Credit unions

These are groups of about 10 to 20 women who meet together weekly. Each woman invests a small amount into the group each week, which is recorded in a book. After contributing for a year or so, she becomes eligible to take out a loan from the group. However, in order to ensure repayment of the loan, another group member has to act as a guarantor.
Loans are used for all sorts of purposes such as paying for an operation or buying a goat or a cow or setting up a small businesses. Once loans are repaid, further loans can be made to other women in the group as further subscriptions continue to be received. Established groups are often successful at obtaining loans from banks in order to make further loans to members. Unlike loan sharks, credit unions are able to make loans to members at very favourable interest rates.

Credit union members with goats provided by HHI. They have promised that they will give the first kid born to their goat to another member.

HHI, through BGM, a local NGO, provides well over 200 of these groups, enabling over 3,000 families (approximately 12,000 people) to benefit in the Neyyar Dam area. Whilst the groups are largely self-supporting, they do need some administration, guidance, training and support.  With the help of our supporters, HHI UK pays Rs. 18,000 (£180) a month for  this.

Credit Unions have been an amazing success.  As one of their members said recently, “The loan sharks don’t come to our village any more”.