How a tribal village in MP opened its own ‘bank’ and got rid of loan sharks

DULLOPUR (DINDORI): The one-room structure that stands on a piece of barren land in Madhya Pradesh’s Dullopur village is easy to miss. There are no signboards or security guard outside. In fact, there is no indication that it's even a ‘bank’.In a sparse room inside, Ajay Singh Maravi — the lone employee — is busy with a customer who wants a loan of Rs 400 to buy a ‘dholak’. The borrower is asked to sign a register as acknowledgement of the money taken. There is a computer on the table but it is seldom used. Maravi knows how to print a document but that’s about it. 70042055“I’m learning. But our records are manual,” said Maravi, who has studied till class 10 and became an "accountant" a few years after the remote tribal village opened its own 'bank' in 2008 to provide loans at 1% interest per month to people around, many of them poor and unlettered. Until a decade ago, Dullopur — 150km from Jabalpur and a half-hour drive from Dindori — depended heavily on 'sahukars' (money lenders) to meet their financial credit needs, like most far-flung villages in the country. medium70053018Sahukars enjoy monopoly over credit markets in rural India due to the absence or negligible presence of state-owned banks in the hinterland. Their interest rates are abnormally high and their recovery process brutal. In Dullopur and nearby villages, where people were forced to pay up to 80% interest per year, several households found themselves trapped in an inescapable cycle of debt over meagre loans. Many had borrowed as little as Rs 500 to buy maize seeds, the only crop grown in the region, but ended up paying several thousands as interest accumulated year after year. Villagers were fed up and when during a scorching summer afternoon in 2008, someone mooted the idea of starting their own 'bank', they were quick to get on board. ‘Jan Shakti Sakh Shahkari Samiti Maryadit, Dullopur’ was born. It then registered itself as a cooperative society under the MP Cooperative Society Rules 1962. People from 14 villages, inhabited mostly by the Gond tribe, joined as members and pooled in money — ranging from Rs 20 to Rs 100 — to start a corpus. Today, the co-op society has a princely corpus of nearly Rs 20 lakh and 959 valued members. Samhar Singh Paraste, chairman, said the bank has helped residents escape the vice-like grip of sahukars. “So many lives were ruined because people took small loans but could never repay them. We needed a financial institution of our own. People now prefer to borrow from us as interest is only 12% per annum.”In 11 years of its existence, the co-op society has disbursed loans to 113 people and has recorded 24 defaulters. But they are sure to pay up, said Paraste. “We all do,” he added. In the close-knit community, trust is the deciding factor. The 11-member central committee of the society approves the loans but all 14 villages have their own committees that can recommend loans to those in need. boxcontent medium70052957How the cooperative was set up?‘Jan Shakti Sakh Shahkari Samiti Maryadit, Dullopur’ was born in 2008 and was registered under Madhya Pradesh Cooperative Society Rules 1962People from 14 villages joined as members and pooled in money to form a corpusToday, there are 959 members and the 'bank' has a corpus of nearly Rs 20 lakhsThe society lends money at 1% per month and 12% per annumVarious checks and balances are also in place. “If a member seeks a loan that is more than what they have deposited in the corpus then we seek consent of all members from his village. Only then is the applicant considered eligible,” Paraste said. Paraste too was once denied a loan. Residents TOI spoke to said the cheaper loans had come as a boon. Joseph Paraste from Dullopur recalled how his neighbour took some money for the last rites of his mother and managed to pay it back. “You don’t know what it means in these parts... to be debt-free.” boxcontent medium70054423Rural banking in Madhya Pradesh2,346 bank branches in rural areas(Source: RBI)52,557,404 is total rural population in the stateEach bank branch caters to 22,404 peopleSantaram of Khamhi village took a loan of Rs 800 to sell sweetmeats and is grateful that he can repay it in installments without worrying about mounting interest. Those involved in farming like Rajkumar of Hinauta village take loans as little as Rs 400 to buy seeds and fertilisers during sowing season. 70042045Apart from lending services, the society has also been encouraging loans for dholaks to tribals. Paraste said that dholaks were earlier played only by Dhuliyas — members of a Scheduled Caste community — in these parts but now people from other tribes are also taking it up to earn money during the wedding season. medium70057262