NABARD's INITIATIVES IN THE FIELD OF
MICRO CREDIT INNOVATIONS
1. BACKGROUND
credit delivery system
Alternative Mechanism - Institutions which function parallel
to the formal credit delivery system
2. SHG Linkage Programme
2.1 What is an SHG ?
2.2. Pilot Project
Characteristics of SHGs
2.4 Partners
2.5 Institutionalisation of the concept - Working Group
3. ADVANTAGES
BANKS
SHGs
4. ROLE PLAY - BANKS
5. ROLE PLAY - NGOs
6. Emerging Linkage Models
Model I
NABARD - Bank - SHG (Bank acting as SHPI) - (18%)
Model II
NABARD - Bank - NGO - SHG (NGO acting as facilitator) - (46%)
Model III
NABARD - Bank - NGO - SHG (NGO acting as facilitator and
financial intermediary) - (36%)
7. Progress
8. SHG Variants
8.1 CGB Experiment - Bank as SHPI
A Regional Rural Bank, viz. Cauvery Grameen Bank assumes the role of Self-Help Promoting Institution and financier with initial training support from an experienced NGO. Two independent studies brought out that SHGs promoted by the bank are sound and maturing in a healthy manner. Banks look at the SHG linkage programme as a business opportunity and use it as a leverage for expanding its good clientele position in rural area.
8.2. CDS, Alappuzha, Kerala - Govt. as SHPI
Nine-Point Risk Factors
8.3 Bulk lending to NGOs
9. IMPACT STUDIES & IMPRESSIONS OF INTERNATIONAL AGENCIES
9.1 STUDIES CONDUCTED INTERNALLY
9.2 IMPRESSIONS OF INTERNATIONAL AGENCIES
[BASED ON INDEPENDENT STUDIES]
[i] Study on Assessment of Linkage Programme in India
Study by APRACA
[ii] STUDY BY FDC, AUSTRALIA
[iii] Study by SDC - EXPERIMENT ON BANK AS SHPI
The Cauvery Grameena Bank Experiment studied for its efficacy at the instance of SDC, by Prof. S.Srinivasan of IIM, Banglore.
10. NABARD's present strategy for upscaling linkage programme
10.1 SUPPLY SIDE SUPPORT
10.2 DEMAND SIDE SUPPORT
10.3 Capacity Building Support
NGOs have limitation in terms of resources, manpower and infrastructure. NABARD has provided grant assistance to select NGOs, SHGs' Federations for capacity building towards promotion, strengthening and monitoring, training, mobility, etc. So far, 44 NGOs have been sanctioned assistance of Rs.13.29 million.
10.4 Training
As part of the awareness building and orientation of bank staff, 4,600 officers imparted training so far.
10.5 Monitoring and Review
11. Constraints and Issues for expansion
12. ALTERNATIVE CREDIT DELIVERY INNOVATIONS
In addition to supporting supplementary credit delivery mechanism, NABARD has undertaken experimentations through NGOs which provide financial services independent of the banking system.
12.1 Revolving Fund Assistance (RFA) to NGOs
RFA BROADLY BEING SANCTIONED FOR
12.2 NGO NETWORKING
12.3 GRAMEEN BANK REPLICATION
12.4 OTHER EXPERIEMENTS
13. SUSTAINABILITY OF NGOs OPERATIONS
14. Perspective
| Year ending |
No. of new Groups to be developed during the year | Cumulative No. of Groups |
No. of families to be reached during the year |
Cumulative Total of families |
| 31/03/1999 | 10,000 | 25,000 | 2 lakh | 5 lakh |
| 31/03/2000 | 15,000 | 40,000 | 3 lakh | 8 lakh |
| 31/03/2001 | 35,000 | 75,000 | 7 lakh | 15 lakh |
| 31/03/2002 | 50,000 | 125,000 | 10 lakh | 25 lakh |
| 31/03/2003 | 75,000 | 200,000 | 15 lakh | 40 lakh |
| 31/03/2004 | 100,000 | 300,000 | 20 lakh | 60 lakh |
| 31/03/2005 | 150,000 | 450,000 | 30 lakh | 90 lakh |
| 31/03/2006 | 150,000 | 600,000 | 30 lakh | 120 lakh |
| 31/03/2007 | 150,000 | 750,000 | 30 lakh | 150 lakh |
| 31/03/2008 | 250,000 | 1,000,000 | 50 lakh | 200 lakh |
15. Budget announcement
GIRIJA SRINIVASAN
(Ex- F.M., BIRD)
Introduction:
Poverty in India is predominantly rural in character. It is intimately associated with over population and an imbalance between population and land resources. Substantial number of landless and small farmers are dependent on wage employment and experience unemployment seasonally. The worst affected are the women and children. Most of the poor are engaged in low productivity activities in agriculture. It was realised by policy makers that a possible solution to poverty is creation of self-employment opportunities through income generating activities (IGAs). Most of the income generating activities of the poor fall in the informal sector and many factors limit the capacity of the poor to take up IGAs. They may lack skills. They may not be aware of the market opportunities. Most importantly, they may lack access to necessary capital for starting an enterprise. The policies and programmes of Government, banks and many of the voluntary agencies have been designed to address one or more of the above constraints. However, access to adequate and timely credit is considered crucial for setting up and successful operation of an enterprise. Hence the emphasis of various programmes, for enabling poor to set up micro enterprises, has been on improving the credit flow to this sector.
Experience of Banks in lending to poor:
Bank lending to poor borrowers have been predominantly under the various schemes of Government of India viz. Differential rate of interest (DRI), Integrated Rural Development Programme (IRDP), Self Employment Programme for Urban Poor (SEPUP) etc. IRDP launched in 1979-80 was the largest of poverty alleviation programmes. Though the total bank credit advanced under these schemes is quantitatively considerable, the directed lending approach adopted has not brought about desired results. Several evaluation studies have revealed that substantialnumber of borrowers do not benefit from the schemes. It has been estimated that only about 20 per cent of the borrowers have crossed the poverty line after receiving assistance from the programmes.
There are several reasons for the poor results. Under the schemes, the responsibility of identification of economic activities and the eligible borrowers is with the Government. The banks had the mandate of advancing loans to such identified borrowers and banks have a minimal role in client identification. There is little post disbursement and follow up since banks do not consider these programmes as their own. This has led to poor loan utilisation and recovery. Moreover, banks have to incur high transaction costs since the amount lent to poor is small and the lengthy procedures for sanction and disbursement of loans are not cost effective. Banks perceive lending to poor as unviable and a high risk proposition. As a result, the rural credit delivery system is burdened with poor quality loans, high level of overdues, non performing assets, subsidised and uneconomic rate of interest and high transaction costs.
The programmes also suffered due to the basic assumption that all poor are entrepreneurs who can manage an asset. However, it is now well established that mere provision of credit does not foster entrepreneurial abilities. While identifying borrowers under the programme, their managerial capabilities were not taken into account. People themselves were generally never involved in the choice of activity. Government authorities and banks had pre conceived notions as to what were the best activities for the people to adopt.
Moreover, the immediate and emergent requirements of the poor are for consumption loans and unless they are met, they have a strong tendency to use whatever loans they receive for consumption purposes. Besides, the people have no stake of their own in the loan and asset created. All the above reasons contributed to rampant misuse of credit. Moreover, under the existing political atmosphere, people were also given the impression that repayment of loans under these schemes is not essential. Because of the above permissive atmosphere, poor repayment ethics have prevailed and loans are construed as grants from Government which need not be repaid. The benefit of borrowers in receiving capital subsidy and cheap credit is offset by the high transaction costs in getting loans which include expenses incurred in repeated visits to the Government offices and bank and in complying with documentation facilities. Opportunity cost in terms of wages foregone during the visits and bribes/ speed money added to the transaction cost. A World Bank study on transaction costs for the poor in obtaining bank loans concluded that for availing an average loan of about Rs.7,000 the poor incur an expenditure of about 18.9 per cent of the loan amount towards out of pocket expenses, price difference and imputed wage loss.
