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19 The base suicide rate in AP is 14 per 100,000. There would be cause for concern only if the rate among the borrowers of an MFI were significantly above this. None of the allegations in the press and from government seemed aware of this, apart from the fact it is very hard to determine the cause of a suicide. This is not to imply that suicides are not tragic whatever the reasons. 20 This is the term used in the literature (e.g. CGAP 2004). In India abusive is also commonly used to refer to verbal abuse, another practice field workers were accused of, as noted below, but it should be remembered that what is considered abusive in the latter sense is culturally specific. 21 Frequency of mention, not necessarily use. 22 Only as a "last resort" were mostly larger, individual, loans, recovered by encashing signed blank cheques, or taking legal action to enforcing blank promissory notes. Use of blank documents is of course clearly an abuse, and lay behind the cheating cases registered. Two respondents mentioned physical force, exercised presumably by centre and group leaders, since a lone field worker would risk retaliation (one was in fact murdered soon after the crisis). 23 The CMF in collaboration with KAS Foundation is experimenting with the impact of introducing flexible repayments schedules, such as allowing the client to skip up to two principal installments through a coupon payment system which simplifies the accounting for both MFI and borrower, or allowing the client to pay double the principal installments during the first six months of a milch animal loan when the animal is productive (see Chapter 9). 24 There is an interesting discussion of emergency loans in the annual report for CASHPOR for 2005-06. 25 But not "long and dirty" ones, which is too often the alternative. 26 Spandana has introduced what it calls a small business loan product, mostly in the urban areas where about half its borrowers reside, to members who have established a track record through the regular group lending programme, or to their spouses, with a maximum loan size of Rs 1 lakh (compared to the earlier ceiling of Rs 15,000, but with average loan size presently of about Rs 25,000) and customised tenor which could extend to 4 years. These loans are expected to constitute as much as 15 to 20 per cent of the portfolio this year. 27 This is contrary to the widespread advantage claimed for weekly repayment that it makes repayment easier, and to what some women told this author during a visit to a village in Krishna district where repayments stood suspended after the crisis, that they regretted the fact that they were working less because they no longer needed to raise money for the wages to meet the next repayment. 28 The previous government was also acutely conscious of the political importance of Velugu and offered members incentives, especially before election time, such as easier access to gas connections. It could be argued though that competition through bribery is preferable to attacking the other model. 29 The CIF is a component of Velugu, under which funds are passed down through the two upper-tiers of the three-tier structure, Mandal Samakhya's and Village Organisations, to the SHGs, with the intention to make each tier self-sufficient in the long run through an interest differential added on each stage. The World Bank's original intention was for CIF to finance small collective projects started by Common Interest Groups of the poor, prepared with their participation under micro-plans, but in view of the poor recovery rate (of 45 per cent in 2003-04) is now used mostly for individual loans by the SHGs, 74
MFIs: Learning from the AP Crisis with the recovery rate expected to increase to 60 per cent in 2004-05 according to AP (2005). CIF continues to finance some collective projects implemented by the higher tiers, such as marketing of agricultural commodities, and food security interventions. 30 Much was made of the fact that the group that ran one of the leading Telegu dailies, also owned a prominent chit fund company. However it is not clear how an MFI borrower could ever join a registered chit fund with large monthly contributions. Only small local informal chit funds would be affected. 31 On the other hand, except when loans are tied to purchases in particular outlets connected with the MFI, one would expect there to be a strong complementarity of interest between MFIs making large individual loans and the retail trading community generally. Spandana discontinued the business when it transformed to an NBFC (see Sriram 2005). 32 Spandana wrote off Rs 18 crore in 2005-06, while still reporting profits. It is likely to have to make further loan write-offs in the current year, since it expects to recover only 70 to 75 per cent of its loans in Krishna district. SHARE wrote off Rs 6 crore, and made a similar provision for further loan losses. 33 It expects its portfolio in AP to come down from about 80 percent currently to 50 percent in the next few years. 34 SHARE's rates in AP are 15 percent, and 19 percent in other states. 35 Both SHARE and Spandana have been roughly doubling their size in the last few years. 75
