The Indian Co-operative Network for Women - A model fit for the ...

The Indian Co-operative Network for Women - A
model fit for the future
by
Dr. Jaya Arunachalam
President
Indian Cooperative Network for Women/
Working Women’s Forum (India)
at
International Raiffeisen Conference
Bonn, Germany
on
May 3, 2012

Background
Being the UN Year of Cooperatives it is
imperative to emphasize the role of
cooperatives in some of our countries and
their impact on vulnerable business groups
of men/women. Experiments like that of
ours i.e., the Indian Cooperative Network
for Women (ICNW) is a classic example to
highlight the role of cooperatives that has
facilitated millions of women in their
entrepreneurship through the micro
loaning process.
1

The Indian Cooperative Network for Women
The microfinance operations of the ICNW has facilitated low income
entrepreneurs to meet their working capital as many of them do not
have access to credit from nationalized banks (though the main
objective of nationalization in 1969 being to help the poor borrowers
i.e., 1% of their profits). However, it took a different shape by not
benefiting the poor and the vulnerable. The concept of microfinance
on the other hand grew in a big way to serve the low income groups.
The experience of the ICNW demonstrates that its programmes are
tailor made to suit the needs of the poor women not only to facilitate
improve their living/working conditions but also help them to escape
from persistent poverty.
2

The Raiffeisen Union
Attending the International Conference organized by International
Raiffeisen Union (IRU) we understand that particularly in Germany
the long experience of cooperatives emerged as the panacea for not
only reducing the hardship among poor workers but also to facilitate
carrying out varied business. Similarly the European visionary Mr.
Friedrich Wilhelm Raiffeisen facilitated Aworkers to form cooperatives
in rural areas in the middle of 19th century particularly to facilitate
farmers and other small craft enterprises relieving them out of their
financial struggle (as they could not meet the expenses of the working
capital for their business and compensate their share to the landlords).
The great visionary took the initiative during this period and founded
the first collective mechanism to support the suffering rural population
of Germany and founded the credit union which today has become the
first conceptual initiative of the cooperatives in the spirit of Raiffeisen.
3

The Raiffeisen Union
Similar to the Raiffeisen’s cooperative,
the Indian Cooperative Movement too
was organized against the deterioration
of rural situation where moneylenders
exploited farmers; and the landlords had
given land rights of large acres of land
known as the permanent settlement in
favour of the colonizers.
The freedom fighters of India therefore had to fight against such
mechanisms to save the exploited masses that India suffered then.
Therefore it is significant to discuss the experiment of the unique
women’s cooperative known as Indian Cooperative Network for Women
(ICNW) promoted by the Working Women’s forum (India) (WWF), its
progress and emerging challenges in the competitive business
environment.
4

Working Women’s Forum (India) (WWF) a social organization has its
major objective as poverty reduction through microcredit/allied
products. It motivates the poor/helpless towards collective vision/action
for their own progress through the cooperative ideology. Within 3 years
of its initiation in 1978, it established a cooperative for women known as
the Working Women’s Cooperative Society in the year 1981 with
headquarters in Tamil Nadu.
This was the first co-operative credit society for poor women by poor
women and initiated its operation with 2500 members in the year 1981.
Later when the women entrepreneurs took the lead and expressed their
desire to spread the message to other states transcending barriers of
linguistic cultural context, it spread its operation to the 3 Southern States
of India with 14 branches to meet the needs of poor women thereby
registering the Working Women’s Cooperative Society as multi-state
cooperative.
5

It is known today as the Indian Co-operative Network for Women
(ICNW) addressing the critical and financial needs of poor women
entrepreneurs.
ICNW reaches these poor women who
live/work in remote areas excluded
from financial services and or even
basic services and helps them to move
out of poverty. The credit programme
of the ICNW has reached so far
544872 poor entrepreneurs effecting
nearly Rs.2343 million accomplishing
about 99.13% recovery rate in the
urban slums/rural areas.
6

The members of the ICNW are involved in trades as vendors, homebased
workers, weavers, garment makers, food processors, handloom/craft
workers, service providers, etc. ICNW was established to strengthen not
only their economic roles but also to orient the poor in strengthening
their existing skills. If necessary train them in new skills enabling most
women in the neighbourhoods to join this effort. Women came out of
isolation/seclusion through the efforts of ICNW and have come a long
way to emerge as successful community leaders/ entrepreneurs. 7

