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Progress under the SHG
Bank Linkage Programme
Box 2.1 Pradan's Computer Munshi System (CMS)
In keeping with its mission to "impart rural livelihoods to enable communities" Pradan promotes
SHGs in 7 states as community institutions designed to offer mutual help, financial
intermediation, empowerment and livelihood promotion. It sees high quality book-keeping as
crucial to the transparency, equity and longevity of its groups. Since it would like its groups
to be on their own within one and a half to two years of inception, with Pradan assisting
thereafter only with annual audit (carried out within a week of the end of the financial year),
this means the groups must be self-sufficient participants within 3 to 5 months in an innovative
system of accounts and bookkeeping called the Computer Munshi system. The system is built
around a Group Accountant with basic financial literacy selected from among group members,
or from the village, who is acceptable to the group, and is trained on-the-job for 3 months,
supported by a Computer Munshi, equipped with a computer and printer in a central location
with electricity supply, who has at least a high school degree, and the necessary interactive
and social skills to be acceptable to a large enough number of groups to make a living, and
the entrepreneurial ability to supplement it, if need be, by offering similar book-keeping and
training services to the banks, DRDAs and other SHPIs.
After each weekly meeting the GA completes, apart from the books of accounts, a Regular
Monthly Transactions Statement (the RMTS I) recording the week's savings and credit
transactions, and balances, including any items of expenditure and income, memberwise, in
the local language. It is collected by a messenger from a drop-box according to a fixed
schedule, and is delivered to the CM, who enters the accounts in his computer, and remits
back to the group a corrected statement, the RMTS II, in time to form the accounting basis
for the next weekly meeting of the group, and for the group to correct its accounts against if
necessary. The system is designed to be self-correcting, since the GA is warned each week of
any discrepancy between the balances in the RMTS and the balance in the cash box, and can
correct any errors as they arise. Likewise the CM is warned of any remaining discrepancies each
week, and is also in a position to prepare a monthly trial balance for the group, which is
discussed at a monthly meeting of village level clusters consisting of about 25 groups each,
which are attended by the group representatives, the CM and Pradan staff.
The groups are expected to pay an honorarium to the GA from the outset, and a fee to the CM
after the first year, during which it is paid by Pradan. It should be possible for a CM to serve
up to 300 groups, which at Rs 2 per RMTS per week should earn him a viable income. By March
2005, 48 CMs were serving about 2,000 groups and the system was functioning with minimal
supervision in about half the locations, with some CMs making up to Rs 1,800 a month and
being occupied for about half their time. However not all groups were convinced enough yet
about the usefulness of the system to be willing to pay, especially for the CM who is located
further away than the GA. Some of the difficulties faced are the CMs not being able to read the
handwriting of the GAs, the GAs not being able to interpret the RMTSs correctly, and errors
arising from a lack of understanding on the part of the CMs of all the different loan products
of the groups. Some of the challenges facing the system are the need for further improvements
in the software (it is already capable of accommodating electronic data entry at the group
level, which will minimize human errors), improving the back-up system for the hardware in
conditions of frequent power failures, and logistical difficulties in the messenger system in
view of the remoteness of some of the groups. One of its features is a heavy commitment of
time, and cost information is not yet available on the overall system to estimate how much
other SHPIs would have to be compensated to take it up (PRADAN has received grants from
NABARD, SIDBI, and initially from the DFID funded CASHE project of CARE, under its innovations
window) 43 Based on Ajit Kanitkar and Jan Meissner, 2006.
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