Jayshree Vyas               sewabank@wilnetonline.net
   A small number of self-employed poor women formed their own organization in 1972 when the Self Employed Women’s Association (SEWA) was registered as a trade union in Gujarat, Western India. Its main objective was to strengthen its members’ bargaining power to improve their income, employment and access to social security.
        Self-employed women are caught in the vicious circle of poverty, indebtedness, no government assistance and low income. A possible solution to free these women from this vicious circle involves linking  them with registered banks. But, attempts to link self-employed women with national banks through SEWA as an intermediary met with many practical difficulties.
        The members of SEWA came forward with an answer — a bank of their own where they would be accepted in their own right and not made to feel inferior. Four thousand women contributed a Ten Rupees share capital of each to establish a Women’s Co-operative Bank.
        SEWA Bank has provided banking services to more than 2,00,000 poor, illiterate, self-employed women and has become a viable financial venture with a total working capital of Rs 850 million in year 2003.
        The main objective of SEWA Bank is to help poor women reverse the process of decapitalization at the micro-level and to begin the process of capitalization. This is accomplished by providing financial services like savings, credit and insurance which help women:

Main Features of SEWA Bank
        Saving schemes can greatly assist lifetime planning for the education and marriage of children or for old age. Credit is used to repay old debts, to fund working capital for business , for buying equipment, and for repairing, extending or buying a new house. Credit and savings also act as insurance against the risks of sickness, accidents, death, floods and cyclones.        SEWA Bank meets women’s criterion through simple procedures, door-to-door service, and credit based on savings performance or loan repayment instead of collateral.
        SEWA Bank’s integrated financial services respond to members by offering different types of suitable products under four categories of financial services: savings, credit, insurance and financial counselling.  

SEWA Bank in Housing and Infrastructure Finance
        In response to demand from members, SEWA Bank has been gradually increasing its share of loans for housing. To date, more than one-third of its portfolio is housing loans. For self-employed women, their home plays a central role in their economic and earning activities, because for them their home is their workplace.
        Loans for housing includes loans for repairing a house, adding infrastructure services like water connection, electric connection, drainage facility, extending a house or buying a new house.       

Learning from Experience in Providing Finance for Housing
        Poor people have an ardent desire to improve their living conditions and environment and add services in their house. They need capital to do this, but who would be prepared to finance them without collateral? Formal sector finance is not easily available to them and they are left to the mercy of exploitive moneylenders.
        They need relatively little finance. They can invest in stages. They are ready to repay regularly and borrow at market rates. They do not need subsidies. They are able to borrow private money from lenders or relatives. The moneylenders are very exploitive and relatives have only a very small capacity to lend, making both these avenues unattractive.
        What they really want is a suitable mechanism imposing low transaction costs and not demanding collateral. While finance is a major input, housing support services offering technical and legal information for example are also required.
        Every small effort made to provide housing finance to the poor has shown that even a very small input makes a big difference in the life of the poor. Investment in housing for the poor is productive. They are bankable and ready to contribute to improve their housing conditions. This is true especially for women as it gives them a tremendous sense of security and ownership.
        SEWA  Bank’s small efforts to finance shelter for poor women workers in the informal sector in Ahmedabad have revealed that investment in housing proves productive for the beneficiaries and generates very encouraging repayment records. Providing housing finance to the poor can be a viable, sustainable activity for the lender, too. 

Housing Finance is Productive for Lenders too
        Housing finance is also productive for lenders, as demonstrated by financial results and achievements of strategic goals:

Shelter is not Just a House
        Shelter means more than a house. It includes other facilities and services in the house: water, drainage, electricity, a latrine, road and pavement, and the neighbourhood environment which is improved by a garden, library, community hall, community playground and other infrastructure.
        Access to land, access to infrastructure facilities, and access to housing finance is a right of every citizen of India. There is a great need to oprationalize this human right. We have a right to gain and secure a home. We have a right to build our own community or settlement in which we can live in peace and with dignity.
        Housing finance should not be seen in isolation. It should be linked with commercial loans for working capital and term loans for equipment. Attention must move from trying to turn the poor and women into mere users of housing finance to becoming owners of housing finance institutions. There is a need for linking housing finance with other private, public and government housing schemes.
        There is a tremendous demand from the poor for housing and infrastructure loans.  In India, the estimated micro-credit absorption capacity of women in the informal structure for housing/infrastructure loans (i.e US$ 5 billion size of absorption capacity for infrastructure loans) is 10 - 15 per cent of the sector (i.e US$ 500 - 750 million).

Conclusion
        The poor living in unhygienic clusters in urban areas have successfully demonstrated in Ahmedabad that they are capable of contributing effectively to any programme that enables them to improve the quality of their life. They have established themselves as a viable economic unit for the micro financing institutions. These citizens are an integral part of the city’s economy and should be involved in the planning process also.
        SEWA Bank estimates that nearly half of its loan portfolio is invested in housing. These funds are used for incremental improvements in housing, new construction as well as home repairs. Given the objective of micro-finance to enable the poor to improve the quality of their lives, it is clear that this kind of investment can achieve dramatic results. The impact is visible not only in the increased asset value of the house but also in the improvement in the quality of the environment in which the poor live.
Poor people do not view their houses as passive investments. Rather home improvements are seen as an investments enables changes that can raise the earning capacity of those living in slums and substandard urban neighbourhoods. 

Policy Recommendations
        In spite of all these highly positive features, it is difficult to obtain housing finance funds to lend to the poor. The reasons for this include the following:
1.     Housing is not seen as a productive investment, but as welfare and unproductive. Housing finance is very often used as a political tool and various schemes are linked with subsidies which are often misused or diverted to the wrong people. Poor people do not need subsidies but need access to finance through procedures that are simple and convenient.

2.     Performance based financing without physical collateral is not recognized by the nationalized banks. Poor people do not have much collateral to offer. Organizations dealing with poor people also do not have physical collateral to offer but can point to their own performance in achieving good recovery rates and strong savings mobilization.

3.     Procedures for obtaining bulk finance are very cumbersome and should be simplified.

4.     A guarantee fund could assist efforts to obtain bulk funding. Efforts should be made to start one.

5.     Lack of trust or confidence in the poor is an access barrier. There is a need to change attitudes toward the poor.  
The author is Managing Director, Self Employed  Women Association (SEWA)