Savings and Credits
The Alliance’s savings and credit system increases the financial assets of the poor and provides affordable credit. Equally importantly, it builds trust and strengthens bonds within settlements. As federation members say, this activity represents the pulse of the organisation: "when savings are strong, the whole federation is strong." Upon entering a new community, therefore, the first thing the Alliance does is form saving and credit groups.
The system is managed entirely by women within the community. One Mahila Milan leader collects a few rupees each day from several households in her neighbourhood. As these families’ savings grow, more people are convinced of the benefits and start saving. Moreover, since the same leader visits the same families every day, she knows when somebody is sick, and when somebody is celebrating. She becomes the most effective judge of when a family needs a loan and is best able to work out affordable repayments.
The savings and credit system is designed to truly support poor families to come out of debt, build their assets and plan for the future. Unlike formal financial banks, there are no savings requirements or fixed repayment schedules. The only requirement is a daily repayment, no matter how small the sum. Instead, the system maximises people's participation and ensures that the poor do not have to dip into their savings in times of crisis. Savings help poor communities plan more systematically for their future and provide them credibility to enter the formal financial sector.
Furthermore, the system helps women develop managerial skills and confidence, moving from the home to the public sphere. New leaders and groups soon start addressing settlement-level issues like sanitation and water. Small local successes breed confidence in Mahila Milan's capacity to address more complex issues, and larger and larger numbers of women find a space to participate in Alliance activities.