Despite a plethora of Government sponsored programmes and steep increase in bank loans to the poor, timely and adequate credit which are the main concern of the poor are not met by the formal financial. In spite of wide banking network of nearly 1,25,000 formal rural credit outlets, rural poor have not been really benefited. Most of them still depend on moneylenders for credit especially consumption needs. Nearly half the indebted rural households are still outside the ambit of the institutional credit system
Poverty - Global Concern:
Such was the case not only in India but also in other countries. There was growing concern among policy makers in various countries as to how to make the poor help themselves.
The Asia and Pacific Regional Programme Agricultural Credit Association (APRACA) promoted by FAO is an association of central banks and agricultural credit institutions operating in Asia and Pacific regions with its emphasis on rural finance. At a workshop in Nanojing, China in May 1986, the member institutions of APRACA weighed two options for effectively increasing the credit access of the poor. The first option was financing of the moneylenders for on lending to the poor, since there was already a nexus between them. The second option was financing the informal self help organisations of the poor which were functioning in the Asian countries. Many of the self help organisations were savings and credit associations which mobilised the small savings of its members and rotated the savings to the needy members as loans. Members of APRACA favoured the latter option, and felt that a linkage programme should be initiated between banks and such informal associations of poor. However, APRACA decided that in order to facilitate linkage programmes the following procedures have to be worked out by each member country .
NABARD is also a member of APRACA and shared the concern of other members in effective financing of the poor. In order to assess the efficacy of SHGs as an effective instrument of credit delivery, NABARD conducted a study of 50 Self Help Groups (SHGs) and 46 NGOs functioning in eleven states of the country . The above study gave useful insights into the dynamics of group organisation, saving potential and repayment ethics of the poor. NABARD also funded Mysore Resettlement and Development Agency NGO, (MYRADA) for an action research project on savings and credit management through SHGs in 1986-87. Encouraged by the results of the study and action research project, NABARD in consultation with the Reserve Bank of India (RBI) Commercial Banks and NGOs, launched a Pilot Project in 1991-92 for linking of SHGs with banks.
SELF HELP GROUPS:
The self help groups are voluntary associations of people formed to achieve collective social and economic goals. People come together and function as a group around some need which furthers their common interest. Non-governmental organisations mobilise the rural poor and under privileged and enable them to achieve their collective goals.
Identification of poor:
NGOs follow different methods in identification of the needy and the poor. Some of them use 'Participatory Rural Appraisal' methods by which the entire history of the village, the problems faced by the villagers and also the ranking of villagers by their wealth are ascertained by involving people. House hold survey is also attempted by some NGOs. Once the poor are identified the NGOs open dialogue with them to assess their requirements. They also moot the idea of working as groups.
Homogeneity: While forming the groups it is ensured that the members have a homogenous background. Homogeneity would be in terms of economic status, caste, gender, occupation or commonality of interest. It is seen that the members should preferably be of the same economic status and if rich and poor are brought together the tendency of the rich is to exploit the poor. In Rajasthan and West Bengal there are a large number of groups which are taking joint activity like weaving, carpentry, pottery and making of other non farm sector products. The crucial aspect in formation and sustaining the groups is the commonality of interests which the members share.
Number: The number of members in a group range between 10 to 20. Groups with larger membership are also functioning. Some of the groups formed by SEWA in Gujarat, AKRSP in Gujarat and also ASSEFA in Tamil Nadu consist of larger membership of more than forty members. However, but for a few exceptions, only few members participate in the larger groups actively. Hence NGOs prefer to mobilise smaller groups.
Initial opposition: Formation of SHGs is not a smooth affair since village elders and other powerful people may not like the idea of poor getting together. In tribal areas , the blessings of the village chief is required before taking up any activity in the group . Some of the moneylenders have also resisted the group formation since the self sufficiency of the SHGs in terms of funds will deprive them of their captive business. In the case of women SHGs many a time the husbands or mothers-in-law object to their group formation, since they do not like the women to go out of the house. The NGOs have to play a vital role in tackling the initial opposition. It is also seen that the members themselves have lot of doubts in coming together. Initially they may not have confidence in each other. They are also reluctant to part with their hard earned money towards savings since they have had bad experiences with local fund raising agencies. The NGOs allay their fear and assure them that the money will be in the custody of group only. They also encourage the members to discuss openly their doubts and thus build the confidence of the members in the groups.
Framing of Bye-laws: Once the members decide to form a group the NGO advises them to form the rules or the bye-laws for group functioning. The bye-laws normally relate to the following aspects:
NGO advises the members to discuss all the above aspects in detail and come to consensus. Some of the rules may emerge over a period of time. For example initially if the group is only mobilising savings, the rules may be pertaining only to this aspect and as and when the groups decide to start inter loaning rules regarding credit will be formulated. The rules are also kept flexible and can be changed with the consensus of members. Some of the groups follow oral bye-laws. But NGOs encourage the groups to write the bye-laws either separately or as part of proceedings to avoid any misunderstandings in future.
Functioning of Self Help Groups:
Objectives: The SHGs have definite objectives of forming into groups. Savings mobilisation, availing credit for emergent requirements, mutual help, economic upliftment through income generating programme are the purposes for which the members normally come together. Wherever the groups take up joint activity like income generating activity, community development project etc. it forms a major objective of group formation.
Membership: The groups also decide initially as to who can become the members of SHGs. The quarrelsome normally are not included because of the fear that they may destabilise the operation of group.If a member decides to leave the group, the savings of the member is returned and usually no interest rate is paid on such savings. For inclusion of new member the group insists that the member should deposit the backlog of savings of the earlier months (in which she was not a member) so that her savings position will be equivalent to those of existing members.
Meetings: The members decide the periodicity of meeting and also the duration.. The periodicity adopted by the groups depend mostly on the NGOs frame work and convenience since the NGO worker attends all the group meetings initially. However, the groups decide the time of the meeting. The groups usually meet in the night after finishing their chores. Some of the women's groups meet in the morning or in the afternoon. The group meetings are normally held in the open.
Savings: Members depending on their savings ability decide the savings amount. The groups usually have fixed amount as savings since this helps in easy accounting and also ensures that all members are equal. MYRADA groups have a minimum amount of savings as the threshold level but the members are encouraged to deposit whatever surplus they may have.
The groups do not offer any interest on savings initially since they are keen to build their internal resources. However, there are some groups which offer interest on saving from the 3rd or 4th year once the common fund of the group builds up. Periodicity of savings depends on the periodicity of meetings. The savings are deposited during the meetings.
Lending:
Lending among themselves out of their savings is an important aspect of group functioning. A few groups start lending from the first month itself. Some of the groups lend the savings among themselves after 3 months of formation of groups whereas some others start lending only after six months. The groups delay lending because the members want the savings to accumulate so that at least a few of the requests for loans can be accommodated. Moreover the trust level initially is low and hence they prefer to wait. The delay is also because the members want to know the real motives of all the members in joining the groups and their sincerity in saving, attending meetings etc. Members request for loans in the meetings. There are generally no written applications. The basis for considering eligibility of a member for loan is regularity in her savings, attendance and repayment of earlier loans. Some of the groups also look into the performance of the member in community development work undertaken by the group. The group discusses the loan requests of members and decisions are taken by consensus. Since they live close to each other, the members have intimate knowledge of loan requirement, genuineness of demand and also repayment capacity of the member which facilitates decision making.
Most of the groups prefer to initially lend only 50 per cent of the accumulated savings of members. Later on, as the confidence in the group builds up, they started lending entire savings leaving a small reserve for meeting emergency requirements. In case of emergency loans where higher amount than the eligibility of the member was required, the loans are sanctioned on the basis of guarantee of two members. At a time only one loan is admissible to a member. However, in case of emergencies, additional loan is disbursed even though the earlier loan is outstanding. In the case of MYRADA and PRADAN groups, the loan limit per member is related to savings, in the ratio of 1:2 to 1:3.
