Tag Archives: Micro Finance in India – Al Khair Cooperative Society

Credit society run by Muslims offers respite for low-income wage groups

Amazing Feats, Business & Economy, Community Involvement / Social Issues, , , , , , , , , ,

Patna, BIHAR :

Head office of Al-Khair Society in Patna, Bihar. | Picture: Clarion India

Headquartered in a small building in the state capital Patna, Al-Khair Co-operative Credit Society, with thirteen branches in four states, has transformed lives by loaning money to low-income groups at zero interest rate. 

Patna (Bihar) :

For 18 years, 51-year-old Kamala Devi used to sell vegetables at her small shop in Patna, Bihar, to support her family. The business wasn’t doing well and when in need of cash she would borrow money from a local lender at a 20 percent interest rate per month. Paying back this money at this interest rate was an extra burden. She found a way out when she came to know about the Al-Khair Co-operative Credit Society, a registered society based in Patna that loans money to low-income groups at zero interest rate. 

In 2012, she borrowed Rs 10,000 from Al-Khair with zero interest and a one-time nominal service charge. With this money, which she had to repay by easy installments of Rs 50 per day, Devi started selling readymade garments at her shop. Her business improved. She paid back the loan amount in one year. Happy with the result, she took two more loans to expand her business. 

“I am planning to borrow Rs five lakh from Al-Khair after repaying a loan of three lakh twice in the last three years. My goal is to further expand my business with the help of my elder son,” Devi told TwoCircles.net. 

Besides lending her money to help her business, Al-Khair also loaned her money to buy a laptop for her younger son, who works in a private company. 

“My family is settled now and our days of hardships are over,” she said. 

Devi is one among 29,000 members of Al-Khair Co-operative Credit Society, a registered body under the Multi-State Co-operative Society (MSCS) Act 2002. 

The society has 13 branches across Bihar, Jharkhand, Uttar Pradesh and New Delhi. Its beneficiaries include vegetable vendors, ready-made garments shopkeepers, medicine shop owners and Dhaba (eatery) owners etc. 

Launched in 2002 by Arshad Ajmal (then chairman of Al-Khair Charitable Trust), Dr Badurl Hoda, Syed Shamim Rizvi and a few others, it employs 125 people as its staff. The need for such a society was felt after a detailed survey in 2001 conducted by S.B. Sinha, a Harvard University expert, revealed that “only 10% of people who were in need of loans had access to commercial banks.”

In order to become a member, one is required to buy at least 10 shares of Rs 10 each. 

Managing Director of Al-Khair Naiyer Fatmi told TwoCircles.net that “Al-Khair has disbursed loans of Rs 113 crores since its inception.” 

Fatmi said that they levy a one-time service charge ranging from 3.5 to 8.5 per cent. 

Helping hand to low-income women during pandemic
Nearly 35 percent of Al-Khair’s members are women. In 2012, Al-Khair started a branch in Mahendru, Patna that is run entirely by women. 42-year-old Shama Parween of Dargah Shah Arzan neighborhood is a member at this branch. She runs a small eatery near a school in Sultanganj, Patna.

In 2019, she became a member of Al-Khair by depositing Rs 500 per month from her husband’s savings.

“During the countrywide Covid-19 lockdown in March 2020, managing our household expenses became difficult as there was no work,” Parween, a mother of two daughters, told TwoCircles.net. As she was a member of Al-Khair, it only took a week for her to avail a loan of Rs 25,000.

She said she found it easier to repay the loan as the field staff from Al-Khair collected Rs 100-200 every day from her.

The hassle-free loans offered by Al-Khair, which take around two weeks to disburse after submitting basic documents, are popular among low-income groups. Its door-to-door system of collection is also found to be a matter of ease for its members.

Rajesh Sahu, from the Madhubani district of Bihar, is a vegetable vendor in Gomti Nagar, Lucknow in Uttar Pradesh. In 2012, he started his small shop with a loan of Rs 3000 from Al-Khair. 

Sahu told TwoCircles.net that he was introduced to Al-Khair by his brother-in-law who was a beneficiary. “There is no hassle with Al-Khair. They don’t ask for too many documents and their charges to disburse loan is reasonable unlike where interest is charged which gets compounded,” he said. He is currently repaying his loan of Rs two lakhs, which he had taken in March this year, by depositing Rs 800 to 1000 every day. 

Despite its popularity, Al-Khair is finding it difficult to increase its number of branches. The last branch was opened in 2014 at Jamia Nagar, New Delhi which remains its only branch in the national capital. 

Fatmi said they have been waiting for almost five years for approval to open their five new branches, which include three in Bihar and two in Jharkhand. Earlier, the decision to open any new branch under MCMS Act lay with the Board of Society, Government of Bihar but after the demonetisation in 2016, the authority was delegated to Registrar, Co-operative in New Delhi under the Central government.  

