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The concept:
Rickshaw
Bank is the flagship program of the Centre of Rural development (CRD).
The program is designed to provide a means of self-employment to the
poor and the marginalized rickshaw community. The central idea is the
issue of an asset-based loan to the rickshaw puller for which
installments are repayable on a daily repayment plan with one-year
duration. Full and timely repayment leads to ownership of the rickshaw
being handed over to the puller. This concept is in contradistinction to
the existing practice in which an equivalent amount of a daily rental
fee is paid to rent the vehicle, possibly for the lifetime of activity,
with no scope for ownership. The innovation lies in its unique style of
service delivery and design that addresses underlying causes of poverty
through asset based entrepreneurship development. To be comprehensive in
meeting the needs of the rickshaw puller and family, the daily repayment
is a one-window repayment amount towards the eventual ownership of the
rickshaw, social security in terms of member deposit, accidental
insurance premium, uniform, licenses, a photo identity card, and related
training. The Rickshaw Bank provides the target community with an income
generating asset – the rickshaw, and allied services thus promoting
micro entrepreneurship among urban poor and rural migrants.
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Rationale:
Rickshaws
are a significant means of transport and conveyance in India. There are
currently estimated to be 8 million rickshaw pullers in India. 95
percent of these rickshaw pullers are victims of high daily rental fees
making it nearly impossible to earn enough income to ever own a rickshaw
in their lifetime. In addition, similar to other rental services, they
have to bear the cost of any accidental damage to the vehicle on which
there is no insurance option. Unable to bear the cost of a large damage,
the puller is subject to harassment and this leaves the pullers with no
choice but to flee the locality. The underlying cause behind this
vulnerability is that Rickshaw Pullers are constrained by lack of access
to basic formal banking services such as loans, savings, insurances,
lack of disposable income to access basic utilities or provide
adequately for families.
The
principles of the social business venture, the Rickshaw Bank, are three
fold: to remove constraints of the targeted community, to increase
earning capacity, to ensure sustainability and scalability of Program.
The Rickshaw Bank addresses each of these opportunities. It releases the
pullers from the constraints of access to basic financial services,
provides identify proof to protect them from the social stigma and
harassment. The second advantage is the enhanced financial gain. When
the pullers pay off the loans for their rickshaws, the future income
goes into their own pockets, to their families, and eventually backs
into the local economy. Through additional collaborations with local
institutions, the Rickshaw Bank has been able to tie up for free
healthcare, affordable clothing, licensing and procuring cooking gas
licenses- all critical expenditures for the household. Third, the
business aims to provide both ‘in reach’ and ‘outreach’. In-reach or
depth of the service means providing access to affordable products,
services, and information to the existing clients by means of
negotiating at a large scale. For outreach, the model is commercially
sustainable for the service to be adopted or expanded to other needy
areas. The product the rickshaws are manufactured locally, either in an
in-house manufacturing unit or by local suppliers. This asset is then
accessible by a five-member common liability group that acts as the
social collateral towards the ‘loan’. The concept of garage is
introduced as the meeting point for the 25 pullers or 5 groups and also
works as a collection centre for the daily repayment. The garage owner
is creation of another point of entrepreneurship initiated by loan from
the Rickshaw Bank. The product available to the target community is the
Rickshaw; the insurance facility for the puller, the passengers and the
vehicle, the license for puller and the vehicle, medi-claim, the uniform
and the identity card. Additional benefits tied in on fee basis are
cooking gas connectivity, emergency loan or need based purchase items.
Core
Business Strategies:
1.
Rickshaws are technologically superior leading to increased customer
demand: Designed by the India Institute of Technology (IIT), Guwahati
and assembled by CRD’s production center, the rickshaw is more
aerodynamic, lighter than the traditional vehicle and has safer seating
arrangements. This makes it easier on the puller and more comfortable
for the passenger, thus creating heightened consumer demand for Rickshaw
Bank vehicles.
2.
Rickshaws are provided to pullers in groups of five. The pullers, who
are members of the Rickshaw Bank, form garages in different parts of the
city to manage their savings, repair the rickshaws, update business
records, and collect rent.
