Strap: A bank by homeless children gives them loans, teaches life skills and has takers elsewhere in the world too

The Children's Development Bank,
The Smart Street Bank

Civil Society News
New Delhi

Weave your way through cars, buses, trucks, thelas and rickshaws. Walk past a sea of people near the old Delhi Railway station. Turn right and go down a long and narrow galli littered with homeless men hanging around stoned. Don't stop to stare because at the end of this corridor you will find a room bursting with positive energy. It is a shelter for children, but also a base for New Delhi's youngest entrepreneurs.

A group of boys are animatedly discussing how they can set up small businesses. Twelve-year-old Mohit, a rag-picker, wants to sell namkeen, and he needs Rs 200 to set himself up. Thirteen-year-old Mohammed Akbar, another rag-picker, wants Rs 500 to brew tea and sell it. Fourteen-year-old Samre calculates Rs 3,000 will be enough to enable him to hawk toys at traffic light junctions. And Sandeep has taken Rs 2,000 to sell plastic flowers that light up with a battery.

The boys got their loans from the Children's Development Bank. The bank was started in New Delhi in September 2001 as a savings and credit scheme by Butterflies, a Delhi NGO that works with street children. In three years, the bank's model has gone global. After expanding to Chennai, Kolkata, Muzaffarpur and now Leh, the bank has travelled to Afghanistan, Nepal and Bangladesh. Talks are on with NGOs in Pakistan and Sri Lanka. The bank is doing especially well in Kabul, guided by Aschiana, an NGO and is expected to open a branch in Mazar-e-Sharif. Requests are flowing in from Sudan and Egypt, too.

Panicker hopes the Children's Development Bank will become a global entity like the Asian Development Bank. "If they can lend money for development projects, why can't we lend internationally to children?" she asks.

The banks are unique because they are owned and managed by street and working children. They have decided its rules and regulations. The adults lend a helping hand. Children can save money and withdraw it whenever they like. They earn interest on their savings. They can take loans and negotiate when and how they want to pay back. The bank managers are adolescents chosen by them.

Panicker says the first bank was started to help street and working children acquire life skills such as learning to save and use money sensibly for education, training or to start businesses. She says banking develops a child's personality and teaches him accounting and management. "It also gives them a sense of security," she adds.

"We don't believe children should work," clarifies Suman Sachdeva, project director with Butterflies, "but given the existing realities, we decided to start the bank." Butterflies first tries to persuade runaway children to return home. Most don't want to and, instead, choose a life of battered freedom.

My money, my bank

The banks in India retain their present name - the Bal Vikas Bank. Each starts with a seed capital of Rs 2 lakh provided by Comic Relief, an international funding agency. The money is routed through a British organisation called CIVA (Centre for Innovation in Voluntary Action). The first Delhi bank got money from the Ford Foundation through the National Foundation for India. Street kids in the Capital have already saved Rs 40,000.
Delhi has two branches, one at the shelter in Fatehpuri near the Old Delhi Railway Station and the other in Okhla, an industrial hub in south Delhi.

The Fatehpuri branch, located inside the shelter, is the main bank. Eighty children between nine and 18 years of age are its clients. At 6 pm, bank manager Suraj, just 16, slips inside the teller's cubicle as children line up to deposit money or withdraw it, at the end of a working day. Rs 3 is the minimum amount accepted, but most children deposit upwards of Rs10.

"It's not very easy being a manager, though I do enjoy it," says Suraj. "You need patience. Initially, we had lots of fights. The children kept getting confused about how much they had deposited or withdrawn. My calculator collapsed showing them."

Bank members then decided to bifurcate the deposits into two khaatas, or accounts - the jamma khaata (current account) also called the chalta phirta khaata and the bachat khaata (savings account). They can alter the rules because the kids are both members and owners. They elect a management committee, a loan committee and the bank's two managers, one to look after each kind of account. A general body meeting takes place once a month and members can express their opinion freely.

