Chandni
India
Report
The economic power of women
boosted by microfinance
"This credit has changed my life; it’s made it better. I am stronger now."
Chandni, age 22
SPOTLIGHT ON CHANDNI, A YOUNG WOMAN WHO BECAME A MICRO-ENTREPRENEUR THANKS TO MICROCREDIT.

Chandni, age 22, has been married for four years. She lives with her husband and two daughters in Saidapur, a village 40 minutes away from Lucknow, the capital of Uttar Pradesh located between Delhi and Calcutta.


Two and a half years ago, shortly after their first daughter was born, the family found itself in financial trouble. Chandni’s husband, a farm labourer, didn’t have a regular job. His earnings were too low to cover their basic needs, i.e., healthcare, food, housing and education. That same year, a visit by a Sonata employee whose role is to go from door to door to acquaint village-dwellers with microcredit was to initiate a decisive change in the young woman’s life.


At age 19, Chandni borrowed 40,000 rupees (c. €585) from Sonata with the aim of starting her own business – a grocery shop. She discussed it with her husband and relatives. Everyone encouraged her to go ahead.
 

femme, Inde, microfiannce
femme, Inde, microfiannce
femme, Inde, microfiannce
femme, Inde, microfiannce
femme, Inde, microfiannce
Chandni et son enfant
Réunion sur la microfinance en Inde
Joint liability groups
Ninety-six per cent of the women who contract Sonata loans do so through joint liability groups. The groups usually have between ten and twenty members who know each other and live in the same area. It is an approach to credit grounded in trust and solidarity among group members. Although loans are granted on an individual basis, they are guaranteed by joint surety among the members. By using existing social bonds among the beneficiaries, the group creates a form of collective guarantee that encourages members to pay back their loans.

Such solidarity groups are loosely based on the ‘tontines’ that are highly popular in sub-Saharan Africa. Tontines “are associations composed of members of a clan or family, neighbours and other individuals who agree to pool goods or services to benefit all members on a rotating basis” (F. Boman, economist). At the monthly meetings, all members the kitty, and one member gets to take the whole sum on a rotating basis.

Chandni’s group is made up of about ten women. They meet once a week to review each member’s projects and collect repayments.
Dossiers de financement
A sense of accomplishment
After taking out a two-year loan for 40,000 rupees from Sonata, Chandni opened her shop. The business soon prospered and she was able to make her repayments on schedule. At long last, the family was enjoying financial stability.

Chandni, who rarely loses her smile, is proud of what she has accomplished, and she is confident about the future. “This credit has changed my life. Our life is better now. I am also stronger than before. Once I have paid off my loan, I plan to take out a larger one so that I can expand the premises and offer additional products.”
Deux commercants bénéficiaires de la microfinance en Inde
Proparco’s role
In November 2016, Proparco acquired a stake in Sonata for approximately US$6.5m. That investment reflects Proparco’s strategy of encouraging responsible microlending in emerging economies and assisting microfinance institutions that show a commitment to social performance.

Through the support it provides, Proparco helps Sonata to achieve its aim of delivering microfinance service to low-income women transparently, swiftly and efficiently.

To ensure that its work benefits the target population, Sonata uses poverty assessment tools that measure household living conditions and assets. Sonata’s lending activity also incorporates the client protection principles developed by the Smart Campaign initiative. The organization has demonstrated in particular its skill in managing the prevention of overindebtedness by steering clear of areas with high microfinance penetration rates. At the same time, despite the serious regulatory constraints it faces, Sonata seeks to broaden its financial product offer to include home improvement loans, mobile banking and the like as a way of more effectively meeting client needs and cementing its reputation in a competitive market.

In India, as in many other countries, microfinance can be a highly competitive industry. Its members must therefore strive for a proper balance between financial and social performance of the kind that can lead to responsible, sustainable development.
inde épicerie
HIGHLIGHTS
Chandni opened her own grocery shop to overcome her family’s financial difficulties. That move was made possible by a loan of 40,000 Indian rupees (c. €585) from Sonata Finance Private Limited (Sonata), a small-amount microfinance lender supported by Proparco.

Access to microcredit can contribute to the liberation and empowerment of women, giving them recognized social responsibility and including them in the labour market.

Many families in the rural and semi-urban areas of Uttar Pradesh (UP) benefit from microcredit. UP is one of India’s poorest states. It has a population of 200 million – as large as Brazil’s. Economic growth in the state is 6%, versus 8% in India as a whole.