People in rural West Bengal often fall into the vicious cycle of loan trap. During emergencies or desperate needs like sickness/hospitalisation, people succumb to taking instant cash from money lenders and fall into the vicious trap of loans.

West Bengal is India’s fourth most populous state with a population of 97.69 million, a fifth of which live below the low poverty line. Poor basic infrastructure, Climate change, Lack of access to jobs and livelihood, Inequality or social injustice, unwise savings pattern, and non-availability of cash are some of the reasons for the lack of financial resources.

Such grave situations compelled people to borrow loans from money lenders at high-interest rates. Their loan keeps accumulating and lastly, they sell their land, household items, cattle, or ornaments at a very low price to repay the loan. The repayment takes generation after generation but still, this loan never ends.

Caritas India Uttoran programme initiated a micro-credit facility through the Village Development Committee (VDC) to support needy families by lending them money without interest. An amount of Rs. 28,680 is collected from the monthly collection of Rs. 20/- from the 60 households in the village. Special consideration is made if the families do not have any means to repay.

This credit facility can be accessed by applying to the VDC. After the application is received, the committee members visit and verify the application and handed over the money to the concerned person within 3 hours. Community members also keep a watch on the utilization of money that has been lent to the ones who borrowed money. Sanction processes are kept simple as villagers know each other and a strong unity is formed between them.

Additionally, VDC guides and supports people by sharing information, helping them to fill out forms for various schemes of the government departments, and assisting them with organic farming. These are done by the volunteers with the support of the Uttoran team, which also encourages the ‘Sharing Community’ to stand by the villagers when they are in need. Some members of the VDC also work for the interest of their community by repairing drinking water resources, closing open wells etc.

This initiative of the Uttoran team with the help of VDC encouraged ‘community sharing’ and built cohesiveness among the villagers. Since November 2021, 5 people facing financial crisis have been supported by VDC, and the village is freed from the loan trap. 60 families (total village households) came together for self-help, and 9 people are supported with hospitalization and medical support. The success of this initiative has inspired other Uttoran villages to adopt the micro-credit facility.