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Microfinance in India A State of th
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List of Tables Page No Table 2.1 Gr
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Preface and Acknowledgements This r
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Abbreviations ABC ADB BC BF CAR CAG
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CHAPTER 1 Overview and Summary of M
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Overview and Summary of Main Recomm
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Page 25 and 26: Overview and Summary of Main Recomm
Page 27: Overview and Summary of Main Recomm
Page 30 and 31: 1 1a 1b 2 2a 2b 2c 3 3a 3b 3c 4 4a
Page 32 and 33: The Light and Shades Study A major
Page 34 and 35: highest proportion of weak records
Page 36 and 37: their profitability after accountin
Page 38 and 39: allow the programme to grow organic
Page 40 and 41: 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
Page 42 and 43: Endnotes 1 It is very hard to compa
Page 44 and 45: as cash with the groups, the true r
Page 46 and 47: linkages", 11 percent 3rd, and 5 pe
Page 48 and 49: References APMAS (AP Mahila Abhivru
Page 51 and 52: CHAPTER 3 Progress Under the MFI Mo
Page 53 and 54: Progress Under the MFI Model is fun
Page 55 and 56: Table 3.4 Comparative performance i
Page 57 and 58: Progress Under the MFI Model on lit
Page 59 and 60: Progress Under the MFI Model 4 Howe
Page 61: Progress Under the MFI Model Refere
Page 64 and 65: MFIs, and the need for MFIs to plou
Page 66 and 67: size had actually come down during
Page 68 and 69: The point at which peer group press
Page 70 and 71: The lack of contact and communicati
Page 72 and 73: Box 4.1 Continued 4. MFIs will coll
Page 74 and 75: Endnotes 1 There will be many disag
Page 78 and 79: References APMAS, 2005, "A Report o
Page 80 and 81: (such as cattle and houses), and co
Page 82 and 83: The advantage of the provider model
Page 84 and 85: Some lessons learnt from experience
Page 86 and 87: Box 5.2 VimoSEWA: Synergies between
Page 88 and 89: 86 Table 5.1 Main Feature of Health
Page 90 and 91: Endnotes 1 While the microinsurance
Page 92 and 93: 16 A little less than a fifth of th
Page 94 and 95: 29 The rationale for transfer progr
Page 96 and 97: Roth, James and Vijay Athreye, 2005
Page 98 and 99: Issues and priorities for action re
Page 100 and 101: Endnotes 1 See for instance CGAP (2
Page 102 and 103: 100
Page 104 and 105: such as Chaitanya who soon became s
Page 106 and 107: money to support operational expens
Page 108 and 109: finance, and the microfinancial ski
Page 110 and 111: Box 6.1 Continued in experts and to
Page 112 and 113: Endnotes 1 In a sense it always was
Page 114 and 115: 16 Examples are Margdarshak in Luck
Page 116 and 117: 114
Page 118 and 119: Table 7:1 Commercial bank exposure
Page 120 and 121: The main constraints to the expansi
Page 122 and 123: further review, RBI has modified th
Page 124 and 125: 9 Thus ICICI has sold some of its b
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B. Equity Investments by the Ventur
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Figure : The Bellwether triangle Lo
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Despite the weaknesses the public s
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Box 7.1 Continued foreign sources o
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Endnotes 1 At this point they will
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References ACCION, 2003, "The Servi
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SIDBI Foundation for Micro Credit (
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categories, depending on the amount
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The distribution of total disbursem
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Endnotes 1 It should be noted that
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B. Donor Participation in Indian Mi
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this has dropped to 8% on the curre
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and poor populations. More directly
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and expansion of available retailer
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11 SDC through various programs for
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154
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1.1 Impact evaluation of Spandana's
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in the loan tenure of 24 months. Th
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There are two main motivations of a
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compensation structures used by Ind
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Endnotes 1 By Annie Duflo, Anvesha
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29 The main components of direct tr
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