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January 2008 Report

Aamara Biswas

Women Helping Women


Nano Finance Institution

Joyasree (Ranu) Mahanti

January, 2008




1.    Introduction


2.    Concept and Justification of Nano Finance Institution (NFI)


3.    Who are the Clients?


4.    How NFI is different from Micro Finance Institution (MFI)?


5.    Operational Method of NFI


6.    Donors and the Financial Status


7.    Evaluation and Future Plan



1.    Introduction


After 10 years of working closely with the people of Orissa (in both rural and urban areas, eastern and western parts),listening carefully to the women in need, traveling to rural villages, seeing the living conditions of people in this century, I initiated several projects to provide basic needs for these people, which everyone is entitled to. Now, I have initiated a new concept, Nano Finance Institution, which will help many more people in need.


I am thankful to the donors who have supported me with their trust and guidance for all these years, the local NGOs (Basundhara and BISWA) through whom the projects were implemented, and the villagers who are responsible for the sustainability of the projects.



2. Concept and Justification of Nano Finance Institution (NFI)



After working at a grass root level for the last seven years and giving loans to women through different NGO(s), I find that although many people get help through micro finance institution (MFI) to establish their livelihood, a large number of people do not have access to small loans for their emergency needs (small business expansion, education, sickness, death, and wedding etc.). The only choice they have is to go to the money lenders for a loan with a very high interest rate (120% or more per year). Most of the time they can not pay back the principal and must keep on paying the interest for the rest of their lives. I have personally witnessed many such cases. This problem is present in both urban and rural areas.


To address this need, I have started a new initiative, Nano Finance Institution (NFI). This institution is not meant to compete with Micro Finance Institution (MFI). Instead, NFI is an outgrowth of MFI. The women who are not able to get help (loan) from MFI will benefit through NFI for their emergency needs. The concept of nano finance is very simple and the operational method is not complicated. Every one can understand its basic structure without going through training and explanation. The main objective of nano finance is to give small and interest free loan to women for their needs and which they can return in a year. They don’t have to go to the money lenders to borrow money with high interest rate.


Through NFI, the women can learn how to help themselves, help each other and work with trust to assist other women who are in distress. My purpose is not to make them rich, rather encourage them to be independent and have the minimum necessities to live a decent life (proper shelter, enough food for the family, basic education, and basic health care) by working hard and taking responsibilities of their own lives. I realize that this responsibility can only be given to the women who are ready to sacrifice certain aspects of their present life for the benefit of their children and other family members. I have full trust in them.



3. Who Are the Clients?


·         Women who do not have access to money for emergency needs


·         Women who need a loan for starting small businesses but cannot access MFI


·         Women who need a loan for educational purposes-


·         For their children and for themselves


4. How it is different from Micro Finance Institution (MFI)?



Micro Finance Institution (MFI)

Nano Finance Institution (NFI)

Getting a loan from MFI (or an NGO) requires satisfying several rules and regulations, which are not very practical or helpful to poor people for emergency needs and small loans.


People do not have to go through paper work and/or rigid rules and regulations for getting small loans through NFI  fro their emergency needs.


Gives mostly group loans for businesses to both men and women.


Gives small loans (up to Rs 2000) to only women.


Due to the complexity of the system, many people are required for efficient operation. High overhead and high interest rate.


Due to the simplicity of the system, a few women will manage the operation. Very low overhead and can sustain with no interest or very low interest rate.


MFI and most of the NGO(s) borrow money from the banks to give loans to the people with high interest. It sustains with the earnings from the interest rate.

NFI sustains mostly on grants and donations.

To get a loan from MFI (for example BISWA), the person has to be a member of a group for at least six months with savings within the group. For other MFIs; the loan can only be given in groups with some security for one year.


NFI only gives individual loans without any pre-conditions. Book keeping is complicated in MFI system due to frequent collection and savings with compound interest.

The book keeping in NFI is very simple. The money transactions will be always is in whole numbers. So, it will be easy for the clients to understand and pay the loan.


Micro financing can be profit making venture for the NGOs.


The only interest of NFI is to help the poor women and it is not a profit making venture.


There is a strong competition between the NGOs (how many self help groups can be created by each of them etc) to get more loan or grants from different sources. At times, the main purpose of helping people can get lost.


NFI only provides individual loans. There will be no competition for creating self help groups.

Encourage the women to help other women by giving the same loan instead of returning it to us. The only requirement is to report this to the coordinator and provide the correct information for record keeping.

An  MFI  can be successful and financially benefited to an NGO without truly helping to the most poor women of the society.


The success of nano finance depends on the net-working of the women with trust.


Helping poor through MFI can be only practiced by Institution with big financial investment.

