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More loans from Sri Lanka and re-launching in India

2 Jun

We are excited to announce that Berendina with whom we have been working over the past few months has got a significantly larger loan approved from their lending bank. This would mean that we will have many more loans from Sri Lanka on our website.

On top of that we are excited to announce that we will be launching in India with an online lending model. Many of you may wonder why we are launching a lending model when we have pioneered the guarantee model and when there are other organizations that have already proven the lending model. The reasons are simple:

We have learned that the guarantee model shows dramatic results when there is a certain degree of stability in the local microfinance market. If the stability is not there, banks are unwilling to lend to local microfinance institutions even with a guarantee.

Thus in several countries international lending may be the only viable model before banks are willing to step in and lend to local microfinance institutions with or without a guarantee.

There is a lot of work to be done to ending poverty. There is an urgent need for several organizations to be involved in fighting poverty at local and international levels. No one can do it alone.

The lending model is a means for our generous lenders to support communities where we are unable to make the guarantee model operational.

Over the last few months, we have been working with two microfinance institutions, Prayas and Mahashakti foundation, who will be our first set of partners in India. We are at the final stages of the paperwork and once we get a loan registration number through the Reserve Bank of India, we hope to have loans online in the next few weeks.

Prayas works in Kutch, Gujarat and Mahashakti foundation works in Orissa. Mahashakti foundation is also a Kiva partner.

While all this has been going on, Richaa Pokhriyal who has joined us as Project Manager out of New Delhi, India has been working with the team at Josh software to make changes to our website to support both the lending and guarantee models.  Richaa is the first salaried team member for UnitedProsperity.

We would like to thank our supporters who have stood by us through our long and at times tortuous journey. We are here because of your generosity, patience and resilience. Thanks once again.

Sri Lanka field visit

17 Feb

This is a post by Gautam Rege of Josh Software.  Gautam Rege and Sethu Ashokan are the co-founders of Josh Software in Pune, India.  Josh Software is one of the experts in building software with Ruby on Rails. They have graciously agreed to support the ongoing development of the United Prosperity website on a pro bono basis. They also volunteered to do a field visit to Sri Lanka to see how their contribution is directly impacting people’s lives.  They no doubt live up to their company’s name Josh that stands for enthusiasm and passion in Hindi. The post by Gautam Rege follows.

Bhalchander

_______________Blog post on Sri Lanka visit by Gautam Rege _________________

In the first week of February, Sethu and I were on a field visit to Sri Lanka that was organized by Berendina Micro Finance Institution (BMI) and UnitedProsperity. Little did we know what’s in store for us but we have come back home changed and inspired.

The visit agenda was to study the impact of the micro loans that Berendina provides to their customers and to see its impact. UnitedProsperity has been involved in providing the micro guarantees for these loans.

We arrived at Dickoya branch near Nuwara Eliya in the morning. A 4-wheel drive was required to scale treacherous uphill and winding roads. This branch services about 4000 micro-loans and is managed by just 6 Microfinance officers. After a brief presentation on what they do, we set off to meet the people who have been helped by these loans. The clientele varied from a house-wife whose has stared a business of incense sticks, to a person who has setup a shop, to a person who has purchased a cow for this small dairy and even a plantation worker who has built his own toilet! This post later contains some photos and videos about these people and the loan impact. What I shall talk about here is how this impacted us and what I felt was wonderful about this entire setup.

Berendina has been around for more than 25 years and their meticulous approach to doing good as a non-profit is seen in their actions. They have an innovative way of providing loans.

  • 3 beneficiaries form a group
  • 10 groups form a cluster
  • 30 clusters are managed by 1 branch officer.

This way 1 branch officer manages about 900 customers! There are regular cluster meetings where the money is recovered on a monthly basis and the group is responsible for their re-payment. This encourages the group to work together and support each other, even on repayment. In some cases to ease the process, BMI also gives loans to co-operative society as a bulk loan.

But Berendina doesn’t just stop there – they also have a Berendina Development Services (BDS) that is targeted only for improving the quality of life. One of the innovative approaches is about giving coupons for training camps – “Livelihood training”, “Entrepreneur accounts management” etc. These coupons are part of the loan and can be redeemed for training or they can get the cash value back in the case of unused coupons. This enables people to not just avail loans but also get some vocational guidance, education and knowledge. To my knowledge very few microfinance institutions anywhere in the world have implemented such a program.

The plantation worker story is an awe-inspiring one. BMI is the only Microfinance institution that supports plantation works whole-heartedly. Plantation workers are those who have been working for all their lives in tea plantations and are considered very high-risk customers for repayment. Their living conditions have traditionally been very poor. BMI strives to improve their quality of life by providing toilet loans, health camps, eye-checkups and even cataract operations all free of charge as part of their BDS initiatives.