The groups lend money for a variety of purposes. Emergency loans for purposes such as hospitalisation, maternity etc. are given preference over other types of loans. The normal rate of interest charged by the groups is to 2 to 3 per cent per month. Quite often different rates are charged for consumption and production purposes. The groups lend to members on the basis of trust. However, some of the groups insist on guarantee of two other members.
The repayment period varies from group to group. Some groups relate the repayment period to size of loans whereas a few others fix uniform repayment period to facilitate accounting. It is generally seen that groups fix a short repayment period.
Normally the groups are very strict about repayment of loans and wherever genuine difficulties are expressed by members, the loans are rescheduled. But the groups are generally wary of postponing repayments since they feel that relaxation in case of one member might lead to such demands from other members.
Peer Pressure:
The repayment of loan in the group is very high because of the peer pressure exerted on a member. Since the members are intimately known to each other they are aware of the credit worthiness of the members, their requirements for loan and also the surplus in their hands. Moreover the availability of fund with the group is not enough to satisfy the demands of all the members at a time. Thus the members who have availed the loan are always under pressure to repay so that other members' requirements can also be fulfilled. So the intimate knowledge about the members and the peer pressure helps in very good recovery of loan.
Fines:
The groups levy fines for instilling discipline among the members. Fines are collected for not attending meetings, saving irregularity and failure to repay the loans. Some of the groups levy fines for even smoking and pan chewing. Some groups levy fines for talking during meetings and walking out of the meetings half way through.
Leadership:
Two or three members are chosen by the group members as leaders. The responsibility of the leaders are to convene the meetings, maintenance of books of accounts, conflict resolution among members, accounting for cash and also dealing with banks and other outside agencies. The leaders are trained by the NGOs to carry out their duties effectively. The leaders are rotated normally once in a year. Such rotation helps in leadership development of all the members.
Maintenance of Records:
SHGs are trained by the NGOs in maintaining proper books of accounts regarding working of groups. The details of the records maintained by the groups are proceedings in meetings, attendance, rate, savings, loans and repayment and other activities of the group. In case of fully illiterate groups the members depend on NGO/outsider for maintaining the books of accounts. Some of the groups pay a nominal fixed amount to an outsider for maintenance of books. Sometimes the educated daughter/son of a member maintains the books.
Participatory decision making:
The groups normally discuss threadbare the various agenda put forth in a meeting and take decisions. Open transactions are encouraged and mobilisation of savings, collection of loan installment and disbursement of loans are carried out in the group's meetings to ensure openness and accountability.
Common Fund
The common fund of the group consists of membership fees if any, savings of members, fines, interest on loans, and interest earned on the deposits with the banks. Some NGOs have a system of contributing seed money assistance to the groups in the initial year for augmenting their resources for internal lending. Such assistance is usually a grant which is repayable after a specified period.
Linking with banks
The groups open savings bank account with the banks for depositing their savings. The leaders usually operate the accounts for depositing savings, loan repayments etc. and for withdrawal. Some NGOs insist that other members in turn should visit the banks for bank dealings so that all in the group inculcate the banking habit. The groups are eligible for bank loan on completion of six months of their existence and successful conduct of meetings, collection of savings and interloaning.
IMPACT OF SHG ON ITS MEMBERS:
Various impact evaluation studies conducted by NABARD, BIRD and the NGOs have shown encouraging trends and positive impact on socio-economic conditions of the members.
Savings:
The poor saved occasionally because the concept of saving was always associated with surplus. The members now saved regularly through thrift, by curbing their expenditure and sacrificing a few essentials. As a result, the members of older groups have now to their credit thousands of rupees. Members have been able to save by virtue of the additional income generated from undertaking income generating activities by borrowing loans from the group. The pressure of the group for the minimum amount to be saved regularly has also contributed to the savings.
Credit:
The members have been able to obtain emergent loans for productive and non-productive purposes on comparatively easy terms. This has reduced their dependence on local moneylenders to a large extent. Formal credit has been associated with the myriad terms and conditions on use of credit in the name of ensuring security of banks interests. In rural lending for development, many stipulations on design of projects, location, unit size, unit cost, economics of scale, choice of technology, etc. have been made. These conditions not only introduce rigidities in investments, but also rob the entrepreneurs of their freedom in taking decisions in running his/her enterprise. Self help group offers freedom to the entrepreneurs to run their enterprises within limits of reason. The borrower can determine his activity, location, scale of operations and choice of technology. This makes him/her more certain of his/her ability to take the risks and cope with the same. The loans are available at their doorstep without any cumbersome formalities usually associated with the formal credit institutions. The members can also know in advance as to when the loan will be available. The above factors contributed to drastic reduction in the transaction costs to the borrower.
Literacy:
The efforts of the NGOs have rendered functional literacy to the members enabling them to read numbers and sign their names. Since there is a natural curiosity among the members to know their savings and as to where their money has been invested, most of them learnt numeracy quickly. Along with the members, the children have also gained functional literacy. Many groups have opened literacy centers for school dropouts.
Confidence level:
Since the members have overcome many odds in the formation and functioning of groups the feeling of oneness is very high in successful groups. The women, especially those belonging to backward classes have been able to express themselves and sound their views. The sense of belonging to a group and the feeling that they are not helpless any more have given the members a lot of confidence. The poor have always been made to feel poorer and unequal and decisions regarding their resource needs are taken by the 'wise' and 'elite'. They feel helpless before the educated and capable, running the formal and informal socio-economic systems. Only in SHGs these people are treated as equals. This sense of equality attracts people to SHGs where they can have access to resources with their 'Self-Worth' intact. The exposure programmes of NGOs where many groups interact with each other have also helped the members to know about other groups and as to how they have overcome their problems. The groups feel that they will be able to carry on their group activities even after the NGO withdraws.
Credibility:
The activities of the groups are not restricted to rotation of money and carrying on economic activities. Many groups have undertaken community development programmes like cleaning of wells, canals etc. They have also represented their problems to District Administration effectively and arranged for drinking water, street lights, roads etc. for the villages. Many of the groups have shouldered the responsibility of maintenance of common assets, such as, bore well, hand pump, street lights etc. The villagers who were initially apprehensive and derisive of the groups' efforts have now high regard for them. This has also boosted the morale of members and their credibility among the fellow-villagers has risen high. This has also resulted in formation of other groups in the village. Most of the members had not visited a bank in their life and left to themselves would never have done so. Now the members especially the women visit bank and have also learnt to operate their personal and group's accounts. Since the groups are regular in repaying the loans, the banker-customer relationship in most cases is very cordial.
Empowerment:
The conspicuous gain of the group formation and functioning is the empowerment of poor. They have been able to take charge of their lives and solve their problems both economic and social. Common problems such as lack of drinking water and electricity, unhygienic living conditions, poor roads etc. have been tackled by the groups. There are a number of instances in which liquor brewers have been banned from entering the village. Many of the old group members admit that they do not go to moneylenders any more for their emergent needs. During the course of her visit to a group in Tamil Nadu the author was pleasantly surprised to hear from the group that they levied visitors' fee for outsiders' visit to their group. They also clarified that such fee was charged from those who gained from interacting with them. It was not charged from the branch manager, NGO etc. from whom the group stood to gain. It is not the levying of the fee which is so important. But it is the thought that their time and efforts are valuable and they are 'somebody' who can command a fee which is important. And here lies the crux of 'empowerment' i.e. making people regain their power of being themselves, feeling equal, being a part of the society in their own right.
ASSESSMENT OF SELF-HELP GROUPS
GIRIJA SRINIVASAN
Ex Faculty Member, BIRD, Lucknow
Introduction
Self Help Groups (SHGs) are voluntary association of people who have come together to attain certain social and economic goals. SHGs are informal groups which have emerged on their own or are formed by voluntary agencies/banks. They consist of members of poor households who are economically and socially backward. Since rural poor did not have access to formal financial institutions and the banks also found it difficult to reach many people of small means, the group approach has been evolved for promotion of thrift and savings among the poor. The savings of the members are collected in weekly/ fortnightly/ monthly intervals and are lent among members for their emergent credit needs. When the group has successfully mobilised savings and extended credit out of its own funds with a good repayment record, the group is linked to a bank for availing credit facilities. The basic principles on which the SHGs function are:
1. The members should be resident in the area and be homogeneous. Homogenity can be in terms of caste/occupation/farm size/sex or income level.
