Committee – A Century old Common solution for debt and interest

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 Almost every one of us certainly have had a conversation with our parents or somebody from previous generations and heard the following expression: “If we couldn’t afford it, we didn’t have it.” However, is it possible for us (age 18-30) to live that expression today? When we are forced to get into debt unconsciously with the availability of credit cards, career development loans, personal loans, mortgages around us, of course with varying interest rates. We have developed an understanding that “spend now and deal with the consequences later” as we do not want to be left behind in the race of materialistic comfort.

 Being a new student to sustainability and Commons, it is amazing that how i started appreciating the aspects of commons in my life that i am living since childhood unaware of their presence as Commons.

 For me a living concept of common is “Committee” As one of the substitute to Debt.

 Here committee is different from its literally meaning, “A group of people officially delegated to perform a function, such as investigating, considering, reporting, or acting on a matter.” (Free online dictionary by Falex). Rather in Pakistan or subcontinent (before partition), there has always been a group of trust worthy people, informally generated within a community; friends, relatives or neighbors. They collect money to help each other commonly known as “committee” or “to go for a committee.” Committee concept has a history of about 100 years at minimum despite the specification of rural or urban areas in Pakistan.

 But how and why it is different than a charity is the mile stone for the Commons in itself. 

 How it works:

Committee starts with a news in the air deliberately spread by the organiser (again informal) let’s say, an aunt of a social circle, family or of the village/community that a new committee is being commenced this October with the monthly instalments of Rs.1000 and all Interested members are welcomed to join.

The formula is, every interested member who joins the committee pays the organizer aunty Rs.1000 every month, but for how long depends upon the numbers of the joined members.

If 10 members join the committee than Rs. 10,000 are collected for the month of October (1000* 10= 10,000)This collective amount of Rs 10,000 is given to the one of the member, mostly decided either by lucky draw or  by mutual understanding. Same formula works for the month of November and so on but this time the collective money of Rs.10,000 is given to next member in line. In this way committee will last for 10 months and every member will keep on paying monthly installments of Rs.1000 for 10 months and enjoying the collective amount Rs.10,000 once in ten months that he could not save on his own.

 Specifications of a committee:

·        Organizers aunty does not charge for her service and is responsible for the collection of installments, security and issue resolution among members.

·         Usually a date is set for the collection i.e. by fifth of every month one must pay his installment.

·        In the matter of urgency, members can decide and swap their turns among themselves making organizer aware of their understanding. 

·         More the members are more the collected amount will be i.e. (Rs. 1000*20= 20,000) but it will take 20 months for a committee cycle to complete.

·        Or more the installment amount is i.e. (Rs.2000* 10= Rs. 20,000) resulting into lesser committee cycle time with better returns. However, it depends upon the income level or resources of the members.

·         One organizer may run more than one committees simultaneously i.e. (one with Rs 1000 monthly installment members and one with Rs. 2000 monthly installment members).

·         Anyone can be an organizer if ready to take the responsibility and considered respectful and trustworthy in his circle.

·        Committee works effectively and efficiently based on long term relationships. People hesitate to sign up for a committee with someone who they do not know long enough.

·        Committee runs on mutual understanding and trust without any documentation, signature and evidence.

 How Committee is serving the community:

All this committee specification seems too mathematical to comprehend for an illiterate village woman. But the fact is this idea somehow originated from the “stayed at home” uneducated, rural community women. As the community run this committee (without government, NGO or civil society intervention), mostly by the trust worthy woman of town or family that’s why the history of committee is unavailable in black and white to understand how and when it started. But it is something that I have seen my mum and her mum doing throughout their lives to have some savings for important, finance based projects of their lives.

The most likely assumption can be made is that men have ever been the bread earners in subcontinent (mostly in Muslim families) and whatever they earned and brought home was given to their wives to run the house. So it has been the responsibility of women to look after the large families with low income and to save some amount for unexpected challenges of life (saving for daughters marriage, university or hospital fee for their children). The committee amount could be a pleasant surprise for a husband at the time of crisis provided by wife, when he does not expect her to save that much amount on her own especially when she is unemployed.

Secondly, there were no banks operating in rural areas 100 year ago from now in Pakistan And if they were (let’s say for the sake of argument) the community was so inter connected and used to trust each other more for borrowing and sharing their problems than some outsider from bank. People loved and cared for each other in difficult times.

 Moreover, the most important aspect of committee on what I based the topic of my post is debt and interest. 

Interest is prohibited in Islam… That is one of the biggest sin for a Muslim to commit (a Muslim must not take or give interest) and  I think committee emerged as a natural solution for the poor Muslim communities with having saying no to interest and debts. Borrowing money is allowed in Islam but no one wants to be in debt unnecessarily. People also do not want to lend money to borrowers with lesser chances of returns.

 Advantages:

·        Borrowing the money with 0% interest.

·        Committee is a borrowing from the people you know already that’s how community gives the sense of belonging than borrowing from bank.

·        Every member has a share in Committee amount gives a sense of ownership and right for the amount he is taking.

·        Members can go for a planned turn of claiming the money when they need it most ( I.e. I would like to have the committee amount in September when I have to pay my university fee).

·        Giving someone your hard earned money is not possible unless a mutual trust has been developed.

·        Committee installment must not be the amount left behind after spending but the other way round.

·        Most people appreciate the concept of committee as they admit they are unable to save lets say Rs 1000 every month on their own but it is possible only for them when they see it as an installment for future savings. 

 Disadvantages:

It will be unfair if I do not mention the drawbacks of committee.

  • Fraud issue is on the top of everything (one person won the trust of people and ran away with their money it usually happens when relationship is not long enough.
  • It is hard for some to quit the committee once started for example if job is lost.

 This concept of Committee is common in Pakistan as if a Pakistani claims unawareness to the concept of committee it will be weird.

I am also a part of a committee for last three year in London (with my neighbor Aunty from Pakistan, built on 7 years long relationship with her) it pays for my holiday trips in December without dragging me into any debt and interest. 

 The most amazing thing about committee is, it started within a community for the welfare of a community by women and has sustained for last 100 years approximately, providing solutions to the community financial problems.

 The interesting thing about committee is that Pakistani men really appreciate the idea of committee but hesitate to be the direct member or the organizer of it.

 

Sharing in the spirit of Commons.

 

 

 

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