Excerpts from a letter of PHIROZ A. POONAWALLA addressed to L.H. Manjunath, Executive Director Sri Kshetra Dharmasthala Rural Development Project, SKDRDP), showing the way of financial empowerment through interest-free venture.
Dear Dr. L.H. Manjunath,
Let me congratulate you once again through this letter for your excellent crusade in assisting the farmers who are otherwise driven to money-lenders, who are worse than sharks in pushing farmers to commit suicides.
I take this opportunity to express the possibility of doing away with debts completely and thus become own financier and banker. In fact one can have a ‘your own’ permanent bank if debts and debt servicing is brought to zero.
I strongly feel that with efforts, commitments and actions, it should not be difficult to ‘turn around’ and do away completely with dependence on bank borrowings. This can be tapered down within 3 to 5 years and one can become financially independent.
The greatest advantage and strength you have is a huge number of self-help groups running into 1,16,500 and a much greater membership of 12,85,000. Your outlook and approach speaks a lot about your respect to your borrowers. It is this approach that shall go into building character, commitments and above all a trust and shall assist you in your venture towards elimination of bank loans.
Your organisation SKDRDP gives loans to farmers and they are supposed to refund those loans within 3 to 5 years. Why not a similar approach be adopted by your organisation to pay back whatever you have borrowed from the financial institutions?
Since you have such a large membership, if every member starts contributing every week/month/quarter a certain amount, surely this equity can help reduce your bank borrowings considerably towards financial non-dependence.
I would request you to ponder over as to why you should receive less on your savings and why pay more on your borrowings. Again I repeat, if your borrowers can do away with loans given by you, why not even SKDRDP? No doubt that in order to meet your over-head expenses, there has to be a constant cost reduction as well as an attempt to bring about revenue generation.
I would also suggest that in order to meet your over-head expenses, whether along with your experiment, can you not enter into a profit-sharing with some of the enlightened farmer members.
My suggestion would be the repayment experiment. This may be done as a pilot project with the goal and mission to bring about nil borrowing and zero interest to farmers.
Now since you would be providing after 2 to 3 years, interest-free loans, it becomes their duty to provide you with a certain amount as an equity which also shall not attract any payment on deposit of those account of saving with SKDRDP. Naturally after a stipulated period, that amount shall be paid back to them who have contributed towards this equity.
I am also impressed by your attempt of providing training, upgrading technology and giving all marketing support, perhaps you can ask them to bring about cost saving and revenue generation by each and every borrower which will also help them to build up small capital of their own. There has to be a constant monitoring and mentoring. I wonder, whether some State, Centre, or corporate can provide interest-free loans for a certain period to meet your new objective. This may perhaps also assist in bringing about zero interest loans to your borrowers. You can generate funds by way of bulk purchases, marketing consultancy, voluntary donations and other such common activities.
In case of loan of a joint venture, losses may be borne proportionately. The entire turnaround movement should be to become debt-free farmers. The entire programme involves a lot of sacrifice and determination which shall increase your opportunities to eliminate threats. This might become a good model for our country to follow and bring a lot of laurels to SKDRDP.
The message is: bring about productivity of money and achieve your goal and mission through nil or zero interest.
(Phiroz A. Poonawalla)