Does present Bank / Financial Institute useful for Under Privileged Citizens?

Does present Bank / Financial Institute useful for Under Privileged Citizens?

Present Market Condition: Analysis has identified that the present cost of financing to the under privileged citizens is as high as 10% per month and in some cases it is 10% per day also. This is done through money lenders as these citizens are non bankable. Due to high rate most of the profits goes to lender, leaving a little for them. Many a times it has been observed that a small loan bind them as bonded labourer for life. 

Even Bank / Financial Institute just provide finance only and nothing else

Case Study: A vegetable vendor needs Rs 2000 to buy vegetables and he sells the same throughout the day earning Rs 2500. The amount to purchase vegetable is taken from the money lender where he has to return Rs 2200/- (with 10% interest) by the end of the day. The vendor carry home Rs 300/- as his earnings. This is normal for the vendor as it is his daily routine and is been followed by his family since long. The vendor does not notice what he is losing out.

Bank / Financial Institute may provide finance, but who will teach them make better use of funds and earn better returns.

The conventional lending whether bank or any institute is on principal of Interest and Risk Transfer. It does not enhance the productivity or capacity of the borrower.

With the conventional lending the lender is interest in the Interest and Transferring the Risk. Here there is no feeling of any obligation, its mere transaction.

Our Model: Our project aims to provide Interest Free support along with the focus on Capacity Building i.e. Training on Skills, Soft Skills & Life Skills to see that overall resultant improves on management so do standard of earning. This even reduces the risk of business failures.

The participation in the profit & risk of the business the beneficiaries, forces to understand the business needs and provide the right advice for uplifting of the same, use the resources, so as to improve earning and profits. It also reduces the chances of loss or any risk. The overall features see that beneficiary is benefited and so do the social investor.

Some part of Profit so generated is given back to the scheme by the beneficiary, providing him the pride of contributing back to the society. This feature helps in creating the brotherhood emotions and makes beneficiary from TAKER to GIVER. Teaching them JOY OF GIVING..

Part of the corpus so collected by the project is distributed to the Social Investors as dividends, built corpus for the project and some part is used for the other objectives of NGO.

Now with this model lets see the above case:

Now once we support the vendor with Rs 2000/- he has to pay just Rs 100/- for 20 days and take home Rs 400 per day and the full amount of Rs 500 from 21^st day. The Income has appreciated from Rs 300 to Rs 500 per day i.e. growth of 67% and extra saving of Rs 73,000 per annum which used to go to the money lender as interest. Now once the same is made understood to the beneficiary along with training and consoling the beneficiaries and our staff decided what he wish repays extra from his earning / profits

This is what we call Inclusive Growth. If you agree put in your comment and or talk to Mr Zoher Doctor on +919824063400 or e-mail vikastrust1@gmail.com, who has worked on this concept and put the same in practice with his NGO Vikas Trust MicroFinance Welfare Project. Join us as Social Investor