A Landmark in Co-operative Banking: The Experiment of Indian Co-op Network for Women

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)
Oct, 1997
(Source: Co-op Dialogue, Vol.7, No.2, May-Aug. 1997, pp. 27-28)

A Landmark in Co-operative Banking - 
The Experiment of Indian Co-operative Network for Women
by Jaya Arunachalam

Indian Co-operative Movement
In the 50th year of India's independence, the co-operative movement is
celebrating.  Democratic values and the spirit of voluntarism have been
the hallmark of both the independence and co-operative movements.
India's founding fathers saw co-operatives as an ideal vehicle to much
needed economic and social reform. 

Over the years, this vision has been marred by bureaucratic interventions
that created impediments to co-operative efforts. Poor literacy rates and
other social ills that exist in India necessitated government checks and
balances, but then intervention began encroaching upon the autonomy
and independence of co-operative structures.

Member Participation - Key to Success
Co-operative ventures that have been successful against the odds have
done so by encouraging member socio-economic participation through a
democratic process.  Co-ops created an environment where people could
work for community development with a sense of commitment and social
responsibility.  Co-operation is more than ideology.  These experiments
have proven ability to adapt suitably and sensitively to the needs of their
clientele and adopt strategies to circumvent the obstacles in their way.

Working Women's Forum India, a social movement of women in the
informal sector, was initiated by Ms. Jaya Arunachalam to organise poor
women by trade in a structure that facilitated the member participation at
all levels.  This women-intensive venture addressed the critical needs of
poor women for training, education, health, empowerment and credit.  In
the absence of any other mechanism to pull those without assets out of the
vicious cycle of poverty, credit was the only option.  Credit facilitates the
transition of women from poverty to economic standing and social status
in the communities in which they live and work.  The Indian Co-operative
Network for Women was founded as the credit wing of the Working
Women's Forum, fully adopting the rules of the central co-operative
registration of the Indian Government.  Initiated with 800 members, today it has grown into a co-operative movement of 450,000 women.

The ICNW - a co-operative banking venture that began as a small
experiment in the urban slums of Madras - soon evolved into a mass
movement where thousands of women participate in 15 different regional,
cultural, linguistic and ethnic contexts.  This growth was made possible
because of the commitment and ideology of the organisation to retain the
grassroots identity of the co-operative bank.

Breaking Conventions
From the outset, ICNW disproved the notion that poor people were non
bankable by achieving a remarkable repayment rate of 95 per cent. This
was done without compromising its commitment to reach the poorest
women. ICNW has confirmed that poor people are indeed credit-worthy. 
Informal and flexible banking operations are the key to ICNW's success. 
Initially, credit provision was taken up by nationalised banks subject to a
guarantee by the parent body, Working Women's Forum, to processing
loans and ensure repayment.  Rigid formal banking structures posed major
hurdles; they could not keep pace with the rapidly swelling membership
and were incapable of handling of a large number of small loans.

Catering to Specific Needs
One of the major reasons for the success of the ICNW is that it has always
been sensitive to the requirements and priorities of its clientele.  It has
constantly devised innovative methods to make the banking operations
user-friendly and accessible even to the poorest.

In the ICNW, savings are not a pre-condition for loans.  Even the share
amount that the members pay is collected after the disbursement of the
loan amount.  All these measures have been incorporated to ensure that the
credit facilities reach those women without assets.

ICNW's original capital fund of 18.2 million rupees has now grown to 210
million rupees, establishing a sustainable poor women's banking network
that was made possible through intensive client participation at all levels
of loaning procedures.

Beneficiaries - Both Participants and Leaders 
ICNW is based on a neighbourhood loan group concept.  All stages of its
operation are carried out by women at the grassroots - from identifying a
potential group to ensuring prompt monthly repayment of the loan.  Even
default management and monitoring is taken up by the organisers
themselves.  It is this participatory approach that has evolved and
sustained the ideology of promoting leadership from the grassroots.  A
majority of the office bearers, directors and members of the board are
former rice cake sellers, idli sellers, fisherwomen, and lace artisans who
have risen through the rank and file of the organisation to the position of
being vice-president and treasurer.

Future Plans
Today, members with a current loan number 165,300.  The ICNW
proposes to extend its services to 300,000 members by the year 2005, out
of which 240,000 (80 per cent) will be from the very poor (living below
the poverty line). ICNW proposes to bring 35 per cent of these members
out of abject poverty. Allied services like pension schemes and life
insurance that are currently being extended to 620 members would be
provided to 1,200 members. Business development services like training,
technical and marketing assistance that are now being offered to 214,000
members would be increased to 450,000 members. With a current financial
self-sufficiency of 103 per cent, ICNW proposes to achieve a financial
self-sufficiency of 120 per cent by 2005.

Setting standards for millions
ICNW is living testimony that the co-operative movement as envisioned
by our leaders - democratic, autonomous and voluntary - can indeed
bring about the much needed social and economic revolution from the
grassroots.  The spirit and commitment of the women in ICNW, who
in their heightened enthusiasm have transformed the state controlled
co-operative initiative into a way of life, have helped themselves out of
poverty and created but institutional model that can be replicated by
millions of working class women in India and South East Asia.

Dr. Jaya Arunachalam  is the President of Indian Co-operative
Network for Women.