Patan Business and Professional Women (BPW)
It was my first full day of work and the director of BPW decided that the best way for me to get an understanding of how her organization worked would be to start from the beginning. So, with that goal in mind, I was sent to observe a “recognition exam” which she would be administering to a group of 10 new borrowers.
The exam serves as an opportunity to reiterate the principles of the MFI, clarify the terms of the loan, and showcase the business plans of the individual entrepreneurs. The exam opens with a round of formal introductions and the reciting of the MFI’s core principles (set to a lovely tune and sung). Next, Urmila, the director of BPW, quizzes the new borrowers on the policies of the MFI and the specifics of their loans. After she feels that the understanding of all the borrowers is sufficient, the group is allowed to begin their business proposals.
BPW distributes loans to individual women who enter into groups of five. These groups are bound together by shared liability. If any member of the group defaults on the loan, it is the shared responsibility of the other four members. This bond of liability is strengthened by preexisting social connections formed within the small communities in which these women live. A key part of this trust process is the business proposal and group approval.
Called forward individually, each woman presents her detailed business plan to the group. The group, along with the director and loan officers, is then allowed to ask questions and assess the viability of the plan. Once all questions have been asked, it is ultimately up to the group to decide whether or not the loan will be given. On this day, every applicant is granted a loan.
Walking back to the office after the exam, Urmila explains to me how the recognition exam fits within the core principles of BPW and the larger micro-finance world. Micro-finance is about the enabling of the individual, while also strengthening the bonds of the community. BPW is able to accomplish both by encouraging individual creativity in the use of the loan while relying upon the strength of social bonds and peer approval.
Simple, but effective./>