A meeting was held under the banner of Forum for Group Discussion on Economic Issues (FGDEI) on 24th August2013 in Dawat Nagar, Okhla, New Delhi. This forum has been formed by Sahulat Microfinance Society in association with Radiance Viewsweekly in order to deliberate upon economic issues with regular periodicity. This was the seventh meeting of the series. The meeting started on a welcome note delivered by Mr Arshad Ajmal, Vice President, Sahulat Microfinance Society. Mr M.H. Khatkhatay delivered a presentation on the topic of "BaitunNas'r Urban Co-operative Credit Society: Its Business Model, Multi-faceted Challenges it faced during its History of Operations, Lessons for Other Interest Free Cooperatives"


Mr Khatkhatay began by narrating the situation of Bait-un Nas'r at the time of its registration as a credit cooperative in the year 1978.It started its operations with a meagre capacity with the objective of providing interest free credit (against service charges). The first major development was the start of its Spot Deposit Scheme (minimum Rs.1 and above per day). Over the years other notable developments were launch of installment purchase loans for consumer durables, matching credit loans, and organizational evolutions leading to creation of an extended branch network, creation of intermediate organizational levels i.e. Regional and Zonal Offices and institution and development of the concept of Central Liquidity Reserve (CLR) for management of liquidity and enabling greater transparency in branch performance evaluation and institution of scientific HR systems for staff evaluation and remuneration.

Among the significant achievements of Bait-un Nasr he discussed about the computerization of operations, its liquidity management system, in-house employees' provident fund scheme, promotion of housing schemes and housing loans, promotion of Barkat and marketing of Barkat schemes, etc. He explained how total deposits and share capital reached Rs 15 crores and its membership around 150,000 during the year 2000; the area of operation expanded as well. But it faced a debacle with the market failure of Barkat in 2000.

Due to Barkat's overexposure to real estate, it became a victim of the global recession of 1997-2000. Major changes in regulations governing the non-banking financial sector by RBI at the turn of the century also compounded Barkat's woes. In spite of the latter being a separate entity, due to public perception of Barkat being a part of Bait un Nasr, there was a run on Bait un Nasr's funds. In consequence Bait un Nasr also had to suspend its operations from 2001 till 2012, with outstanding deposits of Rs 8 crores.

Mr Khatkhatay however sounded optimistic regarding the revival of Bait un Nas'r as the assets of the organization have appreciated and it hopes to pay off its outstanding dues by selling some of its assets. There has been a change in the composition of Board of Directors and the authorities have handed the society back to the Board. Now successful revival of operations from the year 2014 looks a distinct possibility. Future plans also include converting Bait un Nas'r into a multi-state cooperative credit society by the year 2016.

A Question-Answer session followed the discussion and the meeting was concluded with a vote of thanks from Mr Arshad Ajmal who thanked Mr Khatkhatay for sharing his experiences and lessons with the participants.