Tag Archives: loan


Not too long ago, I wrote a post that generated quite the discussion on credit and credit cards in India. As a followup to that, I thought you might find this positive article interesting. It came from one of the Outreach members of the American Women’s Association in Delhi. (You’ll notice the difference in writing in India – in the U.S., the word scheme would immediately hint at a negative program – but this is a positive article.)

Launch of Credit Scheme for Slum Dwellers

Asha made history on Tuesday 28th April by launching a loan scheme for the slum dwellers of India in collaboration with The Ministry of Finance, Govt of India and 9 national banks. The Chief Guest at the function was Mr. Arun Ramanathan, Secretary (Banking), Ministry of Finance, Govt of India, the senior most civil servant in the Banking Division of the Govt of India. The Guests of Honour were Dr KC Chakrabarty, Chairman and Managing Director, Punjab National Bank, and Mr. Gautam Kanjilal, Chief General Manager of State Bank of India, the national heads of the two largest banks in the country.

Dr Kiran Martin, Founder & Director of Asha, delivers the welcome address

Also present were the Chiefs of the other 7 national banks, the New Zealand High Commissioner to India, Mr. Rupert Holborow, Deputy British High Commissioner Mr. Creon Butler, Irish Deputy Head of Mission Pat Bourne, diplomats, dignitaries and over 300 slum dwellers from all over the city.

Loans were given to slum dwellers from all over Delhi for a diverse range of purposes, including the opening and expansion of shops and businesses, purchase of vehicles and construction or improvement of homes. 58% of the borrowers were females and 42% were males. The cheques were distributed to the borrowers on stage by the Chief Guest and the Guests of Honour, in the presence of Asha’s Founder and Director Dr. Kiran Martin and other Asha trustees.

Chief Guest Mr Arun Ramanathan, Secretary (Banking Division), Ministry of Finance, Govt. of India hands out loan cheques to slum dwellers

Dr Martin, the initiator as well as the driving force behind this scheme, remarked in her speech that, when properly implemented, the scheme can greatly increase the country’s GDP through creation of national wealth, and said that “by becoming a force for liberation and transformation, we will be able to change the social and economic landscape of our country”.

This is for the very first time in the history of our country that slum dwellers have been able to directly access formal banking services, a process known as financial inclusion. They have so far always been financially excluded, and have been relying on loan sharks and other exploitative arrangements for their financial needs. This scheme enables slum dwellers to open zero balance bank accounts and receive loans at a very low rate of interest with no collateral required. The application procedures have been made very simple and the loan amount can be as low as US$100 or as high as US$5000, depending on the profile and the repayment capacity of the borrower. The repayment period is between 2 and 5 years, but there are no penalties for early repayment.

Slum dwellers and borrowers from all over the city attend the function

The pilot scheme implemented by Asha and these banks in 2008 created a very substantial enhancement in family incomes and standard of living, and a stunning repayment rate of 99%, proving to all that slum dwellers were indeed bankable. The phenomenal success of the pilot resulted in the Ministry of Finance and the national banks taking a policy decision to implement this scheme all over Delhi and then India.

The major difference between this revolutionary scheme and the traditional self help groups is that in this scheme, each slum dweller has a direct relationship with the bank, and can access the same banking services as any other Indian citizen. The interest rate on loans is much lower (9%) than that paid by members of self-help groups (18-22%), because of the high administrative costs of running the self-help groups and the involvement of intermediaries. Also, most importantly, the loans given to members of self-help groups are very small, usually not more than US$300. This is often insufficient to make a substantial difference to the living standards of a slum family.

Slum dwellers are establishing their creditworthiness in the market, are able to participate in formal economic activity, and are joining the mainstream of society. They will experience not just a cosmetic effect, but a very real improvement in their standard of living, as has already been demonstrated by the 2008 pilot scheme. They can now hold the hope of leading a life of dignity just like other citizens of our country.

Banks are making profits based on large volumes, through funds in the current accounts of slum dwellers, giving loans and receiving prompt repayments, and providing other banking services such as remittances.

Domestic Dispute…….

When I was in college, I was in a sorority and we would have roundtable discussions – where we were free to voice our opinions and let others know what was bothering us. But in the spirit of sisterhood, we were not allowed to specifically mention another sister’s name. So we would start our discussion with “sister x” did this or “sister x” should really think about this. Well let me tell you about “cook x”.