Bank promoters inform other street kids about the bank, collect money at designated contact points - Delhi has 12 - and submit applications for membership or loans. This enables children who don't live in the shelter to become members, too. Development promoters are usually older children, 16-18 years old, well versed in banking. They travel to different cities to train other children. Delhi has four bank managers, eight bank promoters and two development promoters.

To open an account, a child has to fill up an application form with the help of a street educator or bank promoter. The child is given an account number and a passbook. The minimum opening balance is Rs 20. If a child deposits money every day for 11 months, he earns a bonus. If a child wants a loan, an amount of up to 20 per cent of his savings can be sanctioned. The applicant has to furnish two guarantors.

HSBC and Andhra Bank sent volunteers to train the children in assessing loan applications, identifying businesses, recovering loans and understanding banking terminology and principles. Several rounds of training were required with street educator Sunil and caretaker Muhammad Kalam constantly helping out.

"It worked both ways," says Panicker. "The HSBC volunteers adapted quickly and learnt a few things. For a commercial bank, profits are important, but not for these children. For instance, volunteers said a guarantor should have a certain percentage of the loan amount in the bank. The children disagreed. Why penalise the guarantor, they said. He should have only 5 per cent of the loan amount in his savings account." As for recovery of loans, the children felt persuasion was good enough.

Loan applications are perused by Sunil. Then the application is forwarded to the loan committee, which meets once a month. The applicant has to be ready to field questions on the reasons why he requires the loan. If he wants to start a business, he is questioned on his skills, his budget, where he will run it and so on. The loan committee asks the applicant how he intends to pay back the money. Would a year be comfortable? Once the committee okays his proposal, the money is credited to his account.

Certain rules are sacrosanct. Pickpockets and drug addicts cannot become members of the bank. Money will not be sanctioned for starting a cigarette or paan shop. A child can't take an advance on behalf of his family. "Sometimes, estranged parents turn up and ask for a child's money. We tell them it's not permitted. The money is only for the child," says Suraj.

So far, no child has absconded after taking a loan. "Actually, it's quite the opposite," says 21-year-old Muhammad Kalam, the shelter's gentle caretaker. "They open an account, deposit their money. Then they decide to go work somewhere else and leave their money behind." If the child returns and asks for his cash, it is given promptly.

But there's no way of tracking the footloose children. The boys are free to come and go from the shelter. Just 10 per cent stay on. Most ran away from poverty and abuse. Akbar's home is six railway stations away from Samastipur in Bihar, he says. His father is a rickshaw puller. Akbar has travelled to Kolkata to meet his granny, then to Mumbai where the police beat him up, and finally to Delhi. Vijay has come from Nepal via Haridwar. "What else can a lost, harried child do?" asks Kalam. "They get killed hanging out of trains. I tell them please be careful and educate yourself."

Rag-pickers first

Butterflies wants to encourage adolescents to start group enterprises and has identified the food business, computer related enterprises like data entry, repair and horticulture as viable businesses. They also publish a newspaper and hope to train kids to become publishers.
The NGO is looking for mentors and coaches for the children. "While the mentor should be a role model, the coach should be somebody who is willing to share his skills with the child more often," says Suman Sachdeva.

Runaway street kids start their careers as rag pickers and desperately want to work their way up. "See, there's no izzat (honour) in picking rags," says Mohit with a shrug, "It's messy. But for most of us, it's the first job we do. No investment is required. At the end of the day, you deposit your collection with the seth (rag collector)and he calculates your hisaab (earnings). You can earn Rs 30-40."

With his loan from the Children's Development Bank, Mohit figures he could increase his earnings to Rs50 per day. There are shops nearby in Delhi's famed Chandni Chowk market, where wholesalers sell dried, salted moong dal. Mohit intends to carry this dal in a clean, plastic bucket. A bit of chopped onion, a twist of lime and a ditty praising his dal will bring in hungry customers, he believes.

The biggest hurdle to his business growth path is the policeman. Every child has to pay the local cop, sometimes as much as one-third of his earnings. Mohit's friends advise him to hang out at the bus stand and not the railway station, where there's more chance of getting nabbed by the police. He agrees. "The railway station is teeming with policemen. Forget about bribes, I could land up in jail forever," he says with a slight shiver. "At the same time, there are more passengers waiting for trains," he adds realistically.

