National Microfinance Study of Sri Lanka: Survey of Practices and ...

Ten Thrift and Credit Co-operative Societies (TCCS) were selected in
consultation with the Assistant Commissioner Co-operative Development
(ACCD) and five S&C groups were eventually selected out of a pool of fifty
applicants. Two of groups selected were S&Cs groups from the FSP. A further
five S&Cs groups were initiated in communities that had requested assistance in
developing these activities.
After the partner Selection process was complete, the team then underwent two
weeks training with CARE's Microfinance specialist (who was at the time, the
CAB-J Project Director) including a two days workshop with office bearers from
all the CBOs and fifteen university researchers for the orientation of the baseline
study. A household baseline study was conducted and independently analysed
between the April and September 2001.
The survey was a household level survey conducted in two hundred families
within the geographical area of the twenty CBOs and thirty 'control' families
outside. The survey was conducted to provide information on the present levels
of demand and supply for microfinance services in the peninsula and to gain
insights into coping strategies undertaken by households.
In parallel, with the household baseline survey, the capacity building activities of
the selected CBOs were started. This involved each CBO receiving training on
group management and leadership, book-keeping, savings and credit activities.
CBO training was devised to be 'phased' and operate on three tiers of
sophistication according to the previous group management and savings or credit
experience of individual groups. The CBOs are designed to be self-managing,
with monthly visits by the project team and, unless for further training purposes
or by exception, as observers only.
After initial training was complete, CARE grants were given and individual
CBOs were allowed to choose their own loan selection criteria with the project
team removing itself from the disbursement process. Savings in the TCCS is set at
a regulatory minimum of twenty rupees per member per month, savings in the
S&C groups was self-set at a minimum of one hundred rupees per member per
month with some groups deciding to save up to two hundred and fifty rupees per
month.
Each member has an individual savings passbook and quick access without
penalty to savings is one of the principle criteria for the savings component of the
scheme. The CBOs utilise commercial banking facilities and the interest on
members’ savings is comparable with market rates. There is some consideration
being given concerning the possibility of setting-up a networked community bank
for the S&C groups.
Grant provision to the CBOs is stepped in three phases:
phase 1 - SLR 30,000
phase 2 – SLR 50-75,000,
phase 3 – SLR 25,000 +
No phase three grants have been given at this time and the project team aims to
give phase there grants in the form of an insurance product designed to hedge as a
risk & sustainability management tool.
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