The Modi government's Pradhan Mantri Jan Dhan Yojana was widely welcomed by politicians and civil society alike. Few know, however, that a bank in the Jorhat district of Assam has been helping the poor open bank accounts successfully for more than 14 years.
The Konoklota Women Urban Cooperative Bank was founded under the leadership of Lakhimi Baruah on February 26, 2000, years before former Union Finance Minister P Chidambaram announced the setting up of an all-woman public sector bank to bring about financial empowerment for women.
The bank today has over 34,000 account holders, of whom a huge number of women are illiterate.
I had worked at a bank till 1990 myself and I was always aware about the difficulties faced by women, especially poor, deprived and illiterate women, in banking. When I started the bank, my vision was to empower such women, and today, when I look back, I feel I have been able to contribute towards women's empowerment in some way, says 64-year-old Baruah, managing director of Konoklota Women Urban Cooperative Bank.
Its working capital is over Rs 7 crore. The bank has three branches in Jorhat district and one in the neighbouring district of Sivasagar. A new branch is coming up in another neighbouring district, Golaghat, soon. The bank has also written to the government for permission to set up at least one branch in all 27 districts of Assam.
Gaideema Telenga is illiterate. She works as a daily wage labourer at a tea garden in Jorhat and earns only Rs 490 a week. She didn't know anything about savings or bank accounts until she attended an awareness camp conducted by Baruah. She opened an account with the bank the day after.
Today, four years later, Telenga has managed to save Rs 6,000 in her account. She has also withdrawn money in times of need.
Earlier, we never had any savings and during times of monetary need, we had to approach money lenders who charged hefty interest. But things changed after I learnt banking and opened this savings account, she says.
She adds that the approach of the officials of this bank is different from that in bigger banks
In bigger banks, poor and illiterate people like us are paid no heed at all. But, here, we are provided assistance at every step. The bank employees are very welcoming. They help us fill withdrawal forms and we just put our thumb impression, she says.
Lakhi Rani Agniborah, branch manager of the Jorhat branch, attributes the success of the bank to this friendly approach.
Many of our customers are illiterate and belong to marginalised sections of the society. They feel shy of speaking to people. We ensure that such people are not neglected and are given all the help and attention, she says.
The bank requires only Rs 100 as the minimum balance to open an account, compared to a minimum opening balance of Rs 1,000 in big banks.
There are hundreds of thousands of people in the state for whom even a meagre amount of Rs 100 is huge. Old-age pension for people is less than Rs 100 a month. It is almost impossible for them to open an account elsewhere. So we decided to fix that as the minimum opening deposit, says Baruah.
Another beneficiary, 40-year-old Subhadra Sangmai, works as a weaver and earns between Rs 1,200 and 1,500 a month.
I had always wanted to save some money. After opening the account, I started saving on a regular basis. Baruah ma'am also offers us guidance in saving money, Sangmai says.
She now has Rs 5,000 in her savings account.
Teaching banking and entrepreneurship
The bank has also started educating illiterate and marginalised women about banking.
We have started a small movement for financial empowerment of women. The movement must now go on and whenever we have time, we organise meetings in remote areas, says Baruah.
Baruah says that their awareness camps have encouraged even young girls from communities in tea gardens to come forward to open accounts in the bank.
The bank is also taking steps to empower women to start small entrepreneurship activities.
We offer customers with guidance about loans and becoming entrepreneurs. It is encouraging to see women, who had always thought they would have to depend on their families, take up different small-scale entrepreneurial work such as poultry, piggery and weaving, says Baruah.
The bank offers low-interest loans to women who are interested in starting small businesses. It ensures that the loans are sanctioned within a stipulated time frame and helps customers with loan application formalities.
The stipulated timing for sanctioning a small loan of Rs 2,000 is a few hours. Sanctioning a bigger loan of Rs 50,000 takes about a week. This quick sanctioning has, however, not affected our loan recovery, which is over 93 per cent, says Agniborah.
Three years ago, 29-year-old Rubi Bora found it difficult to provide even Rs 100 to open the account. Today, she has managed to earn Rs 78,000 with loan assistance from the bank.
I opened the bank account in 2009, and in 2011, I took a loan of Rs 25,000 to invest in poultry. It was successful and I was able to pay back the loan in one year. In 2012, I again took a loan of Rs 25,000, with which I improved my poultry business. After repaying the second loan, I borrowed again and invested the amount in the tea business, says Bora.
Bora buys processed tea at wholesale rates from neighbouring tea gardens and sells it from door to door. She has bigger plans for next year.
I plan to take a loan of Rs 40,000 and set up a small shop to sell the processed tea and run the poultry business. I aim to increase my savings to Rs 1 lakh next year, Bora says.
Another beneficiary, 39-year-old Geeta Baruah, started her sewing business in 2005. She made almost no profits. Today, she is a small-scale entrepreneur with five employees under her. She manages to earn over Rs 15,000 a month.
She took two loans of Rs 1.5 lakh each, in 2010 and 2013, to boost her business.
With the first loan, I turned my sewing business into a small-scale industry. With the second loan, I expanded it further. Today, we have a small factory unit and an outlet. Besides, we are planning to start a small shop selling essential items for women soon, says Geeta Baruah.
She adds that she had approached various banks for a loan, but was refused by each of them.
Thirty-two-year-old Sheela Borthakur was surprised when the Konoklota Women Urban Cooperative Bank expressed its willingness to help her with the loan process.
I wanted a small loan of around Rs 15,000 to expand my beauty parlour. But no bank was willing to lend as I didn't have any movable or immovable assets to pledge. The approach of this bank was, however, completely different, Borthakur says.
In July this year, I applied for a loan and was surprised when it got sanctioned in less than a week. I immediately purchased the material I needed and now, my earnings have gone up by almost 50 per cent, she adds.
From strength to strength
The bank has tied up with local non-profit Jana Bikash Kendra to extend loans to people for small-scale businesses. It encourages women to form groups of 10 and gives each group a loan of Rs 1.5 lakh. This amounts to Rs 15,000 per woman.
This loan is given under the Konoklota Savalambhi group loan started last year. No guarantor or security is required for this loan. Each woman is the other's guarantor, Baruah says.
One woman is appointed the group coordinator. She ensures that all the members in her group repay the loan.
Several private money lending organisations and microfinance companies lend money at a much higher rate, from 22 to 26 per cent. Our interest rate is much lower at 15 per cent, says Baruah.
Till date, the bank has given such loans to 64 groups, with at least one group in each of the 19 municipal wards in Jorhat town.
We have tried to ensure that the word regarding this loan spreads and that women who are interested in starting a small business can come forward to borrow from the bank, says Munin Bhuyan of the Jana Bikash Kendra.
Banking experts like Nirmala Borah, a professor of economics at JB College in Jorhat, points out that the bank needs to be more aggressive in lending and asset-building.
The bank needs to have publicity drives, says Borah. In order to grow, the loan amount has to be bigger and the bank needs to be profit-oriented.
The district administration and the state government have lauded the role of the bank, saying they will do their best to support its activities.
I have heard about the bank and how it has helped thousands of poor and marginalised women. If possible, the district administration will try to help the bank through the National Rural Livelihoods Mission (NRLM), says Vishal Solanki, deputy commissioner, Jorhat district.