2. Savings first, credit thereafter.
3. SHGs should hold regular meetings.
4. SHGs should maintain accounts.
5. They should have rules regarding membership, meetings etc.
6. Group leaders should be elected by members and rotated periodically.
7. Transparency in operations of the group and participatory decision making.
8. Market rates of interest on savings and credit should be charged.
9. At the time of linkage to banks, loans should be kept small initially with short repayment periods.
10. Group liability and peer pressure are to act as substitutes for traditional collateral.
Importance of Assessment of Self Help Groups :
At the time of considering a loan application for sanction the banker normally evaluates the capacity and character of the prospective borrower, the project, its profitability, including the costs and benefits accruing out of the profit. SHG's as customers have to be appraised before extending credit facilities. But then assessment of creditworthiness of a SHG is very different from that of an individual. SHGs are not to be assessed in terms of their ability to provide collateral, guarantees of networth. They have to be assessed more in terms of certain non-tangible assets like cohesion, vibrancy, goal oriented action, participation of members, collective leadership and feeling of empowerment among members. Of course these non-tangible assets could be tested in terms of the efforts at mobilising and promoting savings of members, meeting credit needs, the self discipline and efforts taken to create greater awareness.
Assessment of SHGs
While the need and approach to assessment is fairly clear, the aspects that need to be looked into, require detailed examination. These aspects can be broadly classified into three, viz functioning of groups, activities of the group and support from NGO.
A.Functioning of the groups
1. Bye - Laws :-
SHGs, like any other organisation, frame certain rules to be followed by the members. NGO may facilitate the group in framing the rules. The rules, also known as bye laws relate to
a) Objective of the groups.
b) Meetings - time, periodicity
c) Savings - amount,periodicity, rate of interest
d) Credit- procedure for sanction, ceiling amount, purposes, rate of interest to be charged, repayment period etc.
e) Fines - in case of default in attending meetings, savings and credit repayment. Group may also levy fines for pan chewing, bidi smoking etc.
f) Leadership - election or nomination of leaders, rotation of leaders etc.
g) Personal/social improvement - minimum literacy level to be achieved, social work to be done etc.
The above norms may be written or oral. They may be decided in the initial meetings or they may evolve over a period of time. The important aspects to be looked into are :
i. Whether bye-laws have been framed and whether they have been framed with the consensus of the group .
ii. Whether the members are aware of the bye-laws (even if they are oral) and understand them.
iii. Whether there is inbuilt flexibility to change the rules as and when the group decides.
iv). Whether the bye-laws are implemented in spirit.
2.Meetings
The group decides the periodicity of the meetings i.e., weekly, fortnightly or monthly. They also decide on the time of the meeting. Decision on time and periodicity helps in regular conduct of meetings. It has to be checked whether
a) the meetings have been held regularly.
b) the attendance rate of members in the meetings.
c) the members are punctual and stay till the end of the meeting.
d) the errant members are dealt with by appropriate disciplinary
measures as specified under bye-laws.
3.Maintenance of books
The number and types of books to be maintained is normally suggested by NGO and differs from NGO to NGO. What is important is whether the basic books are maintained which will indicate the functioning and accountability in the group. The details of number of meetings held, decisions taken in the meetings, amount of savings of the members and credit availed of by the members should be verifiable. NGOs normally impart training to literate members of the groups in maintenance of books and in case of groups of illiterate members either the NGOs or literate villagers maintain the books on behalf of group members.The aspects to be verified are : -
a)whether details of meetings, proceedings, and attendance are maintained.
b)Whether memberwise record of saving and credit are maintained.
c) Whether the records are up to date.
d) whether all members are kept informed of their savings and credit balances from time to time.
e)In case of illiterate groups whether any system is followed by group members/NGOs to verify the books maintained by NGO/outsider.
f)Whether systems have been developed to ensure safe custody of cash.
4.Leadership
Two or three group members are elected as the leaders. Initially the opinion leaders may be selected as the leaders and over a period of time they are expected to be rotated. The group leaders are expected to a) regularly convene and conduct the meetings b) help the group members in taking decisions c) resolve conflicts d) maintain books of accounts and e) travel to bank branch for operation of accounts.
The following aspects need to be verified :-
a) Whether the leaders have been elected and rotated.
b) Whether they aid democratic functioning of the group.
c) whether there is a conscious attempt to groom other members to take up leadership.
5.Awareness of group
Apart from meeting the emergent credit requirements of the members, the SHGs also help in awareness raising and empowerment of the group members by joint action. Members are expected to a)know the purpose and philosophy of group formation b) know the operations and activities of the group viz the savings and credit of the group as well as the individual member's savings and credit details c) participate in group discussions and decision making. d) help solve the problems that are raised in the meetings e) work as a cohesive group and f) have transparent dealings.
The vibrancy and democratic character of the group may be judged by attending one or two meetings and talking to individual members. The awareness level of members helps in proper functioning of the groups and also help them to address the problems that are affecting their day to day life.
B.Activities of group
1)Savings : The group decides on the amount of savings as also its periodicity . It has to be seen whether the saving, as decided upon, is regularly made, how the defaults are dealt with and whether the system is modified as per the requirements of the members.
2)Credit :- The following aspects have to be looked into while assessing the credit function of the group:
a)the decision making process of selecting loanees.
b)the system followed in assessing credit requirement of individual members and the amount to be sanctioned.
c)the system of monitoring the credit.
d)the repayment performance of members and incidence of defaults besides the effectiveness to deal with such defaults; whether the concept of 'peer pressure' is working.
C.SUPPORT OF NGO
Role of NGO in the functioning of groups is:
a) to train the members in group dynamics, cash management and book keeping
b) to watch the performance of the group and
c) to facilitate linking of the groups with banks. NGO is expected to act as a friend, philosopher and guide to the SHGs.
However, many a time the NGOs are charged of creating dependency of SHGs on them to such an extent that without the NGO, the operations of SHGs may come to a standstill. Though in the beginning the SHGs may depend on NGO in conducting meetings, keeping the account of cash, maintaining books of accounts etc, over the long run they should develop their own capabilities for handling their activities.
Thus the level of dependency of SHG on the NGO and the efforts made by the SHG and NGO to make the SHG independent have to be assessed.
BROAD GUIDELINES FOR
IDENTIFICATION OF SHGs AND NGOs
1. Need for Guidelines
In the wake of the growth of the linkage programme and NABARD's increasing involvement in various credit delivery innovations, NABARD as well as the banks are required to deal with increasing number of SHGs and NG0s. This has called for some system of screening of the SHGs and the NG0s for ensuring adherence to the linkage philosophy and its objectives. As regards SHGS, the rating or screening is for facilitating linkage of the right type of SHGs or linkage at the appropriate stage of its growth. The need for rating in the case of NG0s, however, has a broader implication for ensuring identification and screening of committed and competent NGO partners which, in turn, will lead to building up of healthy relationships with a multitude of SHGs and also with smaller NG0s in certain cases.
2. Criteria for Selection of SHGs
NABARD has already issued detailed operational guidelines to the financing banks indicating the broad criteria for selection of SHGs for their credit linkage with banks. These are indicated below:
3. The above guidelines are considered quite objective and adequate for the linkage purpose.
4. Rating of NG0s
During the last few years, NG0s are increasingly assuming the role of financial intermediaries and engaged in savings and credit programmes in the rural areas. In this context, with a view to ensuring that NABARD, banks and other development institutions deal with NG0s having proper credentials, track record and attitude, it may be desirable to consider introducing some sort of broad rating norms for NG0s having regard to their intrinsic strengths and weaknesses. The criteria forming the basis of identification will also have to take into account the functional and qualitative aspects of NGO relationships with the poor in financial interventions. It may, be appropriate for the dealing financial institutions (viz. NABARD, banks) to make an assessment about the NG0s on the basis of relevant factors like legal status, representativity, track record, core competence, commitment, ability to serve the target group, etc. for which a suitable rating system may have to be developed by them.
