme.
The second stage in the scheme is the receiving of loans from the Women’s Bank on the group becoming a member of the Bank. These loans are given for emergencies, consumption needs and small scale income generating activities. Each group member is eligible to obtain a loan from Rs.250 to a maximum of Rs. 500, repayable in a period of time ranging from 4 weekly installments to a 5 month time frame. The second bigger loan is granted once the first is repaid in full. Each loan carries a service charge of Rs.10.
At the third stage, loans range from Rs.1000 to Rs. 2000 repayable in a maximum of 18 months and these loans are given for consumption and other needs and small scale income generating activities.
At the final fourth stage the minimum loan is Rs.2000 which are consumption loans. In addition members can receive small scale income generating loans(Rs.1000), housing loans(Rs.15,000)and short term ceremonial loans(Rs.5000)and long term ceremonial loans(Rs. 10,000)which are for functions and ceremonies.
The group is collectively responsible for the loan repayments and as the loans are first obtained for the whole group, the group has to continue to pay the repayments even if one individual defaults. For defaulters, the group as a whole is fined. Foe one day of delay in repayment, a fine of one week’s interest is imposed. Further a group which has been fined twice in one loan transaction will not be eligible to receive an increased loan in the next stage. If a group is fined three times, the penalty would be a reduction in the loan package and suspension of special loans.
As in the Grameen Bank Approach, the Women’s Bank follows a compulsory savings scheme where each member pay Rs.5 weekly towards the savings. From every loan a member obtais, 5% will be deducted and credited to the member’s savings.
The Women’s Bank exercises a severe penalty system where when one member in a group defaults in repayments, the entire group is punished. This system seems effective from the point of view of the organisations implementing the credit scheme as it ensures full repayment of all loans. But is this severe system fair on the poor beneficiaries who are promoted to deposit their meagre incomes as savings in the Women’s Bank and then severely penalised (fined, loan increases cancelled and special loans suspended)for the defaults of a fellow member over whose loan utilisation they had no actual control over?
Articles and files
GAMAGE, Nandasiri, KANTHA SAHAYAKA SEVAYA=WOMENS' ASSISTANCE SERVICE, WOMEN'S ASSISTANCE SERVICE, 1993
IRED Asie (Development Support Service) - 562/3 Nawala Road - Rajagiriya - Sri Lanka Tel : 94 1 695 481 - Fax : 94 1 - 688 368