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

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MYRADA,Karnatakaa.o.OUTREACH,Karnatakaa.o.Empowermentthroughexperience ingovernanceTo promoteviable,sustainableinstitutions tobuild capacitiesof ruralcommunitiesfor effectiveutilization ofnaturalresourcesBank linkage/NGO promotedMFI (not-forprofit company,Sanghamitra)Banklinkage/MFIintermediarychannelingfunds to SHGsthrough clusterlevelassociations(CLAs)Federationnot engagedin financialintermediation1. CLAs actas financialand nonfinancialintermediaries borrowingfrom NGO-MFI forcluster levelinvestments/workingcapital andon-lendingto SHGs2. Secondary(block/project,regional(non-financial)feds.Direct banklinkage +SGSY,donorrevolvingfund grants1.Banklinkage &other govt.schemes2(a)Wholesaler(SIDBI)-NGO-CLA(b) Bilateralgrant (FordFoundation& others)For SHGs:1. VariousRRBs, co-op.and commercialbanks at around12% p.a.2. FromMYRADApromotedNBFCSanghamitra(about 11% oftotal directfinance) at 14%p.a.1. Bank linkage– 12% p.a. toCLA/SHG.2. (i) SIDBI toOutreach – 11%p.a. (ii)Outreach toCLAs – 15%p.a. (iii) CLA toSHG - 20% p.a.(iv) SHG tomembers 24%p.a.1. Principal of subsidiarity. Federationsonly take up activities not capable of beingperformed at SHG level, e.g. capacitybuilding, information exchange,contributory health insurance, bulkpurchase of seeds and fertilisers.2. 20 SAGs (self-help affinity groups) toone federation, membership open to non-MYRADA SHGs. Federation is a unionwith SAG autonomy, not apex organisation.No secondary-level institution. Legalregistration of federations not beingpromoted.3. SAG Federations to meet own expensesthrough membership fees, fines, othercontributions and donations.1. Shift from SHG to CLA as viablecommunity managed MF institution,promoting bank linkage with CLAs.2. CLAs formed out of 10-15 SHGs (200-250 members).3. In addition to channeling loan fundsCLAs manage crop insurance, trading ininputs and marketing of output, groupenterprises and social action programmesand conduct promotion and financial auditof SHGs.4. Objective of model is to build is ownfund through interest spread at all levels.(18% margin for CLA and 6% for SHG incase of donor working capital grant).5. Future direction is for financialintermediation role to shift to block/projectfederation level, while Outreach satelliteMFI registers as appropriate legal entity.24
Name ofNGO/StateASSEFAgroup, TamilNaduBriefvision/ missionstatementTo establishself-reliantvillagecommunitiesSHG modeltype1. Twocommunityowned MFIs(NBFCs):(i) SarvodayaNanofinance(SNF) (ii) SarvaJana Seva Kosh(SJSK).2. OtherASSEFAcompanies forhousing anddairying lend toSHGs.3. Direct linkageof SHGs withbanks.Particularsoffederationmodel1. SNF is anNBFC ownedby mutualbenefit trustsformed ofSHGs2. SJSK actsas fundmanager foraccumulatedrevolvingfunds ofvillage groups(nidhifoundations).Sources ofexternalloan fundsfor SHGon-lendingBank linkage+ otherfinancialinstitutions(both privateand public),govt. agenciesTerms of loansto SHGs andfederations1. SNF borrowsat 8-11.5% p.a.from differentsources, lends toMBTs at 12%,MBTs to SHGsat 15%, SHG tomembers at18%.2. Nidhis pay aservice fee of2% on theirfunds managedby the SJSK.Remarks1(i) ASSEFA promoted women's SHGsunder IFAD-TNWDC project have beenconstituted into registered block levelmutual benefit trusts (MBTs) (200-250SHGs each).(ii) SHGs contribute for MBT to subscribeto share K of SNF. MBT is entitled toborrow six times its share holding in SNF,which it on-lends to SHGs.(iii) Promotional activities includingformation of new groups are carried out byMBT.(iv) SNF borrows from wholesalersincluding SIDBI, BASIX, HDFC, HUDCO,Rabobank2. (i) SJSK acts as fund manager foraccumulated revolving fund of communitiesbuilt up through donor grants. Limitedborrowing by SJSK - only RMK funds, nowdiscontinued.(ii) Village-level nidhi foundations(financial wing of the village communityorganization, constituted as a trust) areshareholders in SJSK which manages theirfunds. Federations of nidhi foundationsprovide technical and support services.3. SHGs also linked directly to banks.25
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 18 and 19: • training and sensitising bank o
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 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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