Walk into any village in Marathwada in central Maharashtra and you will hear about the bachat gaths.

Four years of drought preceding this monsoon have pushed farms across the region into deep distress. As farm production dwindled through these years, it was the credit availed through the bachat gaths, or small collectives formed by villagers to pool savings, that kept most homes afloat.

Through these collectives, also called self-help groups, women borrowed small amounts – mostly in the range of Rs 2,000-10,000 – to pay for children's school fees, uniforms, household repairs, and even monthly food ration.

At a time when resources were scarce, the self-help groups put money in the hands of women, who in turn ensured that the education of children and running of the household remained the priority. “Even during the drought, most men in the village would spend whatever little money they managed to get on liquor,” said Anita Pawar in Chapaner village in Aurangabad district. “The bachat gaths allowed us to keep our children in school or start a small business, like making bangles or sevai (vermicelli).”

How the groups work

Maya Sorte, a middle-aged woman who is serving her third consecutive term as member of the gram panchayat, is also the default coordinator of self-help groups in Wadwal village in Latur.

“Every member contributes Rs 100 per month and we keep the money in the respective SHG's bank account,” she said, explaining how the groups work. “When one of us needs money, we withdraw it from the bank and give it to the person as a loan, subject to other members' approval.”

There are about 70 self-help groups in Wadwal, and the members are mostly drawn from Dalit, Adivasi and Muslim communities. Among the dominant caste of Marathas, only those with an economic status almost at par with the lower castes join the groups.

The self-help groups in the village stand out for not having availed a loan from any bank since the first one started in 1997. Through the difficult months of drought, these bachat gaths were perhaps the only ones that postponed repayment of loans and waived off penalties for defaulters. They managed to do this since there was no bank loan to repay, and therefore, no need to get any formal approval for repayment-related delays.

Educate, agitate, organise

“For us, the bachat gath isn't merely about give and take of money. It gives us a sense of solidarity and togetherness,” says Kavita Kamble. This is visible in the meetings of the groups – while in most villages, the meetings are quick, formal affairs, the ones in Wadwal go on till late into the night. The women sing about Ambedkar, women’s solidarity and the annihilation of caste.

“My husband wouldn't allow me to come for meetings initially,” said Ranjana Kamble. “When I'd defy him to go for meetings, he'd taunt me publicly saying 'There goes Indira Gandhi.’”

This has changed. “Now, our husbands coax us to go for meetings as they realise we're not fooling around,” said Parvati Kamble. Parvati sunk a borewell and set up a grocery store in the village courtesy loans from the self-help group she is attached to.

In several villages, women mentioned how they had even managed to marry off daughters during the drought years courtesy credit from the bachat gaths. Yet others mentioned how they are part of more than one self-help group since “availability of credit at the time we need is critical”.

The women also spoke of how dependence on the local moneylender is now a thing of the past. Given how moneylenders fleeced villagers in the past, this is a welcome change, but the picture is not entirely rosy.

High interest rates

For one, the rates of interest charged by the self-help groups linked to banks and microfinance institutions are almost as high as that offered by moneylenders.

While some self-help groups have their accounts with nationalised banks, others are linked to local or multi-state cooperative banks and yet others with a variety of non-banking financial institutions. Several hyperlocal NBFCs have opened shop in talukas and villages over the last four-five years that are difficult to track as there is no single body overseeing them.

The government simply does not have data on microfinance institutions or loans disbursed by them. Neither does it regulate their functioning. This leaves them free to charge exorbitant rates of interest.

In some villages like Tandulja in Latur, the members of bachat gaths said they had to pay an interest of 5% per month on loans taken from the group. This comes to 60% annually, which is far higher than the 12%-14% annual interest rate charged by nationalised banks.

But those who are part of the self-help groups don't seem to mind the steep rates. “Through the drought months, the bachat gath was our only source of capital, so we made all efforts to keep the SHGs running,” said Kantabai Pawar in Chapaner village.

In cases where some members in the village failed to pay up monthly instalments during the drought, others chipped in to ensure the self-help group would not be disbanded.

But the drought was so severe that in many places, the groups could not keep up with repayment schedules of loans taken from banks and microfinance organisations.

Sreelata Tondale, a field coordinator who oversees the functioning of 286 SHGs under the Mahila Arthik Vikas Mahamandal in Latur district, said roughly 12%-15% of the self help groups in the district defaulted on repayment through the past two years. “In such cases, we convene a meeting of the SHG and take a vote from the members. If the majority vouches for the group’s inability to pay up, it is disbanded,” she said.

For the landless who have no access to bank credit and rely entirely on self-help groups, this is a huge setback. Since ownership of land is strongly connected to caste, those affected by the closure of the bachat gaths are lower caste communities without education or a family member in government or private jobs. Their livelihood is dependent entirely on wages from agricultural work in the fields of farmers from dominant castes.

Speaking of the rich Maratha and Lingayat families in her village, Dhondubai Gaikwad said: “They at least have farm loans to fall back on.” Others around her in the Dalit basti of Tandulja village too expressed anger. “The government is talking about loan restructuring and interest waiver (for the farmers). But how will it help us?”

As an earlier story on Scroll.in reported, Maharashtra’s much-publicised farm loan restructuring scheme is not helping its farmers.

For the landless, the government does not even have a plan.

The writer is principal correspondent with The Statesman and a PhD scholar at the Centre for Studies in Social Sciences, Calcutta.