From an SHG member to the CEO of one of Tamilnadu's largest microfinance organizations, Geetha Jegan's story is no less inspiring than the thousands of women entrepreneurs she helps cultivate. We caught up with her for a leisurely interview to discuss issues ranging from financial inclusion to gender parity.
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Geetha Jegan, CEO, Gramalaya Microfin Foundation[/caption]You’ve been the CEO of GMF since it was started in 2011. Can you tell me a little about how you started out in the social sector?I started working in the social sector way back in 1998 when Gramalaya, our parent organization, came to Thottiam and formed a women’s self-help group (SHG). I joined Gramalaya as an SHG member; yes, an SHG member (laughs). My first role was that of a ‘school hygiene educator.’ Then I worked as a cluster co-ordinator and project co-ordinator. In 2011, GMF was formed to complete the third objective of Gramalaya’s strategy of promoting the social, health and economic development of our members and I’ve been here ever since.Joint Liability Groups (JLGs) are the models on which you lend to individuals. How is a JLG formed and how is it different from the SHG (Self-Help Group) model of lending?SHGs and JLGs differ in size and the nature of their objectives. Members of an SHG pool their savings and allow internal lending. They can have upto 20 members and the upper age limit for a member is 65 years. A majority of SHGs are formed for agriculture or agri-related activities. JLGs on the other hand, are limited to 10 members with an age restriction of 55 years. There is no internal lending or pooled savings in a JLG.We have adopted the JLG model of lending because it is easier to impart skills-based training on an individual level. In an SHG, not every member may be keen on learning a new skill and starting a small scale business. In our experience we have found that the risk appetite of JLG members is higher than SHGs and that encourages them to start independent small scale businesses.Both GMF and GUARDIAN, your sister organization that focuses on water and sanitation, are primarily based in Trichy district. What is the history of microfinance in Trichy district? Grama Vidiyal was the first organisation to enter the microfinance sector in Trichy district in 1997. Their parent organization ASA (Activists for Social Awareness) was deeply involved in developmental work in Trichy district. They have also collaborated with our parent organization, Gramalaya, on some projects. Today there are more than 25 microfinance organizations operating in Trichy but most of them have a strong urban presence. As a consequence, GMF has been reducing its presence in urban areas. Today GMF’s exposure to urban areas is roughly 10% of our portfolio, with more than 90% of our allocated funds going to rural borrowers.Gramalaya started its microfinance activities after forming GUARDIAN for the purpose of providing water and sanitation microloans. Soon borrowers, after obtaining water and sanitations loans, approached us for loans for income generating activities. Driven by the demand from our borrowers, Gramalaya instituted GMF for the economic development of our members.What are the biggest challenges that borrowers face when they join JLGs? What is the primary motivation for them to seek an income generating activity?The single biggest challenge faced by our borrowers is access to credit. The traditional sources of credit like relatives, neighbours, friends and moneylenders are becoming increasingly unreliable. Despite pledging assets like gold and property, local moneylenders charge exorbitant interest rates. This often leaves very few options for those who are earnestly looking to start a small scale business.Our borrowers are primarily looking for capital to augment their income. Many borrowers are agricultural labourers or housewives and they are looking to increase the income for their families and in the case of housewives, to be productively engaged by starting a home-based microenterprise. Since they have few income generating skills, we train them with the requisite skills based on their interests, area of operation, risk appetite and hours they can devote to their business. Borrowers are often interested in individual loans but we lend to them in groups in the first cycle. Based on their repayment history and loan utilization, we lend to individual entrepreneurs in the second cycle of lending.So our major focus remains on skills training and capacity-building for our borrowers.Coming to gender issues, how do you see the role of women changing in the rural landscape?Women are increasingly coming forward to take on responsibilities to improve their family’s welfare. Part of our mission also involves encouraging women to take on greater responsibilities when it concerns their family’s health, safety and social welfare. Having said that, the empowerment of women within the family often happens because of the support of their family members. In the case of our borrowers, the men are very supportive of their wives learning skills and starting small scale businesses.When it comes to issues like property rights, I feel that there is more that needs to be done to achieve gender parity. Even though women are empowered politically by having reserved representation in local bodies, most of the decisions are often taken by men. It’s not uncommon to find men standing in for women representatives and even signing on their behalf. But the situation is improving. I personally feel that rural women have a strong position in their families and in society; and, it can only get better.With respect to your micro