Self-help Groups as Financial Intermediaries in India ... - Sa-Dhan

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• training and sensitising bank officers• capacity-building support to NGOs, SHGs and banks• financial support to NGOs for SHG promotion• provision of revolving fund assistance to MFIs• evaluation studies and dissemination of SHG best practicesA Microfinance Development Fund with a corpus of Rs. 100 crores has been establishedto scale up the bank linkage programme, build expertise in MF and support the evolutionof regulatory and support mechanisms for MFIs. So far utilization has been low with 330NGOs supported to the extent of Rs. 4 crores by October 2001. NABARD has alsoreceived the first tranche of a DM 3 million GTZ grant for capacity building ofNABARD and its partner agencies.SIDBI: SIDBI has set up the Foundation for Microcredit. By 31 March 2000 it hadsanctioned aggregate assistance of Rs. 52.76 crores to 160 MFIs. It also provides capacitybuilding support to eligible MFIs. It has since increased the funding available forextending loans and equity to MFIs to Rs. 500 crores.RMK: A fund set up in 1993 by the Department of Women and Child Development,Government of India, RMK provides loans to NGOs for on-lending to womenbeneficiaries. It had disbursements of nearly 60 crores by March 2000. Its loans attractthe lowest rates of interest at 8 % with concessions for timely repayment. Grants for SHGpromotion are also provided.HUDCO and HDFC: These corporations are mainly involved in housing finance,including finance to economically weaker sections. HDFC had Rs. 80 crores of loansoutstanding but its portfolio is not directed only at the rural poor.RGVN: RGVN is a non-profit society formed in April 1990. Operating in the neglectednorth-eastern region of the country, it is the only national donor agency working in thisremote area. Sponsored by some of the biggest financial institutions like the IndustriesDevelopment Bank of India (IDBI), Industrial Credit and Investment Corporation ofIndia (ICICI) and SIDBI, it also recycles grant funds by extending “returnable grants” toNGOs. It outstanding loans were Rs. 2.31 crores at the end of March 2001.FWWB: FWWB is a non-profit organisation set up in 1982 as an affiliate of Women’sWorld Banking. It started a revolving loan fund in 1989. It had outstanding loans of Rs.17.41 crores to various MFIs by March 2001. It has also availed of a Cordaid loanrepayable in rupees at 9 % interest.2.3.2 Donors and International LendersOver the years a large number of the well-known international donors have supportedmicrofinance (MF) programmes run by NGOs. Several large projects are also promotingSHGs through multilateral funding. These donors provide administrative support andcapacity-building grants as well as revolving loan funds to NGOs. In addition to the8
sources above, about Rs. 150 crores of funds are available through this route. With theliberalisation of guidelines for external commercial borrowing, MFIs are now borrowingfrom various international lenders such as Deutsche Bank, Rabobank Foundation andOikocredit.2.3.3 GovernmentThe major government programme promoting SHGs and channeling large funds forpoverty reduction is the SGSY programme. Other state and central governmentprogrammes too have promoted SHGs in large numbers, especially in Andhra Pradesh.Some of the issues related to these programmes are discussed in subsequent chapters.2.3.4 NGOsAll over the country NGOs have been promoting SHGs for savings and credit andother social and economic programmes for at least the past 20-25 years. Over 2000NGOs are currently involved in the bank-linkage programme. The leading SHGpromoting NGOs are a mixed group that includes pure SHG promoters, NGOsfunctioning as MF intermediaries, and NGOs that have promoted non-profit and forprofitnon-banking companies for on-lending grant and borrowed funds to SHGs andSHG-based federations. However, the majority of them act as promoters and facilitatorsof SHGs. Of the SHGs linked to banks by March 2002, 75% have been formed by NGOfacilitators and only 9% by NGO intermediaries.One of the major issues relating to the functioning of NGOs as MFIs is the absence ofan appropriate legal form that the NGO can adopt to carry on MF activity. (A note on thelegal form of MFIs in India is given at Appendix 4).Seven NGOs promoting SHGs are covered in this study 6 . These are PRADAN, NavBharat Juvak Kendra (NBJK), Holy Cross Social Service Centre (HCSSC), MYRADA,OUTREACH, DHAN Foundation and Association of Sarva Seva Farms (ASSEFA). Adetailed profile of their operations and outreach is given in Table 2.1. For the vision ofthe NGOs and the nature of the SHG model they are promoting see Chapter 3. Three ofthe NGOs are ICCO/Cordaid partners. Four of the NGOs operate in Tamil Nadu,Karnataka and partly in Andhra Pradesh. Three NGOs, viz., PRADAN, NBJK andHCSSC, operate in Jharkhand and Bihar. These NGOs are presently promoting thousandsof SHGs with the support of a wide range of donor agencies. The succeeding chapters arelargely based upon data and insights on SHG development provided by these NGOs.While these NGOs provide instances of largely sound practice, they are notrepresentative of the thousands of other NGOs also promoting SHGs and their6 With the exception of DHAN Foundation, the author visited all the other NGOs during the course of thestudy.9
Page 4 and 5: List of AcronymsAIAMEDAIMSAPMASASAA
Page 6 and 7: EXECUTIVE SUMMARY1. Introduction1.1
Page 8 and 9: self-management by members and scal
Page 10 and 11: 6.4 On the other hand field reports
Page 12 and 13: sustainable self-help groups. An in
Page 14 and 15: 2. DEVELOPMENT OF SELF-HELP GROUPS
Page 16 and 17: average loan per SHG was Rs. 18,227
Page 20 and 21: organizational structure and the na
Page 22 and 23: Table 2.1 (contd.)S.No.ParticularsN
Page 24 and 25: the SHG from banks starts from pari
Page 26 and 27: • In either situation SHGs can co
Page 28 and 29: 3.2.3 SHG Federations Linked to MF
Page 32 and 33: 3.4 ConclusionThis section served t
Page 34 and 35: MYRADA,Karnatakaa.o.OUTREACH,Karnat
Page 36 and 37: Name ofNGO/StateDHANFoundation,Tami
Page 38 and 39: However, for a comparative analysis
Page 40 and 41: linkages with credit and savings 34
Page 42 and 43: out of 5,153 SHGs covered under the
Page 44 and 45: eceived revolving fund grants, cost
Page 46 and 47: the high level of educated unemploy
Page 48 and 49: CARE-CASHE Project(A.P.)(implemente
Page 50 and 51: Holy CrossSocial ServiceCentre(HCSS
Page 52 and 53: Agency/Programme5. Rashtriya Mahila
Page 54 and 55: microfinance intermediary 41 . Unde
Page 56 and 57: On the other hand, there is evidenc
Page 58 and 59: infrastructural and other constrain
Page 60 and 61: would not be possible while working
Page 62 and 63: through the SHG as a basis to sourc
Page 64 and 65: the programme is particularly probl
Page 66 and 67: It is possible to query the methodo
Page 68 and 69:
world. Other partners from India ar
Page 70 and 71:
RECOMMENDATIONSIt is not clear what
Page 72 and 73:
REFERENCESAIAMED (2000), Good Pract
Page 75:
Mahajan, Vijay and G. Nagasri (1999
Page 79 and 80:
Appendix 2: Types of SHGsTypes of S
Page 81 and 82:
Appendix 3 (contd.)OrganisationSIDB
Page 83 and 84:
4. Trade based Group model: The est
Page 85 and 86:
Appendix 5S.No.1. JOTHI 92,077.00
Page 87:
Appendix 6: Stages of Evolution of
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Self-help Groups as Financial Intermediaries in India ... - Sa-Dhan

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