5. Suggested Parameters
The above mentioned broad approach may be refined for an objective assessment of the capabilities of the NGO on the basis of the four 'C's, viz. character, capacity, core competencies and credit-worthiness.
Broad Indicators Parameters
A.Character a) Legal status and its functionaries not holding any elected office
b) Representativity -Closeness of the NGO to thecommunity proposed to be served
c) Commitment for socioeconomic development of the poor
B.Capacity a) organisational capacity
C. Core Competency a) Experience/ prof iciency in savings mobilisation & credit dispensation/ financial intermediation.
b) Proficiency in other group-related activities such as training of group members, fund management, accounts.
D. Credit worthiness a) Financial position
d) Donor support
e) Sustainability
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MICRO CREDIT IMOVATIONS DEPARTMENT (MCID), NABARD,
HEAD OFFICE, MUMBAI
Monitoring of Self Help Groups
SHGs being the latest entrants into non formal financial intermediation are in the nascent stage of evolution. While it is essential that performance of even well established institutions which deal with scarce public resources are monitored, fledgling institutions require a much intense monitoring effort. This is necessary on account of two reasons (i) the need to generate data for giving feedback to the institution and (ii) determine the level and scale of continued involvement by the funding agency. This duality of purpose in monitoring implies that the monitoring system should be devised in a manner which is understood by the members( who could very often be barely literate) and bring out data and inferences which the outsiders like banks and donors could use to assess the performance of the institution.
Given the objective of internal assessment of their performance by the SHGs themselves, it would be desirable to entrust the responsibility of monitoring to the groups. But a uniform system of monitoring should be designed for use by the different groups so that the data and results are comparable. Apart from designing the system, the groups should be educated on data generation and analysis techniques and helped to carry out the task In the initial stage. A reporting system with a fixed periodicity would enable the funding agencies to access information necessary to carry out their analysis and infer the state of performance of the SHG.
While a reporting system would bring in the data required, it would be too mechanical to assess the quality dimensions of performance. For this purpose the funding agency should supplement the MIS based monitoring with field visits to the groups at their site. Field monitoring can be done by visiting the group, attending the group meetings and scrutinising the books, discussing with the members who visit the branch for dealing with the bank, periodic discussions with the NGO staff and discussion with the other villagers who visit the branch regarding the functioning of the group. But field monitoring entails high costs. The frequency of field monitoring and also the periodicity of the reports from groups to the funding agency should be fixed after a cost benefit analysis of the importance and immediacy of information requirements and the attendant costs.
The operating guidelines issued by the banks to their branches for financing the SHGs indicate that the groups has to be comprehensively assessed for their strengths and weaknesses before advancing the first loan. At present many branch managers for want of experience or time do not give much importance for monitoring the groups after loan disbursement. When more and more groups are linked to the branch the problems mount. In such a situation branch managers tend to rely on NGOs to monitor the groups. Third party monitoring(say by NGO) could be used to advantage provided the monitoring system is specifically so designed. The monitoring outputs and parameters should be determined in advance as also the format of the report. The branch staff would have to regularly interact with the NGO to get a clearer picture of the status of SHGs.
Many NGOs have introduced monitoring mechanisms for the groups. Agencies like MYRADA, PRADAN etc., have computerised the programme implementation and the staff have been trained to handle data input. This ensures quick analysis of group performance and effective follow-up action. LEAD, functioning in Tamil Nadu has developed a system in which the groups report the group functioning on selected parameters by postcards to LEAD. Thus the NGOs generate data on the functioning of the groups on a regular basis and the branch staff can access some of the relevant data for monitoring the groups especially the trends in quantifiable parameters.
The following aspects need to be looked into at the time of monitoring .
INDICATOR |
QUALITY DIMENSION |
Regularity of group meetings |
without being reminded by the NGO |
Member attendance in the meetings |
Are borrowers attending |
Agenda of meetings |
Inclusion of delicate issues like default by members in repayment, savings, attendance, etc. |
Regularity in savings |
Do savings continue after obtaining loan |
Loaning performance |
Is there equitable coverage of members Is there a shift from consumption to productive purposes |
Recovery performance |
Number of defaulting members. Is default wilful |
Maintenance of books and accounts |
Extent of NGO guidance and prompting |
Transparency of cash dealings |
Are there transactions outside the meeting |
Capacity building of members |
Rotation of leaders |
Adherence to rules and discipline |
Enforcement of penalties |
Decision making process |
Is it collective, are all opinions heard? |
Economic capacity building |
Is there a skill / resource development plan for providing incomes to members. |
Confidence level |
Ability to interact with other agencies, Resolve to stand for their rights. |
Social relevance |
Community development activities, support for social causes |
The groups' progress may be watched periodically to see the trend in functioning of the groups. Any lapse in the functioning and negative features observed in its functioning have to be brought to the notice of the groups / NGO for necessary corrective measures. Many NGOs grade their groups as very good, good, fair etc., depending on the performance of the groups along the fixed parameters and arrange for intensive training of the groups wherever necessary. While the present stage of development of a group is important, it is much more important to assess the ability of a group to internalise learning from their past experience and make improvements in performance.
INSTITUTIONAL SUSTAINABILITY OF MICRO CREDIT PROGRAMMES - LESSONS FOR INDIA
Girija Srinivasan*
Principles for successful financial service to the poor
There are scores of microcredit programmes operating in Asia, Latin America and Africa. However much they may differ, there is a common thread running through most of the successful programmes. All of them have found ways to streamline their activities and made the programmes cost effective. Some of the microfinance principles followed by the institutions are:
Financially self sufficient institutions only can effectively serve the poor. There is a growing realisation that large scale lending of small amounts cannot be accomplished through subsidies or grants. The most successful examples of large scale lending to micro enterprises have been accomplished by dynamic specialised financial institutions that have been able to reach large numbers with few or no subsidies. It is clear that almost no donor or government has the resources to subsidise lending to all the poor who presently suffer from lack of access. Self sufficiency is a concept that has emerged from a wide spread change in attitude arising from the debilitating effects of subsidised lending on the lender.
The circumstances in which long term financial sustainability might be possible has become a subject for research. Christine, Rhyne and Vogel , (1994) identify three levels of financial sustainability.
Level 1 Subsidy dependent - the costs of the organisation are funded through grants and subsidies from donors.
Level 2 Operational efficiency - the non financial costs of operation i.e. salaries and other administrative costs are covered out of programme revenues ( interest on loans and fees)
Level 3 Fully self sufficient or profitable - the institution is generating positive
( inflation adjusted ) returns on assets. The financial costs of operation are also covered : capital for on lending is raised through commercial loans and income is enough to cover the costs of these loans.
Many of the micro credit programmes operate at level 1. Grants and soft loans cover the operating expenses and establish a revolving loan fund. The danger is that the value of the loan fund can erode quickly through delinquency and inflation. Revenues fall short of operating expenses resulting in a continuing need for grants. However the programmes can reach level 2 by operating on the proven principles of self sufficiency.
Level 2 is associated with most of the well known credit programmes where most of the subsidy is eliminated but the programmes find it difficult to eradicate subsidy completely. The Grameen Bank for example retains two kinds of subsidy - its cost of capital is several points below the market and it receives income from soft loans placed on deposit(Hossain 1988 ). The Badan Kredit Kecamatan (BKK) of Indonesia has eliminated subsidy from its branch network but requires grant support for supervision( Otero and Rhyne 1994).
Level 3 is reached when the programme is fully financed from the savings of its clients and funds raised at commercial rates from the financial markets. The only major microcredit programmes to have reached this level are the credit union movement in some countries and the BRI Unit Desa in Indonesia.
The programmes need not begin at the bottom of sustainability scale and work their way up. Once a programme is set on the foundation of subsidy, it takes a long time to work the subsidies out of the system and make it sustainable by passing on market costs to the users. Beginning at a subsidy free higher level is far better option. Adopting the accepted principles of financing, the programmes can establish themselves at level 2 and gradually move to full self sufficiency.
