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

(i)Retail NGO-MFIsDuring the last decade retail NGO-MFIs have come to dominate the retail service landscapewith the most widely practised service model being the SHG. Most of the retail NGO-MFIschoose to either get credit linkages established through local branches of banks or get creditdirectly to later on-lend the funds to SHGs.(ii)SHG FederationsThe several forms of SHG federations make it difficult to classify their operating featuresaround one simple model. There are important variants even with those models. In some SHGfederations the next level from the SHGs is the cluster which gathers SHGs from ageographic unit together and in turn federates them into a larger unit called federations.In some instances the retails services are undertaken by SHGs in others by the cluster and instill others by the federations. The point of service in this structure finally determines thepoint of interface with the local bank. During the past few years community-basedorganizations (CBOs) are emerging which are directly borrowing from either government ornon-government on-lenders and are well on their way to becoming full-fledged MFIs. Thesevariations result from the strategic choices the promoting NGOs make in mobilizing theSHGs.V. MACSAndhra Pradesh (A. P.) enacted the Mutually-Aided Cooperative Societies (MACS) Act in1995. Cooperatives formed under this Act are largely immune from government interventionsin their affairs such as fund raising, governance, etc. and a number of cooperatives have beenformed under this act. Over 2,000 MACS were reportedly registered in A. P. recently.According to the Cooperative Development Forum (CDF), Hyderabad, 234 thrift cooperativesocieties (with 59,000 rural men and women members) promoted by CDF were registered inWarangal district of A.P. alone under the MACS Act till December 1999. These MACSprovide savings, borrowing and loan insurance services to their members.Following Andhra Pradesh, three states – Bihar, Madhya Pradesh and Jammu and Kashmirhave enacted similar MACS Acts. However they are considered by many to be weaker formsof the AP MACS Act.In Bihar out of 667 societies formed under the Bihar Self-Supporting Cooperative SocietiesAct, 1996, which has similar provisions, only 14 were credit cooperatives.In Tamil Nadu, a neighbouring state of A. P., the cooperative act allows for a great deal ofgovernment intervention. The cooperative cannot even enact its own by-laws and must adoptby-laws given by the state of Tamil Nadu which were formulated in pre-independent Indiawhen the cooperative was an extension of the government. In addition, Tamil Nadu has itsown conservative Societies Act which gives the government the power, under certaincircumstances, to take control of an organization registered under the Act.74