Financing a Dream

Stardate 64495.6 

20:08 IST - As our first outing in India, we visited the workshop and home of a recipient of microfinance services. The purpose of microfinace services is to offer the poorest a way to borrow and save money.  In normal situations, banks make clients offer up collateral for a loan or have a minimums balance to open a savings account.  However, the poor do not have the collateral or the minimum amount in order to do business with the banks. Over 60% of Indians do not have a bank account; therefore, they cannot obtain these financial services.  Companies and NGOs, such as Basix, help deliver these services.  In many cases, the poor only need loans of a few hundred dollars to make their goals a reality.  These small investments in their futures make huge returns in the form of more income and better, more sustainable livelihoods.
Our small, tired from jet-lag and famished group traveled about an hour to another part of New Dehli where we came to a place where our small complaints were not warranted.  Roughly 20 Americans huddled into a small workshop in a smaller neighborhood in New Dehli.  We watched and listened as 5 women told us about their experiences with their loans and businesses. The owner of this particular workshop space served as an informal leader of the group to explain her whole process.  Rinky is a 26 year-old women of New Dehli who had taken out a loan to buy sewing machines. With a 10,000 Rupee loan (roughly $250), Rinky could buy four sewing machines to start her business of re-purposing old jeans from the US into pants worn by Indians.  At a profit margin of 2 rupee per jeans, she began growing her business and now employs four people.  Rinky expanded her business to now have roughly 6 sewing machines and a machine to put elastic in the waist band.  Her new plans to expand include moving into a new living space in a nicer neighborhood to separate her workshop from her home for which she has already taken out a small home loan for.  Besides microloans, Rinky and her husband have been able to purchase small forms of health insurance to cover their hospital visits.  Also, Rinky pays into two pension plans: one for her and another for her husband. This 400 rupee contribution makes 10% interest and will be delivered to them when they are 58 years old.  Orphaned at a young age, started working at the age of eight, and finished the 10th year of school, Rinky never imagined that her and her husband would be able to obtain this type of success. With a thriving sewing business and her husband's cd business, she can support her younger siblings and help support her husband's family.

Although microfinance allows recipients to pursue their dreams on their own, it is not a cure for the rampant amounts of poverty in India and across the globe.  Basix attempts to provide other services such as pension and savings plans, education, and insurance.  The idea behind this multilateral approach focuses on the need to continually help the recipients to continually reinvest in themselves and grow out of poverty.