finance activities, how does the government assist your aim of improving financial inclusion?In the past two to three years we have seen some positive changes. NABARD (National Bank for Agriculture and Rural Development) has come forward to provide grant assistance to microfinance organizations. NABARD, in conjunction with a few nationalized banks is strengthening the BC (Banking Correspondence) model for microfinance. We, the MFIs, are tasked with the formation of borrower groups, along with the due diligence that goes into the process. The loans are sanctioned by the banks and the funds are released to the borrowers. MFIs are provided with grant assistance for our participation in the process, but this barely covers our operational costs. NABARD fixes a target for the number of borrower groups to be formed in a district and this target is achieved with the participation of the major MFIs operating in the district.While visiting borrowers, I have noticed that marketing of products is an obstacle that many borrowers face. Are there any steps that you are taking to improve the marketing and/or entrepreneurial skills of borrowers?This is a concern that we have noticed and there are many steps that we are taking to address this. For instance, we have found that the products made by our borrowers are good but packaging, branding, barcoding and certification will add greater value and improve the appeal of the products.The GREAT (GRamalaya Entrepreneurs Associates) Network and WEN (Women Entrepreneurs Network) are two major initiatives that we are focussed on developing. The GREAT Network will purchase products directly from our borrowers and sell them at retail outlets. WEN will be a forum for our entrepreneurs to come together to exchange best practices, provide feedback and to share experiences. We regularly organize buyer-seller meetings and district-level seminars and workshops to improve the marketability of our borrowers’ products. At the training stage, we have signed MoUs with various training and marketing institutions to ensure that the borrowers receive a wide range of skills-training that is both suitable to their interests, and for which there is a good market for the finished products.Our aim is to deepen our relationship with our borrowers beyond the stages of providing skills-training and granting loans.[caption id="attachment_7551" align="alignnone" width="1583"]
A group of aspiring entrepreneurs learning the skill of making wire bags[/caption]GMF is also involved in the promotion of energy products like reduced smoke cookstoves and solar lanterns. What makes borrowers opt for these energy efficient products over traditional ones?In the case of reduced smoke cookstoves, most rural folk opt for firewood as the primary source of cooking fuel because it is cheap and readily available. LPG, though subsidized, is generally costlier and doesn’t fully meet the requirements of a large joint family. The reduced smoke cookstove is popular with our customers because of its versatility and efficiency. With increased awareness of the harmful effects of the smoke generated by traditional mud chulhas, people are eager to adopt cleaner alternatives.The solar lanterns are popular with our customers because of the frequent power cuts in rural areas. Small traders use it to light up their stores and keep their businesses functioning smoothly, children use them to study and housewives use them to complete work during power outages. We are also looking at providing solar home lighting systems, that will power a fan and two lamps, as there is substantial interest in the product. Providing solar power to agricultural pumps is another possibility we are exploring and are searching for the most cost effective option as the initial investment cost is quite steep.What role do you see technology playing in the microfinance sector? Are there any technological initiatives that GMF is implementing to improve its efficiency?At the macro level, a common credit database for borrowers will be of benefit those who wish to obtain microloans from different MFIs. There are many MFIs that operate in different fields and offering a variety of loan products, so this will enable us to ascertain an individual’s total liabilities.Technology at the field level will go a long way to reduce the paperwork of our field officers. Sending SMS alerts at every stage of the loan process and reminders for repayments will certainly improve our efficiency. Contingent on receiving grant support, we are hoping to introduce handheld devices to scan documents and fill out application forms. Maybe in the near future we might also have ‘Smart Cards’ to facilitate monthly repayments.Presently, we are also in talks with local retailers who are interested in selling our borrowers’ products online. These are some of the ways we are harnessing technology to meet our objectives.Your organization is now more than 3 years old. Where do you see GMF in the next three years?In the next few years our focus will be on improving the entrepreneurial skills of our borrowers, particularly with regard to marketing and financial literacy. The establishment and development of the GREAT Network is one of our major initiatives to achieve this aim.We also hope to offer more clean energy products and to expand GMF’s footprint to neighbouring districts. To do this we are actively seeking to increase our sources of funding, particularly through the BC (Banking Correspondence) model.Well, I believe that we’ve covered a good range of topics in this interview. Thank you so much for sharing your thoughts and your time.Thank you too.This interview has been edited for clarity and length.