Anyone who has lived in India for at least 5 minutes has a domestic staff story to tell – so the fact that it has taken us 7 weeks to earn our story to share is probably pretty good.

Number One Hubby hired our cook the week before the kids and I got here. He speaks good English, cooks American food, irons clothes well, and was supposed to have making bread as his specialty. He agreed to cook, clean, and do laundry for a family of five. And he promised to make yummy homemade bread. (The way to our family’s heart is with with yummy homemade bread.)

Enter a family of five.

First day:
Oh boss, I cannot cook, clean, and do laundry for a family of five. And, I need a raise. Yes, on his first day.

So, we continued with Ravi who was cleaning just for hubby. He comes in for 4 hours a day and is thorough and unassuming and very kind. So, that’s okay. We like him and not having to let him go was okay with us. Now cook does not have to clean.

We even gave the cook a raise. A 20% raise. We liked him too. (Just in case you are new at this whole staff thing – apparently, you start with someone on a temporary basis and a lower salary – then after a few weeks, if you plan to keep them, you give them a raise. We got to the whole raise thing a little early.)

So then he asks for us to include bus fare in his salary. This is really not a big deal because bus fare usually does not run more than $20 a month (and that is on the high end). So, bus fare it is. I think it might have been $10 for our cook.

We did not pack our kitchen up and bring it with us. We have just gotten things as we realized we need them. There has not been one thing he asked for that I did not get. Not one.

From what I can gather, domestic staff usually work about a 12 hour day in India. Our cook generally worked a 9-hour day and had most Saturdays off completely – or if he worked, he just worked a few hours.

Then our cook’s wife started a new job and they were moving. So we gave our cook several days off of work to move and coordinate moving.

Along with the move came the need for a security deposit. I don’t know if you just heard the collective gasp rolling across Delhi – but the number  one rule in having domestic staff is to NEVER lend them money.

We lent him money. I know, I know!

He was to pay it back over 5 months. Honestly, I will not regret this decision. We immediately agreed that it was the right thing to do. It was not so much money that it was life changing to us – but it was for our cook – and it helped him get a roof over his head. So, we did it – and, yes, we would most likely do it again.

Our cook was not happy with our smaller washing machine – so we have ordered a larger one. Our cook was not happy with our fridge – so we got a larger one.

Finally, our cook’s new digs did not have drinking water – so every night he would take lots of water home with him. We were happy to let him do that.

And quite possibly the straw the broke the camel’s back – the cook never made the promised bread for hubby. That was not a good idea. A fresh, warm loaf of homemade bread forgives a multitude of sins.

So, what I am saying is – he had it pretty good.

Or at least we thought so. Apparently he did not agree. He wanted a uniform allowance. Which is not uncommon – but we felt that we had given quite a bit already. (Again, if you are new to having staff – what I have found out is that it is normal to give domestic staff a clothing allowance for summer and fall. And a bonus at Diwali. But that the clothing allowance generally comes after they have been with you for 6 months or so.)

Hubby said no. Here is a note to staff – perhaps it is prudent to begin paying back the one month’s salary before you ask for a uniform allowance. Just think about it – ‘kay? Especially if you are new to the family.

Then he asked hubby again. The hubby said no – again.

Hubby is not impressed with having to say no again.

Our cook has been working for us for about 5 weeks at this point.

Then our cook asks me. Here is a second note to staff. If my hubby says no to you twice – I am not going to say yes. I err on the side of hubby. Period.

I told him he had to talk to the boss about it – that was his department – I can tell him what we want for dinner – that is my department.

Hubby overheard him ask me. Note to staff number 3 – it is not wise to try to win the wife over in earshot of the hubby. Not very wise at all.

So hubby comes into the kitchen and gives me a way out of the conversation. Thank you hubby.

But hubby is not done with the conversation.

Hubby outlines all of the things we have done. Cook tells hubby that hubby just does not care and that the wife is more understanding. Do I need to insert the fourth note to staff here – I bet I don’t – I bet you know all by your lonesome just what it is.

Needless to say, after talking in circles with our cook, my hubby invited our cook to leave and walked him out the gate.

It turns out that our cook had been bad-mouthing us to our driver and Ravi. They both are happy that he is gone. We both felt bad about letting our cook go – until we heard this. Note to staff number 5 – do not bad mouth your boss to the other people who work for him. They will sell you out. Quickly.

So, while I will miss his pasta salad, I now have a domestic staff story. We have two leads on new staff people – and you know I will let you know how it goes!