Mohit has decided to wait for Delhi's winter chill to set in before launching into business. So has Akbar. He has bought a kettle, a kerosene stove, tea leaves and plastic glasses for his tea-selling enterprise. He even went around the markets with his kettle, but found few takers. After two days, Akbar gave up and put his equipment away. "I tried selling each cup for Rs2 without much success. The tea went cold. Finally, I brought my kettle back to the shelter, warmed up the tea and shared it with my friends. Once winter comes, people will buy my tea more readily," he says, hope written all over his small face.

His pals say he needs to make his tea tastier. But more importantly, he should consider setting up shop on the pavement. The tea will stay hot, simmering on the stove, and customers will come to him. Besides, when roaming around, the tea could spill. Akbar also conjures up the fearful image of the local cop.

Muhammad Kalam agrees that winter is a good time to begin business, but also advises caution. "How about selling peanuts?" he suggests, but Akbar says he's invested in tea and he's got to make that work. Meanwhile, to earn money, he's gone back to picking rags.

Samre switched from selling pirated CDs and audiocassettes of Bollywood movie music to hawking plastic toys. The cassettes cost a mere Rs3 each, but sold for as much as Rs20 each. He used to earn nearly Rs80 every day, but the police would take about Rs30 of that. "I ran the risk of going to jail if I didn't pay the cops. It used to worry me no end." He started the new business two months ago. His toys are selling and he has already repaid Rs300 of his loan.

Pickpockets are another hurdle. Street kids could do with an ATM machine. Sandeep lost Rs300 when his pocket was picked. His plastic flowers, at Rs 6 a piece, are selling well, but could do better. He buys them from a wholesaler in Sadar Bazaar in the walled part of the city, but he's often saddled with duds.

"I've got to find another wholesaler and do something about keeping my money safe," says Sandeep. He is also considering selling cheap radios, which cost as little as Rs18. He says he will need a second loan for this diversification.

There's really not much choice for these children who ply their businesses on the roads of Delhi. They have to be mobile vendors. Every inch of the Walled City's broken, crumbling pavements are valuable real estate rented out by the cops. Although the Delhi government plans to regularise street vending, child hawkers are excluded.

Home is a shelter

The shelter, run by Butterflies, is a real money saver. The boys used to spend around Rs10-20 every day on food bought off the streets. At the shelter, they get clean, subsidised food - Rs3 for lunch and Rs2.50 for dinner. A second expense was movies. But the shelter has a large colour TV with a DVD player. Each boy is a member of the Bal Sabha and a decision was made collectively to buy a TV.

"Every working child has a small surplus," says Sunil, street educator. "They used to waste it on gambling and drugs. Thankfully, that's all over now. The bank has inculcated in them the habit of saving. We'd like to encourage them to invest their money on further education."

The shelter is a large room. A school functions morning and evening and helps street kids appear for the National Institute of Open Schools (NIOS) exam. Some attend local government schools and work part time. There are computer classes, dance classes and theatre classes. The boys have identified a terrace atop a crowded MCD parking lot as a playground. A boisterous game of cricket goes on while bored drivers waiting below wonder where the noise is coming from.

The boys' long-term ambitions are also changing. Theatre, banking, social service and teaching are professions that have entered their gambit of thought.

Muhammad Kalam maintains discreet discipline, switching off the TV when it's time to study. He understands the children's fierce sense of independence, but also the value of education. He was a rag picker when Butterflies opened its first shelter at Jama Masjid. "I used to sleep in the park," he recalls, "During the monsoon months, I had no shelter. Butterflies invited me in and I have never looked back since." After 12 years, he went back home to Muzaffarpur, persuaded by Butterflies. His family was delighted. They had given him up for dead.

Do the boys want to go back? It's a tough life, but they say no thanks. "I like it here. I've got my pals and my freedom. The shelter makes us feel safe. We have hope of a better future," says Sandeep.