SKI Charities founder, Shyam K. Iyer, is the first to admit that he did not invent the concept of microfinance. Nor did he pioneer the idea of extending microfinance opportunities specifically to women. Iyer comments,
“What we’re doing, we think it’s unique in the places we’ve gone, but I didn’t invent the concept of micro-finance. Muhammad Yunus, the Nobel Prize Winner from Bangladesh, pioneered micro-finance on the large scale, and he focused on women – which we replicated and are tailoring for our communities.”
Iyer was inspired to structure SKI Charities much like Muhammad Yunus’ Grameen Bank, a project that began in Jobra, Bangladesh in 1976. Touted as a “bank for the poor,” Grameen utilizes the concept of micro-finance to empower otherwise disenfranchised women. The bank does not require any collateral and focuses on a person’s potential, rather than their acquired assets. The Grameen methodology is one based on four specific principles: discipline, unity, courage and hard work.
Like any unconventional project, Grameen Bank began small. As of October 2011, however, the total number of borrowers was 8.35 million, of which 96% of them were women. Now, the bank has 2,565 branches and works in 81,379 villages. The staff totals at 22,124 individuals.
Yunus also pioneered the idea of solidarity lending, which places borrowers in 5-member groups. Though each individual is responsible for their own repayment, group members are meant to support and encourage each other’s endeavors and entrepreneurial spirit. SKI Charities adopted a similar model, Iyer comments:
“We also do solidarity lending so that they can support and monitor each other and help each other out. All of these concepts, including the idea of women, have been tested. It’s all been studied. People much brighter than me have written papers about it and done the hard research side of things.”
Treating borrowers with respect and autonomy has yielded excellent results for both the Grameen Bank and SKI Charities. The bank’s loan recovery rate is 96.67%, and so far, no SKI participant has failed to pay back her loan. “None of them have defaulted on us, which tells us that we’re doing it right for the environment that we’re in,” says Shyam.
“In fact, a lot of the women have taken me aside and said, ‘You know, you could be charging us more, it’s okay.’ Basically, we’re treating them with more standard terms. We give them a shorter time frame, we give them a month, and we do charge a very small interest rate. The reason behind the interest rate is, of course, you can’t go to any bank without an interest rate. And we’re not in the business of providing aid, we’re providing people with access to finance. So we treat them on an equal level, just like you or I going into a bank. We don’t want to receive free money, we receive a loan, with an interest rate, and we would pay that back and get these women to pay it back every month.”
Shyam contends that treating participants like empowered individuals “inspires the women and the families to work harder because they know that we respect them, that they are our equals, and that we believe it’s a community project.”
For more information and interesting facts on the Grameen Bank, click here.