Geetha Jegan, CEO, Gramalaya Microfin Foundation[/caption]You’ve been the CEO of GMF since it was started in 2011. Can you tell me a little about how you started out in the social sector?I started working in the social sector way back in 1998 when Gramalaya, our parent organization, came to Thottiam and formed a women’s self-help group (SHG). I joined Gramalaya as an SHG member; yes, an SHG member (laughs). My first role was that of a ‘school hygiene educator.’ Then I worked as a cluster co-ordinator and project co-ordinator. In 2011, GMF was formed to complete the third objective of Gramalaya’s strategy of promoting the social, health and economic development of our members and I’ve been here ever since.Joint Liability Groups (JLGs) are the models on which you lend to individuals. How is a JLG formed and how is it different from the SHG (Self-Help Group) model of lending?SHGs and JLGs differ in size and the nature of their objectives. Members of an SHG pool their savings and allow internal lending. They can have upto 20 members and the upper age limit for a member is 65 years. A majority of SHGs are formed for agriculture or agri-related activities. JLGs on the other hand, are limited to 10 members with an age restriction of 55 years. There is no internal lending or pooled savings in a JLG.We have adopted the JLG model of lending because it is easier to impart skills-based training on an individual level. In an SHG, not every member may be keen on learning a new skill and starting a small scale business. In our experience we have found that the risk appetite of JLG members is higher than SHGs and that encourages them to start independent small scale businesses.Both GMF and GUARDIAN, your sister organization that focuses on water and sanitation, are primarily based in Trichy district. What is the history of microfinance in Trichy district? Grama Vidiyal was the first organisation to enter the microfinance sector in Trichy district in 1997. Their parent organization ASA (Activists for Social Awareness) was deeply involved in developmental work in Trichy district. They have also collaborated with our parent organization, Gramalaya, on some projects. Today there are more than 25 microfinance organizations operating in Trichy but most of them have a strong urban presence. As a consequence, GMF has been reducing its presence in urban areas. Today GMF’s exposure to urban areas is roughly 10% of our portfolio, with more than 90% of our allocated funds going to rural borrowers.Gramalaya started its microfinance activities after forming GUARDIAN for the purpose of providing water and sanitation microloans. Soon borrowers, after obtaining water and sanitations loans, approached us for loans for income generating activities. Driven by the demand from our borrowers, Gramalaya instituted GMF for the economic development of our members.What are the biggest challenges that borrowers face when they join JLGs? What is the primary motivation for them to seek an income generating activity?The single biggest challenge faced by our borrowers is access to credit. The traditional sources of credit like relatives, neighbours, friends and moneylenders are becoming increasingly unreliable. Despite pledging assets like gold and property, local moneylenders charge exorbitant interest rates. This often leaves very few options for those who are earnestly looking to start a small scale business.Our borrowers are primarily looking for capital to augment their income. Many borrowers are agricultural labourers or housewives and they are looking to increase the income for their families and in the case of housewives, to be productively engaged by starting a home-based microenterprise. Since they have few income generating skills, we train them with the requisite skills based on their interests, area of operation, risk appetite and hours they can devote to their business. Borrowers are often interested in individual loans but we lend to them in groups in the first cycle. Based on their repayment history and loan utilization, we lend to individual entrepreneurs in the second cycle of lending.So our major focus remains on skills training and capacity-building for our borrowers.Coming to gender issues, how do you see the role of women changing in the rural landscape?Women are increasingly coming forward to take on responsibilities to improve their family’s welfare. Part of our mission also involves encouraging women to take on greater responsibilities when it concerns their family’s health, safety and social welfare. Having said that, the empowerment of women within the family often happens because of the support of their family members. In the case of our borrowers, the men are very supportive of their wives learning skills and starting small scale businesses.When it comes to issues like property rights, I feel that there is more that needs to be done to achieve gender parity. Even though women are empowered politically by having reserved representation in local bodies, most of the decisions are often taken by men. It’s not uncommon to find men standing in for women representatives and even signing on their behalf. But the situation is improving. I personally feel that rural women have a strong position in their families and in society; and, it can only get better.With respect to your micro finance activities, how does the government assist your aim of improving financial inclusion?In the past two to three years we have seen some positive changes. NABARD (National Bank