The clientele are acquainted through orientation in financial literacy,
custody of income, entrepreneurial ventures, alternate skill training, and
general empowerment to equip themselves to face future struggles. The
concept of participatory training process has made them rich human
resource not only to transform themselves but also grow as a fully developed
entrepreneur.
This was the first experiment of poor women in the Indian co-operative
effort to test their strength and weakness to have better livelihood options
utilizing their own banking options.
National Cooperative Union of India lauds ICNW: Time-to-time ICNW
organizes skill training/leadership development training programmes with a
motive to impart necessary knowledge/skill and competencies to the staff of
14 branches in Tamil Nadu, Andhra Pradesh and Karnataka enabling them
to utilize its nuances in their day-to-day work. In this perspective, the skill
training programme was organized by ICNW on 30 December 2011 where
the National cooperative union of India (NCUI) CEO along with the
President was invited as the chief guests. Complimenting the effort taken by
ICNW to tap the latent talent of the women members, they appreciated that
this cooperative enables women from lower socio-economic groups to raise 8
themselves into confidence, empowerment and blossom into entrepreneurs.

The height of their economic role not
only raised their standard of living also
demonstrated the promise of gender
equality. Further appreciation from the
union was that the ICNW/WWF
provided women with the skill and
ability to earn a livelihood and earn
between Rs.2000 and Rs.5000 a month
by training them in various trades.
Often, workshops are arranged to equip the women with the latest
techniques of business. This year it was in association with Goldsman
Sachs and the Indian School of Business, Hyderabad on 17 February 2012.
The outcome arrived at during this two day training workshop was that
the participants became aware of new techniques of business, costing,
pricing, marketing, etc. Exchange of knowledge and skills amongst the
participants has been a visible positive outcome of the training. Besides,
what was learned during the two day workshop was imparted to other
entrepreneurs in Tamil Nadu, Karnataka and Andhra Pradesh.
9

The crisis of microfinance in India
It is not that microfinance operations in India was carried on smoothly as in
other parts of South Asia. It did have its own difficult times particularly in the
southern parts of India. For a short period there was a setback in the
programmes due to the fact that few borrowers borrowed from multiple
sources beyond their need and capacity to repay. Instead of being messiahs of
poor the microfinance institutions have become moneylenders charging high
rate of interest, making these loans available at the door steps of the poor.
Further, these MFIs also engaged in coercive recovery practices. This
happened in the recent 3-4 years. Infact the microfinance practices were on
the verge of collapse. However, the Reserve Bank of India (Central Bank of
India) took prompt action and set a ceiling for the amount to be borrowed not
more than Rs.50,000/- per borrower and lending rate not to exceed 26%,
limiting that these poor borrowers to one institution and not to borrow from
multiple sources. This is the system that is practiced in ICNW since inception
where the limit is Rs.50,000/- lending it at not more than 18% interest.
Further identifying multiple borrowers in the year 2010-11 enabled ICNW to
function as a successful cooperative bank in the year 2011-12.
10

ICNW – Cooperative of poor women
As an innovative approach ICNW has evolved a comprehensive social
security programme for its members such as life insurance, health
insurance, disability insurance, accident insurance and has covered over
9,39,463 women. Further it shares its expertise from its experience of
working for over three decades facilitating the women in poverty to
other non-governmental organizations (NGOs) universities and those
that require such facilitation. Infact this successful strategy has attracted
several NGOs both within and outside the country to visit ICNW/WWF
both for an exposure visit and orientation to setup a similar outfit in
their respective region.
Several scholars visited the cooperative
for internship and for short orientation
programme and one such intern is
Anganeta Dyck, Post Graduate student
from University of Duisburg-Essen,
Germany who visited ICNW/WWF from
1 March 2010 to 28th May 2010.
11