“Our application is lying with them from 2016. We just hope that it gets approved,” Fatmi said.

Sami Ahmad is a journalist based in Patna, Bihar. He tweets at @samipkb

source: http://www.twocircles.net / TwoCircles.net / Home> Lead Story / by Sami Ahmad, TwoCircles.net / May 26th, 2022

Beyond religion: Muslim cooperative society helps transform lives of Hindus, others

Amazing Feats, Business & Economy, Community Involvement / Social Issues, , , , , , , ,

Patna, BIHAR :

Courtesy: Two Cirlce
Courtesy: Two Cirlce

Patna:

Kamla Devi, Pankaj Kumar, Geeta Devi and Sanjay Singh, all Hindus, share one thing in common. Their lives have been transformed through “interest-free” loans provided by a Muslim cooperative credit society in Bihar, yet another example how integrated Indian society has always been at the grassroot level.

They are four of nearly 9,000 Hindus — mostly vendors, small traders, roadside shopkeepers, marginal farmers and women — who got rid of exploitative moneylenders thanks to interest-free loans by the Al-Khair Cooperative Credit Society Ltd that is based here.

“I used to sell potatoes and onions in a small roadside shop. I was often exploited by moneylenders for a small amount of Rs 2,000 to Rs 5,000 that I needed for my business. But a few years ago, I was surprised when someone informed me of interest-free loans from Al-Khair Society,” Kamla, in her mid 40s, told IANS at her shop in Mirshikar Toli here.

She first took a Rs 10,000 loan to run her shop, followed by loans of Rs 20,000 to Rs 50, 000.

“It helped me expand my business from a vendor to a wholesale trader,” she said.

Now doing financially well, Kamla managed to fund the education of her two sons, with one getting admission in an engineering college and the other in a B.Ed. college.

Based on the Islamic principle of prohibiting interest, Al Khair Society has provided interest-free loans of more than Rs 50 crore to nearly 20,000 people, mostly those struggling for survival, in the last one decade of its existence.

About half of these beneficiaries are Hindus. Regardless of religion and any other considerations, Al Khair Society has opened new vistas for large sections of marginalised people, skilled and unskilled, from unorganised sectors.

Geeta Devi not only turned her small roadside vegetable shop into a big one; she has opened another vegetable shop for her son.

“Our life has changed after I came into contact with Al Khair Society. It helped us live a life of dignity. For poor people like us, interest-free loans are God’s gift and, unlike in regular banks, there are no uncertainties about getting the loan,” she said.

Manju Devi, another beneficiary, has been taking a loan of Rs 20,000 to pay the annual school fee of her children for the last five years. Her husband runs a roadside shop.

“I also deposit my daily earnings with Al-Khair Society and repay the loan amount without paying any interest,” Kamla said.

Sanjay Singh, another beneficiary of the interest-free loans, said banks have no time for vendors like him and they have no interest in giving out small loans.

“Banks charge interest and there is a lot of paper work involved that only discourages and frustrates the poor,” said Sanjay, who used to sell garments on a bicycle. He now owns a small garment shop run by his wife even as he continues to sell clothes on his bicycle.

What attracts people, many of whom are not literate, to Al Khair Society’s door is that it involves minimal paper work and a poor-friendly perspective.

“Interest-free loans may be a concept associated with Muslims as Islam prohibits interest as it terms it unjust, but it has a universal appeal and can benefit all, not just Muslims,” said Shamim Rizvi, a retired bank officer closely associated with Al Khair Society for nearly a decade.

Unable to get help from banks, these loans help people free themselves from the clutches of moneylenders who charge high interest rates.

Nayiar Fatmi, managing director of Al Khair Society, told IANS that interest-free loans are gaining popularity.

“Even a small amount of five to ten thousand is significant for people who don’t have access to banks. Nearly 50 percent of the beneficiaries of interest free loans are Hindus. Most of them use the money for earning livelihoods that empower them,” Fatmi said.

Al Khair Society has 13 branches spread across the states of Bihar, Jharkhand, Uttar Pradesh and Delhi.

“We are planning to open new branches in Kishanganj in Bihar and Ranchi in Jharkhand to reach out to more such people,” Fatmi said.

Al Khair Society is a successful example of interest-free microfinance that has brought smiles on faces of thousands of people. It started with merely a small fund and two employees at a small office in Patna. Today it has 100 employees.

The organisation charges a nominal service charge from those who take interest-free loans to pay salaries of its employees, rent of office and other expenditure.

Started by a group of educated Muslims in early 2000 as a small step to help ordinary people, the organisation has seen a tremendous response from all sections of society, irrespective of religion, caste or creed.

(The weekly feature series is part of a positive-journalism project of IANS and the Frank Islam Foundation. Imran Khan can be reached at imran.k@ians.in )

source: http://www.siasat.com / The Siasat Daily / Home> Breaking News> Featured News> News> Top Stories / by Imran Khan / April 18th, 2018