This is a rural community of 7 families living near Tumkur, Karnataka for 30 years.
The community is known in the area for their snake bite healing abilities.
This does not contribute greatly to their income.
The primary source of income is through daily agricultural work.
The community has one grid connected street light provided by the Gram Panchayat and it
works irregularly.
The 7 households do not have many basic services including connection to the grid and access
to toilets.
The community was approached by Selco's Tumkur branch after the manager read about them in
a newspaper article.
The Selco branch manager and sales associate first approached the community and discussed
with them about their general needs.
Selco formed a trusting relationship with the community by visiting several times and
learning about their overall need as opposed to just energy, thereby motivating each household
to find a way to purchase solar systems.
Prior to Selco's engagement, the community had bank accounts with State Bank of Mysore
that had been opened through a government's work program.
The accounts had not been used because of lack of awareness on how to operate it for
saving.
Selco used the assistance of the regional manager of State Bank of Mysore who agreed
to give a loan if the community formed a joint liability group.
So Selco approached us for the financial assistance for the scheme which they wanted
to implement in the community.
The families were asked to form a group wherein 7 families were sponsored and formed a group
called Adishakti group.
The group was financed from the bank whereas 25,000 subsidy has been provided, security
money has been provided by the Selco company.
Selco lowered financing barriers in two ways.
Rupees 500 as down payment per system in order to lower the initial upfront cost for the
customer and a risk guarantee fund of 40% of the total loan to the bank.
That is, Rupees 25,000 in order to instill confidence to the banker in the event of non-repayment.
Selco assisted seven women in the community in forming a joint liability group which they
called Adishakti.
They hold meetings every Friday at which each woman contributes Rupees 10 to the group's
corpus.
This money is then deposited in the bank.
Selco trained the women's group in record keeping.
All money transfers are recorded, making the financials very transparent.
The minutes from the group's weekly meetings are recorded in detail.
Selco monitors the records during monthly visits.
The installment is Rs 400 per month per person but the group has decided to pay Rs 500 each
meaning it will pay off the loan in less than the two-year payback tenure.
Selco's innovation demonstrates how simple complementary mechanisms can stimulate end
users of poor rural communities to benefit from banking facilities.
