Nano Finance (NF) is a system through which small interest-free loans are given to the women for their emergency needs, livelihood, children’s education, and healthcare. It offers them an entire year for paying back the loan in installments. Their returned money is recirculated and given as loans either back to them or to other women who are in similar situations. Under the rules of the NF system, women get access to additional interest-free loans under the condition that the previous loan is paid back in full.
” The coordinators are like the CEOs of a big company who manage thousands of women with confidence and trust.”
A visitor
It employs coordinators who manage specific regional areas. Women local to each area select coordinators who they can trust and who can understand their unique circumstances. Most of these coordinators do not have even a high school diploma, but their hard work, trust in the organization, and love of helping other women have made the NF system successful. A visitor remarked: “The coordinators are like the CEOs of a big company who manage thousands of women with confidence and trust.” The coordinators and the women who participate in the NF system are truly responsible for the success of this program.
The NF system gives women a sense of security and comfort in times of emergency and saves them from having to take loan from moneylenders. It also gives them the opportunity to earn supplemental income and provide a better life for themselves and their families. The impact of a small loan ($20) gives them hope and confidence for their future. Through the NF system, women learn how to help themselves while also assisting other women who are in financial distress.
Principles of Nano Finance
Only girls and women who do not have access to funds for even emergency needs are eligible for Nano Finance.
The payback period for each loan in a maximum of one full year.
The system has minimum administrative cost and requires minimal training of the community coordinators.
Trust is a key factor to the program’s success of women helping themselves and other women in their community
It is extremely important to pay back the loan, not only to help the borrowers but others as well and also for the sustainability of the NF system.
Recirculation of the returned money is the uniqueness of the NF system
Micro Finance vs Nano Finance
| Micro Finance (MF) | Nano Finance (NF) |
| Getting small loans from MF (or an NGO) requires satisfying several rules and regulations, which are not very practical or helpful to the poor women for their emergency needs. | Women do not have to go through paper work and/or rigid rules and regulations for getting small loans through NF system. |
| Gives mostly group loans for businesses to both men and women. | Gives small loans up to the equivalent of 20 USD only to women. |
| Due to the complexity of the system, many people are required for efficient operation which requires high overhead and high interest rates. | Due to the simplicity of the system, a few women manage the entire operation. Very low overhead and can sustain with no interest rates. |
| Book keeping is complicated in MF system due to frequent collection and savings with compound interest. | The book keeping in NF system is very simple. The money transactions are in whole numbers. So, it is easy for the women to understand numbers while paying back their loans. |
| MF and most of the NGO(S) borrow money from the banks to give loans to the people with high interest rates. It sustains with the earnings from the interest rates. | NF system sustains mostly by re-circulating the returned loans, donations, and grants. |
| To get a loan from MF system, the woman has to be a member of a group for at least six months with savings within the group. For some other MF system, the loan can only be given in groups with some security for one year. | In NF system, only individual women receives loans without any pre-conditions. There is no group loans available. |
| Micro financing can be a profit making venture for the NGOs. | The only interest of NF system is to help the poor women and it is not a profit making venture. |
| There is a strong competition between the NGOs (how many self help groups can be created by each of them etc) to get more loan or grants from different sources. At times, the main purpose of helping people can get lost. | NF system only provides individual loans. There will be no competition for creating self help groups. Encourage the women to help other women by returning their loans in time, so that their returned money will be used for giving loans to others or to them if they need. |
| An MF system can be successful and financially benefited to an NGO without truly helping to the most poor women of the society. | The success of nano finance depends on the net-working of the women with trust. |
| Helping poor through MF system can be only practiced by Institution with big financial investment. | Helping poor women through the nano financing system can be practiced by anyone who truly wants to help the poor even with a very small initial investment |
Benefits of Nano Finance
Through Nano Finance system, women are empowered as entrepreneurs, as contributing members to their family and often as leaders in their community. Trust (the meaning of the Hindi word “Biswas”) and taking ownership are key factors to the success of Nano Finance system that provides a welcome opportunity for many of the women to avoid the greed of moneylenders and benefit from a sense of security and comfort. The purpose is not to make these women rich, but rather to empower their independence at the very minimum with proper shelter, food, basic education, and health.