Contributing factors to achieve self sufficiency
Cost Saving measures
Traditional credit programmes have very high operating costs. In the initial stages it may be very common to incur a cost of a rupee for every rupee lent. However, by adopting the principles outlined above, these programmes can move towards viability. Once the cost saving measures are adopted the changes come incrementally with economies of scale and increasing efficiency. Continued improvement in processes, the information system and better financial management also contribute to the financial viability.
High repayment rates
Programmes which have adopted the principles outlined above have achieved very high repayment rates. Though some amount of default is unavoidable, most of the successful programmes claim losses below 3 percent of principal due to delinquency.
Less dependence on grants
In the initial stages programmes depend on grants or loans on soft terms and hence they are spared the payment for the cost of funds since donors bear this cost. As soft loans are in short supply, dependence on such funds can be a limiting factor for the expansion and even the continued existence of the programme. Hence the microcredit institutions move towards funding from borrowings at commercial rates and by generating savings.
Charging market rates for services
Traditionally the microcredit programmes do not charge the full cost from the micro enterprises. In many of the level 1 programmes the rate of interest or fee for the services may not be giving any real rate of returns. Studies have shown that the small borrowers are more sensitive to the availability of the financial services than the price they pay for the services (Christen 1989). In order to graduate to the level two and level three of self sufficiency the programmes should aim at cost plus pricing. However it has to be ensured that the borrowers are not called upon to pay up costs of inefficiency either of the NGO or the financing institution. Realistic interest rates to ensure sustainability would mean an underlying optimal cost structure.
Managerial and organisational sustainability:
Financial viability is not the only component of ensuring institutional sustainability. The structure and management of the organisation are equally critical considerations.
Staffing Policies
One of the critical issues is staffing. The staff should feel motivated to deal with the poor borrowers and they should be prepared to the intense supervision the microcredit programmes entail; their honesty and integrity in dealing with the money of the public must be apparent; without which the demand for the financial services will decline. The group approach adopted for savings collection and lending ensures transparency and accountability. In the case of Grameen Bank the group meetings ensure the transparency and accountability of staff as well as the members. It is necessary that the staff donot collude with the scheme users to abuse the scheme.
Organisational form
The organisational form may be the most significant design element in relation to long term sustainability. Financial services are not the kind of services which can exist for a short term or conditional to the donor support. If poverty alleviation has to be a significant outcome of the microcredit services, a long term approach is needed in the organisational frame work. ROSCAs, Village banks, credit unions, village assemblies, banks and schemes run and managed by the NGO itself are some of the organisational forms which the programmes have adopted world over.
The different programmes offer a rich and diverse range of experience from which to draw conclusions as to which form would be most appropriate and enduring. The most obvious organisational form for sustained financial service provision is a bank. BRI of Indonesia, a state owned bank, is a very successful example of a commercial bank predominantly catering to the needs of the micro enterprises. There are some organisations like Bancosol in Bolivia and Grameen Bank in Bangladesh which started as NGOs and have been able to convert themselves into banks suggesting that this is a course of action many NGO run microcredit programmes could follow. However the feasibility of this approach is questionable especially in terms of Government regulations. Apart from the legal difficulties there are some who question the necessity of the NGOs to act as a financier. In many countries they could end up duplicating the services offered by banks at fairly high uneconomic costs. Dichter 1996 says that the NGOs should concentrate on what they know and do best - reaching the poorest and engaging in the activities that help poor change - rather than trying to act as a bank. However, such debates are not decisively concluded. An alternative strategy for NGOs could be to persuade commercial banks and private banks to extend their services to the poor people. Groups nurtured by the NGO may be encouraged to link with the formal banks.
At present NGOs operating the microcredit institutions are concerned as to how they could establish organisations which can survive over a long term. Legal status is a major concern especially the Government regulations regarding the organisations accepting deposits from the public. The other popular and legally recognised alternative to banks is the credit unions which is being owned by their members and are savings based. However there is much to be learned about credit unionsÕ large scale replicability especially in the rural areas.
Paul Mosley and David Hulme 1996 in their study on twelve micro finance institutions which included Grameen Bank, Banco Sol, BRI, BRAC etc have concluded that no one administrative model dominated others and both the success and failure could be observed within the solidarity Group, co-operative group and individual lending models. The market determined interest rates, the availability of savings and insurance facilities, intensive loan collection and incentives and motivation for the borrowers to repay, and agency staff to perform are all associated with high performance.
Issues in self sufficiency and institutional sustainability in India
In India the micro credit institutions comprise of the rural financial institutions who cater to the needs of the poor and the NGOs who act as financial / non financial intermediaries. (The institutional sustainability of the RFIs is a separate topic altogether and the discussion here is restricted to NGOs as micro credit institutions). As per the latest statistics around 270 NGOs are participating in the SHG linkage programme in India. While a few are acting as financial intermediary, many are non financial intermediaries. There are some institutions like SHARE, Hyderabad, RDO, Manipur, Nirdhan, West Bengal etc., which are following the Grameen Bank pattern of mobilising and lending to the poor. SEWA, WWF,CDF, etc., have set up women's banks in a co operative form.
In a study on the self sufficiency of the micro credit operations of the leading NGOs in India(who act as financial intermediaries), the findings of which were presented in the Regional Workshop on Developing Sustainable Micro finance Technologies in Asia Pacific conducted at Kuala Lumpur, it was seen that out of the eight NGOs under study none was self sufficient and three were partially self sufficient and were at level 2.
NGOs in our country are not allowed to raise deposits from the public since most of them are not registered as banks/ NBFCs etc . which has put serious constraint on their capital base and growth prospects. David S. Gibbons in his article SHARE, Andhra Pradesh (in the book Cloning Grameen Bank edited by Helen Todd , 1997), has commented on the institutionalisation of the NGOs.
SHARE is registered under the Societies Act and under this act SHARE can do limited banking with the members...... SHARE has already discovered that banks will not lend the large sums required for expansion to a society which is not required to have any capital and which is not regulated by the Reserve Bank of India. Not only SHARE but all the NGOs in India that are carrying out financial intermediation with the poor are in this situation with respect to the lack of supervision of their fiduciary relationship with their depositors. While this is certainly beneficial to all concerned at this early stage in the development of a financial institutions for the poor, it is not a sound basis for their expansion and institutionalisation.
Another issue which deserves attention is the staff remuneration structure and incentives. Most of the NGOs in India face high turn over of staff. The staff incentives should be structured in such a way which improves the capacity and performance of the staff and ensures their retention with the NGO. The institution building objectives of the project could be met only if the staff stay committed to the objectives and the organisation.
Under the SHG linkage banking programme, the NGOs get a financial margin of 1.5 percent on the loans disbursed where they act as financial intermediaries depending on the institution from whom they borrow. They donÕt get any service charge where they only facilitate the linkage of the groups/ individuals with the banks. NGOs have so far absorbed the costs of formation of groups and developing the basic network, which has facilitated the banks and borrowers, out of funding or through grants received for implementation of various projects. For any operation to be sustainable in the long run, the users have to pay for the services and the borrowers have to pay the market rates of interest.
A major issue in sustainability would be the ability of the financial system for the poor to continue to thrive even after the withdrawal of the NGO (where they act as non financial intermediary involved in mobilisation of the poor). A programme which depends perennially on donorÕs funds and NGOÕs mobilisation abilities for continued functioning is clearly not sustainable. Sustainability in the context of SHGs could be defined as the ability of the groups to continue to function and grow without financial, managerial and organisational support from SHPIs and others on subsidised terms. In other words SHGs which are sustainable, should be in a position to absorb the costs of group maintenance and administration, pay market costs for amounts borrowed, and manage its funds by itself . Hence micro credit programmes should be designed with eventual withdrawal of Donor and NGO, and a suitable institutional mechanism to manage the programme independently. The emerging phenomenon of SHGs creating federations as umbrella organisation merits careful examination as it could provide the necessary support to SHGs during the transition period when NGOs withdraw.