for Agriculture and Rural Development) has come forward to provide grant assistance to microfinance organizations. NABARD, in conjunction with a few nationalized banks is strengthening the BC (Banking Correspondence) model for microfinance. We, the MFIs, are tasked with the formation of borrower groups, along with the due diligence that goes into the process. The loans are sanctioned by the banks and the funds are released to the borrowers. MFIs are provided with grant assistance for our participation in the process, but this barely covers our operational costs. NABARD fixes a target for the number of borrower groups to be formed in a district and this target is achieved with the participation of the major MFIs operating in the district.While visiting borrowers, I have noticed that marketing of products is an obstacle that many borrowers face. Are there any steps that you are taking to improve the marketing and/or entrepreneurial skills of borrowers?This is a concern that we have noticed and there are many steps that we are taking to address this. For instance, we have found that the products made by our borrowers are good but packaging, branding, barcoding and certification will add greater value and improve the appeal of the products.The GREAT (GRamalaya Entrepreneurs Associates) Network and WEN (Women Entrepreneurs Network) are two major initiatives that we are focussed on developing. The GREAT Network will purchase products directly from our borrowers and sell them at retail outlets. WEN will be a forum for our entrepreneurs to come together to exchange best practices, provide feedback and to share experiences. We regularly organize buyer-seller meetings and district-level seminars and workshops to improve the marketability of our borrowers’ products. At the training stage, we have signed MoUs with various training and marketing institutions to ensure that the borrowers receive a wide range of skills-training that is both suitable to their interests, and for which there is a good market for the finished products.Our aim is to deepen our relationship with our borrowers beyond the stages of providing skills-training and granting loans.[caption id="attachment_7551" align="alignnone" width="1583"]
A group of aspiring entrepreneurs learning the skill of making wire bags[/caption]GMF is also involved in the promotion of energy products like reduced smoke cookstoves and solar lanterns. What makes borrowers opt for these energy efficient products over traditional ones?In the case of reduced smoke cookstoves, most rural folk opt for firewood as the primary source of cooking fuel because it is cheap and readily available. LPG, though subsidized, is generally costlier and doesn’t fully meet the requirements of a large joint family. The reduced smoke cookstove is popular with our customers because of its versatility and efficiency. With increased awareness of the harmful effects of the smoke generated by traditional mud chulhas, people are eager to adopt cleaner alternatives.The solar lanterns are popular with our customers because of the frequent power cuts in rural areas. Small traders use it to light up their stores and keep their businesses functioning smoothly, children use them to study and housewives use them to complete work during power outages. We are also looking at providing solar home lighting systems, that will power a fan and two lamps, as there is substantial interest in the product. Providing solar power to agricultural pumps is another possibility we are exploring and are searching for the most cost effective option as the initial investment cost is quite steep.What role do you see technology playing in the microfinance sector? Are there any technological initiatives that GMF is implementing to improve its efficiency?At the macro level, a common credit database for borrowers will be of benefit those who wish to obtain microloans from different MFIs. There are many MFIs that operate in different fields and offering a variety of loan products, so this will enable us to ascertain an individual’s total liabilities.Technology at the field level will go a long way to reduce the paperwork of our field officers. Sending SMS alerts at every stage of the loan process and reminders for repayments will certainly improve our efficiency. Contingent on receiving grant support, we are hoping to introduce handheld devices to scan documents and fill out application forms. Maybe in the near future we might also have ‘Smart Cards’ to facilitate monthly repayments.Presently, we are also in talks with local retailers who are interested in selling our borrowers’ products online. These are some of the ways we are harnessing technology to meet our objectives.Your organization is now more than 3 years old. Where do you see GMF in the next three years?In the next few years our focus will be on improving the entrepreneurial skills of our borrowers, particularly with regard to marketing and financial literacy. The establishment and development of the GREAT Network is one of our major initiatives to achieve this aim.We also hope to offer more clean energy products and to expand GMF’s footprint to neighbouring districts. To do this we are actively seeking to increase our sources of funding, particularly through the BC (Banking Correspondence) model.Well, I believe that we’ve covered a good range of topics in this interview. Thank you so much for sharing your thoughts and your time.Thank you too.This interview has been edited for clarity and length.
