Mudimyal Dispatch

My last stop in India was Mudimyal, a village about 12 kilometers (7 miles) from Yarvaguda as the crow flies. Mudimyal has 25 self-help groups, which are "federated" into a Village Organization, a body whose membership is the head of the SHGs. The Mudimyal VO is turn federated with other VOs in its mandal, and mandal organizations are in turn federated at the district level, and district organizations at the state level. By luck, we arrived during a meeting of the VO. It took place in a simple, sturdy concrete building. By the time I arrived, half the women had left. Interestingly this meeting was overseen by men, who work for the local mandal organization:(More pictures here. Zoom in on the photo icons near the lower right of the map.)SHGs mostly get their finance from commercial and state banks. However, a separate funding channel originates with the World Bank, flows through the government to SERP (see previous post), and down through the hierarchy just described. SERP, my guide said, makes grants to the mandal federations. These lend to village organizations at 6% interest. These in turn lend to SHGs at 12%, using the profit to cover administrative costs and fund other non-finance programs. The main purpose of the meeting I found was to handle the routine business of repayment and disbursement associated with this financial channel. So the cash in this picture is World Bank money:This meeting ran long because one SHG---actually one woman within that SHG---was having trouble keeping up with repayments, and so had requested a new loan from the VO. The women and the men discussed the matter quite vigorously---whether to make the loan, how much to lend. In the end, they agreed do it. Watching these women so energetically discuss this serious business, I appreciated two strengths of the SHGs. First, they give women ownership and power over important financial decisions. Granted the women in this meeting, as SHG heads, were probably strong characters to begin with. But it seemed like a healthy thing to empower them in this way:Second, I could see the flexibility of the SHG lending approach, born of its communal nature. The women decided to join together to help one of their own. That flexibility, as I wrote in my Yarvaguda dispatch, can be extremely valuable. As I write in chapter 7, it enhances freedom. MFIs apparently tend to be far more rigid.After the decision was made, I asked the women about their loans, as I had in Yarvaguda. To my surprise, while all had loans from their self-help groups, almost none of these dozen women had outstanding loans from the new MFIs, though a few had taken and repaid in the past and one had an outstanding loan from BASIX. (See the Yarvaguda post for more on these categories.) Yet Krishna, one of the men running the meeting, had done a census of Mudimyal and found 265 women borrowing from MFIs in a village of 420 households. Unsurprisingly, this collection of SHG leaders is unrepresentative. They were probably better off, and so perhaps needed credit less; they also may have had access to larger loans from their SHGs. No suicide stories here.I was more careful this time to ask about uses of their loans. Among the objects of investment: schooling, home improvement, a new house, irrigation pumps, dairy (water buffalo), autorickshaws (3-wheeled taxis), and a photo studio. As for household income, some reported earning 300--400 rupees ($6.66--8.88)/day, but more referred to the 70 rupees ($1.55)/day women could earn by working on other peoples' farms (perhaps an overestimate of the average income since the work is not available every day).Toward the end, I had a Lant Pritchett moment. The women asked if they could ask me questions. Of course. Do you have SHGs in the U.S.? Nope...well, the Grameen Bank is operating in a few cities. I explained that I do my financial business solo at banks.After group photos and a farewell, my guide and I left Mudimyal for the Hyderabad airport. 36 hours later I was home. It was something to jump from their neighborhood to mine like that. As I walked along the autumnal sidewalks of Capitol Hill toward my sweet home and family, I found myself imagining how my life would look through the eyes of the women of Yarvaguda and Mudimyal for whom a $500 or $1,000 loan is an intense strain.