REFERENCES
Carr Marilyn, Martha Chen and Renana Jhabvala, 1996 : Speaking out - Women's economic empowerment in South Asia, IT Publications, London.
David Hulme and Paul Mosley, 1996 : Finance Against Poverty, Roultedge , London.
Johnson Susan and Ben Rogaly, 1997 : Microfinance and Poverty reduction, Oxfam, UK and Ireland.
Otero Maria and Elisabeth Rhyne , 1994 : The new world of Microenterprise finance IT Publications, London.
Sinha Sanjay and John Samuel 1997 : Micro finance capacity Assessments- case studies of selected micro finance institutions in India, Asian and Pacific Development centre, Kuala Lumpur, Malaysia.
The World Bank, 1996 : A world wide inventory of microfinance institutions, The World Bank, Washington.
David S. Gibbons, 1997 : Cloning Grameen Bank, edited by Helen Todd.
SHG Federations - Emerging Institutions
Girija Srinivasan
Introduction
Non governmental organisations (NGOs) have been the pioneers in mobilising the poor into groups and motivating and nurturing such groups to function effectively. Looking to the prospects of linking such groups with the banks, the Reserve Bank of India and the National Bank for Agriculture and Rural Development have launched a linkage programme between the SHGs and the banks which has been operational since 1992. The groups have been utilised by banks as a conduit of rural credit which has resulted in increased access of formal credit to the poor and reduction of transaction and risk costs of the banks.
The group formation and nurturing require intensive efforts and the NGO staff have to spend considerable time to make the groups stable. It is normally seen that the NGO attends all the meetings in the initial two or three years and helps in maintaining the books of accounts. Thereafter the nature of support extended by the NGO to the groups is that of overall guidance. Serious apprehensions have been expressed by the NGOs, banks and policy makers as to whether the groups could ever be on their own managing their affairs and whether the local vested interests would 'take over' the groups in case the NGO moves out. Another aspect which is bothering them is the legality of such groups. At present most of the groups are informal in nature which may come in the way of accessing large amounts of loans from banks and certain other schemes of Government and Corporations like HUDCO, Rashtriya Mahila Kosh etc. More over, the progress in the linkage programme is slow. For example out of about 3000 groups formed by MYRADA only 700 have been linked to the banks. NGOs have to play the role of loan broker in respect of each SHG which they find to be time consuming. To address the above problems some of the NGOs like PRADAN, Madurai; MYRADA, Bangalore; RASS, Tirupati; LEAD, Trichy; CHAITANYA,Pune; etc., have encouraged the federation of the SHGs. The SHGs functioning in a cluster of villages are federated into a cluster association and such cluster associations are federated at the block level. The broad objectives of federating the groups are:
Thus the federations are expected to take over the functions of the NGO in the long run. However the objectives vary from one federation to another as can be seen in the following paragraphs.
MYRADA:
MYRADA can be called the pioneer in the SHG movement and also in federation of SHGs. There are nearly 59 federations functioning in the three states of Tamil Nadu, Andhra Pradesh and Karnataka out of which seven are in Tamil Nadu. In Tamil Nadu 12 to 15 groups functioning in a compact area are formed into the apex federation. Two representatives from each group are the members of the federation. The groups contribute a specific sum of money to the federation as per mutual agreement. No interest is paid by the federation to the groups for their savings. The seed money assistance given by MYRADA earlier to the groups, has been transferred to the federation for on lending to the groups. The federation has monthly meetings the expenses of which are borne by the federations themselves. Different federations have different roles to play suiting the local requirements. Thus some federations are registered whereas the others are not. MYRADA in its publication( 1995) states that ' There are several types of federation depending on their reasons for emergence...some are temporary to achieve a particular objective like desilting of a tank...some federations decided to mobilise and manage funds and pragrammes others decided to operate like Farmers' service societies....Most Apex societies decided not to operate as lending institutions and have restricted their role to monitoring of the groups.....MYRADA on its part discouraged Apex bodies from a lending role'. However, in recent years several apex bodies have managed to play the role of a lender also. Major roles which is common to all are, monitoring the performance of the groups, lobbying with the Govt., and tackling problems common to the area.
PRADAN:
PRADAN have promoted about 450 groups under the community banking project in Madurai and Ramnad districts of Tamil Nadu. The SHGs consist of 15 to 20 poor women at the hamlet. 10 to 15 groups are federated into a cluster association. The objectives of the association are to increase the access of the groups for higher amount of loans and to provide promotional support on a continuous basis for long term continuity and growth of the groups. Promotion of new groups, training and strengthening of groups, monitoring and evaluation and addressing community issues are some of the activities of the association. All the member SHGs frame the operating guidelines for the association. An executive committee of five members is elected to manage the affairs of the cluster association. The expenses of the cluster association in conducting meeting and hiring staff are met by the member groups. Cluster Nidhi is the financial wing of the cluster association and is manned by a manager and an accountant. It has a Board of Directors elected from the member associations. Each group contributes to the corpus of the Nidhi and raises a loan demand on the association when the credit needs of the members exceed the funds available with the groups. After assessing the need and the performance of the group the loan is sanctioned. Nidhi charges 12-15 percent from the groups and the groups in turn charges 24-36 percent from the members .
About 100 to 200 groups are integrated into a Federation at the block level to provide continuity for the programmes by women, to fill the credit gaps not met at the cluster level and to gain greater access to outside funds. At present there are three block level federations. They are registered as Societies. The federations have availed of bulk loans from SIDBI and NABARD for on lending to the groups.
LEAD:
LEAD based in Trichy in Tamil Nadu is operating in three nearby districts. It has formed nearly 325 SHGs which have been federated into 14 cluster associations. The group representatives form the Board of Directors of the association called Mahasabhai. As of March 1997, the expenditure for the federation meetings were met by LEAD. The cluster associations are to be federated at the block level and registered as a company. The purpose of the federations as indicated by LEAD are to avail of loans from outside agencies, to form new sangams, to link weak SHGs with strong ones, to ensure monitoring and evaluation of the groups and to enable LEAD to with draw from the groups.
Shri Padmavathy Mahila Abhudhaya Sangam(SPMAS):
SPMAS had been promoted by RASS and PRADAN in the urban areas of Tirupathi. The federation has been functioning since 1990 and as of July 1996 it has 221 member SHGs with a membership of 2467 women in its fold. The SHGs functioning in a compact area are formed into a cluster association. The leaders of the SHG represent the group in the association. The association has its office whose expenditure are borne by the SHGs. The various cluster associations are federated as the apex federation.
The federation has been functioning autonomously since 1993 when it became independent of the promoting NGOs.. The federation is registered as a Society and as of 1996, has a corpus of Rs. 10 lakhs. The federation has the following functions- fund balancing of the member SHGs, formation of new SHGs, mobilisation of funds from financial institutions, to meet the credit needs of the member SHGs and building solidarity among the members. The apex federation has its own office and staff and all the women form the general body where as the Board of Directors are the elected representatives from each cluster. The day to day affairs are looked after by nine staff members
Grameen Mahila Swayamsidha Sangh(GMSS):
Chaitanya a NGO functioning in Pune district has formed the GMSS which is a federation of 52 SHGs. The federation has been registered both under Societies Act and under Bombay Trust Act. The federation had taken bulk loans in 1994-95 from FWWB for lending among the groups which has since been repaid. At present the federation is acting as a fund balancer among the SHGs. The other activities under taken by the federation are auditing the accounts of the SHGs, training the members and undertaking insurance of the assets created by group loans. The SHGs regularly contribute to the share capital of the federation and the federation earns a margin of 12 percent on the loans to the SHGs.
In almost all the cases the groups which have completed six months are eligible to become the members of the next tier of federation. The NGOs have tried to create a formal structure which can sustain the efforts of the groups and NGO in the long run. Thus the federation appears to be the solution for the sustainability of the groups and the withdrawal of NGOs. The grassroot women have been involved in the governance as well as the day to day operations of the federation. NGOs have also provided for the financial sustenance by way of margin on the loans to the groups, compulsory contributions to the share capital and other funds of the federations by the groups. However it is not clear as to how far the groups, the cluster associations and the federations are functioning independently. As of 1996-97 SPMAS may be the only federation in the country which is functioning independently.