3.
Repayment is collected on a daily basis. Since the puller has a daily
earning pattern, the repayment is collected on a daily basis. This
revenue for the Bank is applied towards the cost of the rickshaw,
insurance premium, license, uniform, and operating costs.
4. Finance
is raised on a Loan cum Advertisement based model. Formal financial
institutions provide the loan on commercial rates; grant money is
targeted to leverage greater financial access to bank loans and for
internal capacity building; advertisement space behind rickshaws is sold
to local businesses or interested corporate houses and is an additional
source of revenue. The advertisement revenue also helps to reduce risk
in case of delayed repayments from pullers.
5.
Additional loans given to the Rickshaw Pullers community to address
other community needs. Pullers own their Rickshaws in a maximum of 15-18
months—with most owning this asset within 10-12 months. The link with
the Rickshaw Bank continues for a loan towards second product or service
and especially for negotiating better advertisement rates with
businesses, and for accessing insurance services.
ICICI bank
has agreed to fund CRD in the tune of Rs. 20 million provided it
arranges the FLDG –First Loss Deposit Guarantee amount --of 15%. AIF
grant to CRD helped in bridging that gap. As of date we have taken Rs.
4.00 million from ICICI bank. Further State Bank of India (SBI) has
supported with a term loan of Rs. 3.00 million with a tripartite
agreement with CRD-SBI and Rickshaw Pullers. The entire money has been
withdrawn and utilized.
CRD has
also been able to mobilize fund for manufacturing improvised rickshaws
from Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC)
and Hindustan Leaver Limited (HLL) through entering into agreement where
it provides their advertisements on rickshaws for the period of 3 years
at the fixed rate of Rs. 7000/ per rickshaw. The companies have found
these offers attractive and they get mobile publicity across the city
and the rate said to be 96% cheaper than the going market rate in the
city. Total advertisements these corporations have sponsored were 300.
The American India Foundation (
www.aifoundation.org )
has extended their support for the
capacity building and replication of Rickshaw Bank activities in the
state of Assam and UP.
Rickshaw bank in Assam: Assam has reached a milestone of 390 Rickshaw pullers becoming the owners of their own means of livelihood. There are another 510 rickshaw pullers who will soon join their ranks. The total number of Rickshaws disbursed till 30th Oct 2007 is 1474.
Rickshaw bank in Tripura:
On 26th July, 2006 the formal inauguration of the Rickshaw Bank project was held with the rolling out of 100 Rickshaws in presence of the Chief Minister, Minister of Sports and Rural Development, Chairman Tripura Industrial Development Corporation, Chief General Manager and General Manager of State Bank of India (SBI) Local Head Office, Guwahati. A new assembling unit with the regional office has set up at Chandrapur areas of Agartala with a 15 member local team.
Rickshaw bank in Tamil Nadu: CRD started working in Chennai in 2006 partnering with CARE India in its Tsunami Response Programme. A total of 200 rickshaws are scheduled for rollout in the city of Chennai. An assembling unit of the rickshaw bank is also operating in a place called Gumudiipundi. The place and shed for this assembling unit is provided by the Tamil Nadu Government.
Rickshaw bank in UP:
To start the Rickshaw Bank activities in Uttar Pradesh, India
CRD has established a regional office in Lucknow. The valuable support of American Indian Foundation (AIF), www.aifoundation.org
has led to further expansion in a partnership model with three
organizations working in different districts of UP, namely NEED in Lucknow city,
JMN in Varanasi city and AAK in Allahabad
city. Already the demo phase is
completed.
Rickshaw bank in Gujarat: Recently five cities, those are Ahmedabad, Rajkot, Surat, Valsad and Badodara were surveyed to find out the scope of rickshaw bank project in Gujarat.
It is observed that the problems of the Vegetable vendors, fruit
vendors etc. are similar to that of Rickshaw Drivers. Here the demand for goods caring Rickshaws is much more than human caring Rickshaws.
Keeping this vital issue in mind CRD has already launch “Hath Lorry” (Hand cart) in beautiful city of Surat. The present status of CRDs issued hand cart is 93 up to October 2007.
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