The Children's Development Bank offers loans to poor children to start up small businesses and teaches them to become self-reliant
"My plan is to open up a shop and take another loan from the bank to do it," says an optimistic 16-year-old who, till recently, earned a living picking up garbage from the streets of Delhi. Thanks to the Children's Development Bank, popularly called the Bal Vikas Bank (BVB), Afroz now sells wallets, T-shirts, combs and other small knick-knacks from a pushcart he bought with a loan from the children's bank.
With a local shopkeeper acting as a loan guarantor, Afroz took his Rs 5,000 loan six months ago. He was able to pay it off in three months. Since then he has taken another loan of Rs 4,500. Business has been good enough for him to consider expanding.
The Children's Development Bank was started by Butterflies, a non-governmental organisation working with street children, in September 2001, in New Delhi. The bank soon caught the imagination of the children and demand for similar banking models in other areas began to grow. Today, the bank has four counters in Delhi (Fatehpuri, Okhla, Nizamuddin Dargah and Bhogal) and is mobile in another eight places in the national capital.
From New Delhi to Chennai, Kolkata, Muzaffarpur, Srinagar and now Leh, the bank has found enthusiastic young takers keen on becoming small entrepreneurs. It has also travelled to Afghanistan, Nepal and Bangladesh, while talks are on with Pakistan and Sri Lanka.
The uniqueness of the bank is the fact that it is owned and managed by street and working children who decide on the rules and regulations themselves. They are only occasionally helped out by adults.
Each BVB starts out with seed capital of Rs 2 lakh, provided by the international funding agency Comic Relief and routed through the British organisation CIVA (Centre for Innovation in Voluntary Action).
The bank's working committee includes a bank manager, bank promoters and development promoters. The bank manager is usually an adolescent chosen by the bank members. Bank promoters inform other street kids about the bank, collect money at designated contact points and help fill up application forms for membership or loans.
Development promoters are usually senior children in the age-group 16-18 who are well versed in banking and are sent to various cities to train other children.
"It's not easy being a manager...initially the children kept getting confused about how much they had deposited or withdrawn. That's when we decided to bifurcate the deposits into two khatas -- the jamma khata,also called chalta phirta khata (current account), and the bachat khata (savings account)," says 16-year-old Suraj, bank manager at the Fatehpuri branch.
In true democratic fashion, members of the bank, besides electing the bank manager, also elect a management committee and a loan committee. Once a month a general body meeting is held where any member is free to express his/her opinion.
With the BVB's help, street children who usually start out as rag-pickers have now begun selling tea and plastic toys on handcarts, and set up other small enterprises. This gives them self-confidence or "izzat" (self respect), as Mohit who has shifted from rag-picking to selling snacks out on the streets, puts it.
While initially they found it difficult to save money, and were under constant threat from pickpockets, the children now put in and take out money whenever they like. To open up an account, a child has to first fill up an application form. He is then given an account number and a passbook. The minimum opening balance required is Rs 20.
The bank opens everyday from 6 pm to 8 pm; timings are usually fixed according to the children's convenience. If a child deposits money everyday for 11 months he gets a bonus, which acts as a motivational factor.
In case a bank member wants to take a loan to start a new business, a street educator or bank promoter helps him draw up a business plan. The application is then forwarded to the loans committee that quizzes the applicant on his skills, his budget, where he plans to run the business, etc. The applicant is also asked how long it will take him to repay the loan. Once the committee is satisfied the proposal is okayed and money -- 20% of the member's savings amount -- is credited to his account.
The bank does have a few strict rules. Pickpockets and drug addicts are not allowed to become members. And loan requests to start cigarette or paan shops are not entertained. It is also mandatory for adolescent boys who take loans to continue their schooling. Most BVB members are part of the National Institute of Open Schooling and continue studying whilst running their businesses.
"The bank was started to help street and working children get life skills, like learning to save and using money sensibly for education, training or to start businesses. Banking develops a child's personality and teaches accounting and management, besides giving him a sense of security," says Rita Panicker, director of Butterflies.
Suman Sachdeva, a project director with Butterflies, is, however, quick to add that the organisation doesn't believe children should work. The bank was started given the existing realities.
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