Infact ICNW/WWF combined evolved special modules of the
training programme to the visiting NGOs from Uttranchal, Madhya
Pradesh, Maharastra, Bihar, Orissa, Rajastan, Chattisgarh, Uttar
Pradesh, Jammu and Kashmir, Nepal, Sri Lanka, Afghanistan, Laos,
Ghana, South Africa and Universities from U.S., Germany, France,
etc. The orientation in ICNW is an intensive exposure-cum-learning
experience to replicate the grassroot leadership experiment in their
respective region. The exemplary work of ICNW/WWF among
poorest women in the three southern states of India was appreciated
across the country and towards this gesture an ‘Honorary Doctorate’
to the President from the University of Lunenburg (Germany) was
bestowed in the year 1999. Besides this, to commemorate the Silver
Jubilee Year of ICNW/WWF Prof. Brunhild Landwehr from
Lunenburg University covered the entire operations/programmes of
ICNW/WWF in the form of a book titled “Structuring the Movement
and Spreading it on….”.
12

International Acclaim
As the work of ICNW spread across the
country, several prominent dignitaries like
Queen Mother Juliana from Netherlands, late
Prime Minister Shri. Rajiv Gandhi, Dr.
Klemens van de Sand, Germany, Rural Adivisor
from Dutch Government Mr. Paul-ter Weel and
recently the US Secretary of State Madam
Hillary Clinton showed special interest to visit
ICNW/WWF headquarters in Chennai to meet
the poor entrepreneurs in solidarity and observe
its functioning. Madam Hillary Clinton not only
observed the products of the women
entrepreneurs but also showed great concern
patiently listening to their stories who have
progressed to the status of fast food sellers from
pavement seller/hawkers.
13

To remind ourselves of our vision today I would like to putforth
before this august body that there are several examples of ICNW that
remind Raiffeisen’s experiment particularly the ideology of self-help
and self-management process among the workers.
The poor women can be successful co-operators
To sum up ICNW experiment demonstrates that even the poorest and
semi-literate women can manage and run a cooperative following the
principles of co-operative management if they have the right kind of
training/orientation and field exposure. This system has not only
worked but also infused confidence among the members, raised the
standard of their living, upholding human dignity, helped
redistribution of resources towards ensuring social justice and
positive social change.
14

A new type of world leadership: From below
From the experiment of ICNW it could be observed that the world is
experiencing a new kind of leadership experiment emerging from the
grassroots, capable of expressing their collective wisdom for collective
survival. It is only the beginning for change in our times. The new
leadership recognises the extraordinary force that is drawn from different
kinds of people and different kinds of leadership the strength of women, the
wisdom of the youth and the old. It is a great realization in the present
times that the true leadership does not come from the individuals but from
the collectives of people working together through the richness of their
diversity and disagreement. Such a leadership has a specific commitment to
break the traditional barriers of sex, race, class and age, and help the
emergence of the much needed leadership in other communities to struggle
together in a spirit on non-violent, universal comradeship, fight the
situation of hunger and poverty, assuring the most deprived and the
neglected populous, to reach a stage of self-reliance and self- respect. A
leadership that will awaken communities to their true potential towards
their commitment for a better world and a better economic order.
15

Details of Working Women's Forum (India)
And The Indian Co-operative Network for Women Ltd.,
Portfolio Report as on 31 st March 2006
Area covered under the Working Women's Forum (India)
No of Members (Cumulative) 1317902
No of Branches 14
Villages 3780
Slums 2405
Social Security Coverage of Women (cumulative) 939463
Reproductive Health Coverage 16,18,842
As a legally registered Micro Finance Institution ICNW has on
Out reach in Credit 544872
Loan Portfolio (Rs.)
2343 Million
No of Loans 15,69,398
Share Capital
102 Million
Savings:
Member’s Savings 161 Million Total Used Capital
Fixed Deposit of Members 86 Million
Working Capital:
247 million
Borrowed Capital
360 million
Returned Capital
308.17 million
Balance Capital
52.45 Million
Outstanding Portfolio
140 Million
Financial Self-sufficiency 108%
Operational Self sufficiency 103%
% of women clients 100%
% of Rural Clients 68.00%
% of Urban Clients 32.00%
On Lending Interest Rate
18% on declining balance
Avg. Repayment Period
12 Months
Cumulative Repayment Rate 99.13%
Default Rate 0.87%
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