Credit Societies

Basic facts
The biggest burden that the families carry are the crippling debts. The interest rates go up as high as 15% per month which results in rapidly escalating debts. It is as good as impossible that a family can come out of such an oppressing debt. They have to disappear from the area and settle elsewhere unknown. Even cases of suicide or murder are not uncommon in such a desperate situation. The unfortunate truth is that our children's families are all debt-ridden. A loan is taken for various reasons, often unavoidable such as emergency medical help, house repair, marriages, school fees. And even if a family can sustain their jobs, the wages are too low to meet the minimum living standard, especially in a growing city like Bangalore, where costs are increasing rapidly. To make matters worse, over two-thirds of our children come from families with an alcoholic father, which of course means that even the bare minimum that is earned by the parents is insufficient to run the household.


For these reasons we formed Credit Societies, in line with the Grameen Bank model of Nobel Laureate Muhammad Yunus. We invested a corpus fund of Rs. 500.000 that was available for people who needed a loan. In order of priority the following areas are covered by the loans - children's education, for clearing high interest loans, medical expenses, towards self-employment, house repairs and construction of toilets or houses, obtaining gas connection, installing solar lighting.

Thanks to this initiative, siblings of our school children have been enrolled in private English-medium schools. Over 20 people have managed to open small businesses becoming financially self-reliant. In case of medical emergencies, people have found it highly beneficial to approach us for support. Timely treatment has been possible which in turn has saved lives because of this support. At least 10 families availed the loan for house construction and a further 15 families constructed toilets attached to their homes. With the gas connection, around 75 families are now able to save Rs 500 a month on fuel costs. Another 75 families obtained solar lighting which now gives them a saving of Rs 300 a month on the electricity bill along with uninterrupted power. But perhaps, the biggest support has been in ridding the people of their high interest debts. A whopping 80% of our children's families were ensnared in high interest loans and have come out of it thanks to our credit schemes.


Families avail the loan at an interest of a mere 1% which is charged towards our administrative costs. Shishu Mandir's role is in administering the loan and ensuring that repayments are collected on time.


March 2012