Microfinance brings major changes

DAILEKH, MAR 9: 

Until a few years back, locals at Baraha Village Development Committee (VDC) in Dailekh used to borrow from their wealthy neighbours insignificant amounts of loans. 

But, at present, microfinance initiatives in the village have ushered in a significant shift to their plight. People’s lives in the village have changed for the better after we started a group-based deposit and lending system, said Mina Gurung of Fulbari Saving Group in Baraha VDC. “Microcredit has become very useful for the poor because now they do not have to visit moneylenders.”

Most of the microfinance groups in Baraha VDC offer very small loans to the poor, usually women, to help them expand their small-scale businesses or start new ones, informed Prava Gurung who is also handling a savings group in the village. 

Local groups encourage farmers and women to save up to Rs 100 every month, according to her. They can utilise the amount when they need it. 

“People in the village have realised that small amounts of savings can provide relief during adverse situations,” she said. “The savings are being utilised for micro entrepreneurship such as vegetable, bee and animal farming, along with solving other monetary problems of the locals.” Obtaining loans from big banks is a challenging task for the poor, said Gurung, adding that they have to spend at least Rs 5,000 for food and accommodation to receive a loan of Rs 10,000 or even less because villagers have to go to the district headquarters to receive the loan.

“Generally, villagers do not need big amounts of money to fulfill their needs,” informed a member of Laligurans Saving Group Manishara Gurung. “They need small amounts to fulfill their general needs such as to buy fertilisers, seeds or animals.” So, it is not pragmatic for them to visit banks to get small amounts of loan, she said.

The interest charged on loans taken from local deposit groups is always significantly lower as compared to the rate charged by other credit sources like loan sharks and moneylenders, informed Gurung.

Source: THT