Helping poor women through the nano financing concept can be practiced by anyone who truly wants to help the poor even with a very small initial investment





5. Operational method of Nano Finance



A.   The Priniciples


·       Loan to women only

·       Three types of loan as: Emergency, Business, and Education

·       Interest free loan with payback period of one year or less

·       Monetary transactions must be in whole numbers

·       Simple book keeping with little extra information

·       Minimum administrative cost

·       No training required for the grass root coordinator

·       Trust is the key factor

·       Women helping themselves and other women



B. The Client Form: Example


Name of the Grass root Coordinator: Sari Bhoi


Name of the Client: Sumi Mahajan


Address: Kamali Bazar near Ramjigudi


Loan Amount: Rs.500 Date: 06/09/07            Return Date (after one year): 06/09/08


Purpose of the Loan: Buying books for the children Payment Plan: Rs.50 per month


Amount Paid (Rs)       Date                            Remaining Amount (Rs) (Loan Amount – Paid Amount)


50                                07/10/07                      450 (500-50)


50                                08/20/07                      400 (450-50)


(12 columns for 12 months)
C. Employee Qualifications


      Qualifications/Responsibilities of the Office Manager


·       Minimum qualification: High school

·       Capable of understanding the problems of the women in need and explaining the concept of Nano Finance

·       Daily management of the office

·       Daily book keeping

·       A meeting with the grass root coordinators a few times in a week

·       Weekly report to me through telephone


Qualification/Responsibilities of the Grass Root Coordinators


·       Basic education (read, write, and do simple math)

·       Recruit from the areas where mostly women will take loan

·       Find clients who genuinely need money

·       Constant communication with the Office Manager to update the loan status

·       Encourage clients to pay back some amount every month towards the principal regularly


6. Donors and the Financial Status of the Project


There are six donors who had invested for BISWA MFI and asked Mr. Khirod Chandra Malick to give the amount to me for the nano finance project. I am truly thankful to the donors for their kind support. The total amount contributed towards the project is $11,500.


The total amount I received from BISWA is $11,500+5% Interest (Rs.5,05,769).


Financial Status of the Project (by Dec 31, 2007)


Started giving loan on Nov. 2, 2007

The office/counter was opened on Nov. 9, 2007 at Kamalibazar, Sambalpur, Orissa

Total amount invested Rs 5,05,769

Aamara Biswas bank account in the Axis Bank (Sambalpur branch) Rs 1,00,669

Cash in hand Rs.18,500


Total Expenses


Loan amount disbursed: Rs. 3,56,600 (600 clients)


Salaries for five months: Rs.10,000

Office Manager (1) salary Rs1000/month

Grass root Coordinators (2) Salary Rs1000/month


 Establishment of the Office expenses:  Rs 10,000

Furniture (Table, Chairs, and a Cabinet): Rs. 7460

Printing books: 1900

Other small expenses: 238

Total Rs. 9598


Business: Rs10,000

We encourage the women to start small business by providing them materials (ready made ladies garments, dry foods, and candles etc.) and keeping a small profit for the organization for the administrative cost in future.


Loan amount collected Rs. 60,000  (Dec. 31, 2007)


The Office space is free and has been provided by Mr. P. R. Raychoudhury (my brother).


7.    Evaluation and Future Plan of the Project



·       Since there is no interest earned, how will the project sustain?

                             Like any other NGOs in India, it should sustain with donation, grant, and other income                                 generating projects.

·       If there is default in collection, how do I consider the project is a success ?

There will be some default. If 80% of the clients return the loan I consider the project to be a success. With time, I will also learn the process of giving loans and whom to give loans. I will also modify the concept by charging a small interest in the second year, and start small income generating business

·       Am I planning to spread the concept to other parts of Orissa?

I hope to spread this concept not only to other parts of Orissa, but also to other parts of the world where people will benefit.

·       What is unique about this project?

This project can be started independently by any body with any amount of funding with minimum supervision.

·       How do I justify the Basic Needs Program (which I started in 2002, November) through Nano Finance Project?

The loan is given for small business, education, and emergency health care.

·       Do women get empowered through the Nano Finance Project?

This loan is only given to women to make them financially secure and help them to take major decisions for running the house hold.

·       How does someone start a nano finance project?

- It depends on the population and  funding.

- One can fix an amount depending on the financial situation and invest that amount to start the      project and roll the amount from the collection.

- A reliable person whom you can trust will be the Office Manager

- For small amount of transaction, one does not need an office space and it - - can be done by          one person from home.

- For large amount of transaction and population, an office space is required - and a few grass          root coordinators are needed.

·       What are my future plans for this project?

- Start a few more centers in different parts of Orissa.

- Help others to start similar centers with their own funding.

- Each center should be independently operated with its own budget, employees, and project    coordinator..

- If I get a grant or donation, I like to keep a fixed deposit in the bank to cover the   administrative cost for the project.

- I would like to provide a minimum health care to the clients through this project (most       difficult wish to achieve).

- I see most of the women (from urban areas) come to take loan and don’t know how to sign    their names. I am hoping to get women to be able to sign their names and would like to provide adult    literacy classes in order to get women to be functionally literate.