Microfinance savings groups

Whenever possible Karuna's projects help people to become self sufficient. Instead of giving material help, they try to create situations where people can come together to find common solutions to their own difficulties. Savings schemes have been one of the most successful projects in accomplishing this.

The idea is simple; at the beginning of every month a group of women come together and contribute a small amount of money, typically around 75p to a communal fund. Then at the end of the month members meet and are given the change to apply for a small low-interest loan to start up small businesses. If approved, the woman borrows the money, puts it to use, hopefully makes a living from the initial outlay and pays the money back into the fund.

An example…

Vayjanta applied for a loan of 500 rupees (£7.50) to start selling fruit and vegetables outside her hut. She used the money to buy her first stock of vegetables from the local market. From this business she makes a small profit of 30 rupees (45p) per day to help support her family. She was able to repay the original loan within the first three months.
"Before, I hardly knew my neighbours' names. Now we are coming together to improve each other's lives."

Woman busy making a new life for herself

One of the most positive aspects of the groups is that they promote a strong sense of collective responsibility; women don’t want to let down the group. So far, there has not been a single case of a woman defaulting on a loan. The team is now looking into the possibility of setting up a small co-operative bank capable of making larger loans for projects to improve the lives of people living in the slums.

Karuna has helped Bajutan Hitay and Jeevak setup over 100 savings groups which have more than 1500 members, they cost very little to set up and become self-sufficient very quickly.

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