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Satin

The NMI Fund III has made an equity investment in Satin Credit Care Network, a microfinance institution headquartered in New Delhi, India. This travelogue depicts some of the experiences and the customers Ole Sandsbraaten, Chief Financial Officer at NMI, met on a field visit to one of Satin’s branches in a rural area 80 km from New Delhi.
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We drive from Delhi and arrive in about two hours. The village we are visiting consists of about 3,000 people representing approximately 300 large families.

The loan group is gathered under a superstructure. A loan group consists of about 15 members who have taken out loans for income-generating purposes. All members are jointly liable for each other so that if one cannot pay, the group as a whole must pay her portion. The group therefore carefully examines new members before accepting them. In addition, when a woman takes out a loan both she and her husband are responsible for it. Only women can take out loans and only for income-generating purposes. Before they can receive a loan, they must complete a five-day mandatory training on what it means to take out a loan. This loan is not a gift - it must be repaid.

When I meet the group, they are gathered in order to make payments of principal and interest on their loans. Payments are made biweekly. We sit in the shade since the temperature is over forty degrees centigrade and flies are buzzing around us. It is hot for one like me who is not accustomed to the high temperature. We are given some fans to wave away the flies. This also creates a slight breeze against our faces to keep the temperature comfortable for a short period of time. The loan officer performs roll call to check that all are present. If one cannot attend, she needs to send a relative to pay.

Everyone brings their loan card, which shows how much they paid and how much goes to interest and principal. On the card, there is also a phone number, which they can call if they have complaints. According to the representative from the head office, Satin receives the 25-30 phone calls every day. Most often, it is complaints about a loan officer who has not treated clients as one might expect. The company has over 800,000 customers and must handle complaints seriously in order to have a good reputation in the market. Complaints can also be submitted anonymously in boxes at the nearest branch, which, in this case, is 6-7 kilometers away.

I speak with Rihana, a woman who has just turned 55 year old. She has 2 children, aged 22 and 18, and both are studying. The husband is a farmer and rents land from a landowner. The family did not have a sufficient income to support themselves, while at the same time the children needed financial support for their studies. Therefore, Rihana has another source of income by minding other people's children in the village.

This gives some extra income, but she needs more. She has therefore acquired a milking cow for 40,000 rupees (about 4,000 Norwegian Kroner). She did not have enough money to pay the whole cow with savings, and therefore took out a loan of 30,000 rupees (3000 Norwegian Kroner). The cow was collected from a place 180 kilometers away, and provides about five liters of milk a day. The family uses about two liters, and can therefore sell three liters to a dairy nearby. This additional income provides 25 Norwegian Kroner extra each day. This amount is sufficient to cover what they lack and to contribute to children's subsistence. The loan will be repaid over two years. When I ask her if payment every other week is too often, she says that it is fine, even though she spends a good deal of time to travel to and from meetings. Financially she could have managed to pay off the loan with 1,000 rupee – i.e., around 100 Norwegian Kroner - every other week, but standard repayment provides some liquidity buffer to meet unforeseen expenses.

I talk with a few other women in the same group. They obtain their income from farming. They have partnered with a landowner and share the expenses for seed, fertilizer, etc. The women grow vegetables and sell these goods at the local market. The profits are shared 50/50 with the landowner. This work supplements the family income so that they have sufficient funds for subsistence. 

The loan collection for this group takes about 45 minutes, but since I am visiting today, we sit for nearly one and a half hours. When everyone has paid, we go on to the next village where another group has a loan collection meeting. 

Ole Sandsbraaten

CFO at NMI
Nordic Microfinance Initiative AS

Postal address:
P.O Box 1925, Vika, N-0125 Oslo, Norway

Visiting address:
Rosenkrantz' gate 22, 7th Floor, N-0160 Oslo

Telephone: +47 22 36 22 40
Fax: +47 22 42 89 01
E-mail: info@nmimicro.no
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