Bonding with the have-nots

Bandhan, which began as a social welfare society, started micro credit operations in 2002. After barely five years, Bandhan was ranked no. 2 in Forbes’ list of the top 50 MFIs in the world, placed well ahead of the famous Grameen Bank of Bangladesh, founded by Nobel Laureate Mohammed Yunus.

But the journey to the no. 2 spot was not an easy one though. “I went from pillar to post but no bank believed in my proposal,” says Ghosh, reliving the days of the struggle.

It was finally the Small Industries Development Bank of India (SIDBI) that sanctioned a loan for Rs 20 lakh. And Bandhan has never looked back ever since then.

“Now, all those who had refused my proposal come back and tell me that they made a mistake,” Ghosh claims confidently.

Bandhan today has 451 branches, a 2,500-strong staff, nine lakh members and an outstanding loan amount of Rs 280 crore. As of date, Bandhan disburses Rs 66 crore as loans to one lakh women belonging to the most economically backward sections of the society each month. Its total disbursement by the end of January 2008 was Rs 765 crore.

By March 2010, Ghosh wants Bandhan to bring 25 lakh women under its umbrella and disburse Rs 5,000 crore as credit to the poorest of the poor.

Gone are days when no bank wanted to lend to Bandhan, disbelieving that their money could ever be recovered. “Today most of the top banks in the country, including the State Bank of India, ABN Amro, HDFC, Axis Bank and others, are queuing up with hefty cheques to do business with Bandhan,” says Ghosh.

Bandhan, which started its work first at Bagnan in Howrah district, has now spread its wings to other parts of West Bengal, Assam, Bihar, Jharkhand and Orissa. It is now opening a new office in Meghalaya.

Bandhan not only benefits those to whom it lends credit but even those whom it employs. “All the men and women working with Bandhan across India are from a weak economic background and are mere graduates or higher secondary pass-outs with not even a first class degree,” Ghosh says.

His decision to employ such people stems from his own understanding of their situation. Ghosh, whose father owned a sweet shop in Siliguri, used to work at his shop and even sell milk door-to-door to make two ends meet. Amid all his hardships, Ghosh managed to complete his Masters in Statistics from Dhaka University.

“The first step towards ensuring good health, education and all other basic needs for the poor is access to credit. Bandhan aims to facilitate for poor credit from banks without collateral so that they can employ this money to create assets and reap the benefits,” Ghosh says.

Ghosh was determined to prove to the financial institutions that even the poor, living in the remotest corner of the country, are bankable. And he has managed to do that with ensuring a 99.99 per cent repayment rate for the loans that Bandhan gives out.

But the organisation had its share of hiccups even after it started work. According to Ghosh, local money lenders who used to charge exorbitant interest rates, spread a rumour that Bandhan was in fact a chit fund and that people would be duped by it. “Though we still have to face the problem is some areas, but our work speaks for itself and we have been able to win over the confidence of the people,” Ghosh claims.

The tidings of Ghosh’s success have spread thick and fast to other corners of the world. “Organisations from Afghanistan, Brazil and South Africa want to learn from our model and even have us working in their countries. But it would be at least another two years before we can have the kind of manpower to venture into those countries. We cannot go abroad and not live up to our reputation. Besides, there is a lot of work left to be done in India as well,” says Ghosh.