In an exclusive conversation with NewsX in its special segment, NewsX A-list, Padmaja Reddy, Founder & Managing Director of Spandana Sphoorty Financial Limited shares her incredible journey in microfinance and working experiences especially focused at low-income women.
Establishing herself as a first-generation entrepreneur, Reddy talks about her microfinance organisation ‘Spandana’ which she started after searching for a scalable, viable, sustainable model of social development. While working with her past organisation, she happened to meet a rag picker and the chance interaction changed Reddy’s direction. “After my post-graduation in management, I worked in an NGO as a deputy-director and later in 1998, started Spandana. In my past office, it was a chance interaction with a ragpicker where she narrated her ordeals. I asked her about the business, and she said business is very diminutive because people do not understand the value of this scrap,” says Reddy.
“She earns 60 rupees per day and she told me that by evening she is left with only 20 rupees. On asking what happened to the remaining 40 rupees. She said that she was using a pushcart and was paying a rent of Rs 10 for it. When asked about, since how long she is doing this business, the lady said that she started it when she was 12 years old and was doing it for the past 14 years. She paid over Rs.40,000 rent for a cart that would have cost Rs.1,500 had she bought the same. She also said that she was borrowing Rs.270 every day and paying back Rs.300 on the same day to the moneylender and she was obligated to sell the scrap to him at a price which is lower than the market price.”
On hearing the rag picker miseries and losses, Reddy said “I enquired on whether she would be able to repay the loan in case she is given a loan. Upon assurance from her, Rs.2,000 loan was given from that NGO”, says Reddy telling us how the news spread like wildfire. “After two days, about 300 women came to the NGO office to request for the loan. They were promising that they could repay the loan without any default and wanted relief from the clutches of greedy money lenders.”
“After seeing this demand and convinced by the impact that this small loan could create on the rag picker’s livelihood decided to scale up and extend support to other such women who are being exploited by money lenders and are struggling to make both ends meet. As I could not scale up in that organization, I quit that organization and they started Spandana in 1998 society,” says Reddy.
Reddy spoke to us about work insights into the livelihoods of the poor and an insatiable appetite for sustainable market-linked solutions. “So that was the first time I came to know that like they’ve done microfinance organizations like Grameen Bank. What I am trying to do we started giving loans to poor women who cannot receive a loan from the bank. The Banks ask for collateral on these payments. They don’t have any collateral, they don’t live in a house, and they just live in a small factory. And again, banks cannot give up these small loans, the loan sometimes is asked more or less.”
“We operate in that particular segment, we operate among low-income women where we organize them into small groups and they give a guarantee to each other and we grant them loans,” Reddy further adds. Growing into the largest Microfinance institution in India and 6th largest across the globe, Reddy also shares with us how her education also helped you in this journey. “I did my post-graduation in Business Administration, and subsequently, I have done a number of diplomas from different countries. I did a project management course in Berlin and pursued various training on Microfinance. I did a course on microfinance at Naropa University, U.S.A, Credit and Micro Enterprise Development Training from Durham University Business School, U.K Market Research for Micro Finance at Uganda and Masters from Harvard Business School.”
All these different courses helped Reddy understand how microfinance organizations across the globe are functioning and working and help her established this largest empire providing a sustainable model to low-income women. All these years making such a positive impact to a lot of women entrepreneurs, and women’s lives, Reddy in an inspiring way tells us how much of work still remains.
“We have given loans to over one crore women in the last 22 years, and accumulatively we dispersed about 50,000 crores. But however, India is so large that we have 130 crore people in terms of households and there are over 25 crore households. Microfinance organizations together are able to reach out to only 50% of the low-income women and households. So still another 50% is left,” says Reddy.
On a concluding note, Reddy stresses on her future goal and says “Presently we are operating only in 18 states and in 280 districts, but there are 90,000 villages hence there is still a lot to be done while trying significantly to improve the socio-economic status of millions of poor families in India.”