Lets meet some of their customers:

Here are some memorable photos:

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The Berendina office, which houses Kishore, the Branch Manager and his 6 Branch Officers.

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Parthiban – the Hero of the day. He has received the entrepreneur award from Berendina.

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The old and the new hygienic changes that Berendina is bringing about. The plantation workers earlier had common open toilets as opposed to the new private clean toilets.

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The Happy Shopkeepers – Srikumaran and Bhuvaneshwari – their lives have changes after the loans they got from Berendina.

We also interviewed several clients and here is video of our interviews: Berendina visit video

We were also highly impressed by the transparency, dedication and commitment of the Berendina team. Travelling with them through the long day in a tough terrain, we were amazed to see that their energy level never flagged and they seemed to be going on an on like an energizer bunny.  This visit has energized us even more to do our bit to ending poverty.

Launch in Sri Lanka – new loans online

5 Dec

We are delighted to announce that we have partnered with Berendina Microfinance Institute in Sri Lanka and we have new loans online. It has been a long wait, and the wait is over.

Berendina  was originally started as a Trust named Berendina Stitching in 1987 by Mrs. Berendina Borst of Netherlands.  Over time the activities grew and Berendina Microfinance Institute (BMI) was setup in 2007.

There are several reasons why we decided to choose BMI as a partner:

BMI works directly with the borrowers rather than adopt a community based approach that is common in Sri Lanka. Thus they are able to reach the most vulnerable sections who are often neglected by the community based approach.

BMI works in difficult areas that are further away from densely populated towns.  During the floods of 2011 in Sri Lanka, in some areas they had to visit their clients by boat.

BMI works closely with Berendina Development Services in creating livelihood opportunities, health, sanitation and other areas.

They work with 280 private sector companies to create employment opportunities for the youth.

BMI has also been an innovator in several areas and has pioneered interesting approaches such as ‘enterprise and technical training’ for clients who take the enterprise loan.

The launch in Sri Lanka is an important step forward. We have survived the tough microfinance crisis in India and were able to successfully return 100% of the money loaned by lenders.

We are back on our feet now  and we  plan to grow UnitedProsperity.org with your continued support. Let us start by lending one loan guarantee at a time.

Update on the legal agreement with the bank in Sri Lanka

13 Nov

In my  previous post, I had written that we were expecting to hear from the bank in Sri Lanka on the legal agreement. While we were expecting to hear back in 10 days from my previous post, we heard back only last week. It has taken longer than what we expected, but fortunately things are moving forward. For now, I will not make a prediction on how soon we will be able to move to the next step, but I promise to update the blog by the middle of December. Thanks for your patience.

Loan processing delays

17 Oct

In my last post, I had written that the loan to BMI had been approved. However there have been some unanticipated delays in getting the legal agreement finalized. We are expecting to hear from the bank over the next 10 days. Hopefully we will start seeing progress soon.

Thanks for your patience.

Loan to Berendina Microfinance, Sri Lanka is approved

16 Aug

We are delighted to announce that a bank in Sri Lanka has approved a loan of $100,000 with a 50% guarantee to Berendina Microfinance, Sri Lanka. This will be the first ever bank loan to Berendina.

While the bank’s credit and risk committees have approved the loan, the bank’s legal department is reviewing the guarantee agreement we have shared with them. We hope to get their feedback in the next few days. Once the legal agreement is approved and we complete the necessary paperwork we will have new loans on the website.

We are really excited about this development and we are keeping our fingers crossed that we do not run into any unexpected obstacles. Watch out for more posts on this subject in the next few days.

Update on new loans

8 Jul

Previously I had written about signing up a partner in Sri Lanka. At this stage we have learned that a proposal to approve the loan to Berendina Microfinance Institution backed by our guarantee is being reviewed by the bank’s risk and credit committees. We have been informed that the reviews should be complete by the end of July. We are cautiously optimistic that this process should go through smoothly and we hope to have loans online soon.

As I had mentioned in my previous post we are also getting a positive response from South and Central America. We have been able to make considerable progress with an MFI in Honduras. We hope to report on further developments over the next few weeks.

In India, the Ministry of Finance proposed a new bill for regulating microfinance in India. After receiving feedback from the public the bill will be presented in Parliament to be made into law. At this stage it is definitely a step forward. While some have commented on the bill, it is still a bit early to say how the final law and regulations will take shape and the impact they will have.

We are eagerly looking forward to report on new loans! Please do visit again for further updates.