Conclusion
The success of the federation depends on how far the members understand the concept at various levels of the federation, participate effectively in the decision making, understand the financial details of the federations and carry on the day to day activities independently. More over the financial viability of the operations of the federations have not been assessed so far. By creating one more structure whether the members are forced to pay higher rates of interest to sustain the efforts of the intermediary is an issue to be probed. Federations are likely to be the answer for the problems faced by the NGOs and policy makers regarding the legal status, slow momentum in linking of groups, sustainability of groups and withdrawal of NGOs from the groups. However the people's participation in the federation should be ensured, the operations of the federation should be understood by the members and they should own the federation.
Impact on Transaction and risk costs by lending through SHGs
Girija Srinivasan
Identification and appraisal of borrowers, appraisal of loan proposals, sanctioning, documenting and disbursing the loans, monitoring and recovering the loans are the major lending functions. One of the major problems in lending to small borrowers has been the high transaction time and costs involved in lending. The problem is compounded by the small amount of loans which do not yield enough income to cover the costs. Another problem area has been poor recovery of loans which has increased the risk costs of the banks.
Some studies have been conducted to assess the impact of transaction and risk costs of lending through SHGs the summary of which is given below. Puhazhendi (1995) studied 19 SHGs, 5 bank branches and two NGOs in Karnataka and Tamil Nadu. The four models of lending studied were;
| Model - I | Bank lending directly to borrowers (bench mark) |
| Model - II | Bank lending to borrowers and NGO and SHG are involved as non-financial intermediaries. |
| Model - III | Banks using SHGs as financial intermediaries to lend to borrowers with NGO acting as non-financial intermediary. |
| Model - IV | Banks lending to NGO for on lending to SHGs which in turn lend to borrowers i.e. both NGOs and SHGs act as financial intermediaries. |
The study concluded that under Model III the transaction cost was minimum and the reduction in transaction costs was 40 percent as compared to Model I. (For comparing the two models, the number of members availing loan from SHG were assessed and the transaction cost and time were of dealing with a SHG was reduced to per member basis). The default risk was negligible in lending through SHGs while it was 22% in direct lending.. However the study noted, that the available population for sampling was restricted in size specially in Model IV. He observed that there was scope for further reduction in time spent for delivering the loans once the procedures are standardised. At the borrower level, transaction costs are reduced by 85% as compared to individual lending since group lending has significantly reduced the time spent by the borrowers at the bank premises together with the elimination of documentation procedures.
Indian Bank (1995) had conducted a similar study in Tamil Nadu. The study covered 45 branches of Indian bank, 101 SHGs and 122 individuals. The different models under study were :
| Model -I | Direct lending to individuals. |
| Model -II | Direct lending to individuals under Integrated Rural Development Programme (IRDP), a Government sponsored programme |
| Model-III | Lending to individuals with SHGs and NGOs acting as non-financial intermediaries |
| Model-IV | Lending to SHGs which on-lend to borrowers with NGO acting as non-financial intermediary. |
The study examined only the transaction costs of the branches under different models for credit delivered for medium term loans upto Rs 25,000. It concluded that both the Model III and IV resulted in saving of transaction costs to the banks especially on follow-up and recovery. The cost per Rs. 100 loan is the cheapest under Model IV. It noted that the sample available for study under Model IV was limited and it should be possible to further reduce the costs under the model with increase in the loan amount per SHG.
Girija Srinivasan and Satish ,BIRD ( 1998)had conducted a similar study to assess the impact of linking large number of groups on the transaction and the risk costs of the branches and to quantify the cost of credit delivery under five models of lending viz: bank lending to a)individuals under normal lending, b)individuals under IRDP c)SHG without financial intermediation by NGO and d)NGO for onward lending to SHG. Eight branches - four each of Regional Rural Banks and Commercial Banks - were studied and 7 NGOs and 22 groups were also covered under the study.
The major findings are that the financial intermediation by the groups and NGOs have resulted in substantial reduction in transaction costs as compared to individual lending. The transaction costs were lower by 89 % under c) and 99% under d). Lending under IRDP was 75 % higher than normal lending. A peculiar feature of lending under c and d is that the loan offtake registers quantum jump in the subsequent years since the savings of the members to which the credit is linked increases. And banks also increase the savings to credit ratio for subsequent loans from 1:1 to 1 :4 in phases. Neither individual loans nor the loans under IRDP register such an increase. The transaction costs per Rs 100 of loan dramatically falls in the case of SHG lending with the increase in the size of loans.
The studies bring out that it is possible to transact retail rural micro-credit at a low cost effectively through NGOs and SHGs. Self Help Groups take over the responsibility of selection of borrowers, their appraisal, decisions regarding the terms and conditions of the loans, monitoring and recovery of the loans. Thus the costs incurred by the banks on these functions are externalised. Moreover through one SHG the bank is able to cover a number of borrowers. Thus by lending to SHG for onward lending to the individuals the transaction costs of the bank can be considerably brought down. This approach has the built in advantage of reducing loan default through greater involvement of borrower's funds and involvement of members in the thrift and loan administration processes. The peer pressure and close monitoring by the members for loan utilisation and repayment ensures near 100% recovery. A further cost saving is in the hands of the borrower who finds that the groups reduce the time spent in dealing with the banks. It is one of the rare win-win approaches for the banks which ensures outreach to micro borrowers without sacrificing institutional sustainability.
COMMUNITY MONITORING SYSTEM
The thrift and credit societies set up in every Neighbourhood Group (NHG) in the Community Development Societies (CDS) have enabled the 'High Risk' families to enjoy the benefits of banking in their neighbourhood itself. They have been able to utilise the services of thrift societies for saving their frugal amounts and build up a small fund of their own. The members have also been able to utilise this amount along with bank loans to meet emergent requirements and take up many income generating activities. They are now keeping all accounts as per the "Community Financial Management System" (CFMS). Honorary accountants have also been engaged by the CDS at each ADS level to help the Secretaries of NHGs to maintain the books properly.
With the increasing financial services offered by the structure, a scientific but inexpensive system of checks and balances within the CDS is now needed so that the money handled is accounted for properly and books of accounts are maintained as per the CFMS to ensure transparency in financial dealings. The system should also throw up the required information to the higher tiers for taking policy decisions.
Keeping in view these requirements, a low-cost internal auditing system has been devised for use.
1. Audit
Audit of financial accounts is a prerequisite for any institution dealing with financial resources. Presently, the accounts of Community Development Societies at town/district levels are being audited by Chartered Accounts. While this arrangement is quite satisfactory at the apex level, the cost and time involved in conducting audit by Chartered Accountants for all ADSs and NHGs, specially when the groups are located even in rural areas, will be prohibitive.
Keeping in view the organisational structure of ADSs and NHGs, and also the nature of transparent financial transactions undertaken by these tiers, it is felt that periodic internal audit of books by the members themselves would serve the purpose. The ADSs and NHGs, after all, are informal groups and do not deal with external agencies directly. All their transactions, barring the savings bank accounts, are with their own members and at best with the higher tier in the organisation (i.e. NHG with ADS, and ADS with CDS). Therefore, so long as the audit of accounts are carried out without much loss of time, the purpose of ensuring transparency in accounting and financial dealings would be achieved.
The CDS can build a team of auditors by selecting interested honorary accountants, ADS functionaries and Anganwadi workers, and provide them with necessary training for conducting such audit. The audit of the NHGs and ADSs can be taken up on quarterly basis. Audit for each NHG may be carried out by one person, and audit of each ADS by two persons. The allocation of ADSs and NHGs to be audited can be made in such a way that the audit team belonging to one ADS will undertake the audit of the adjacent ADS. The allocation of audit can also be rotated periodically, say once in a year. To meet the travelling and other expenses of these selected auditors and also to provide them with a small incentive for undertaking the work, a predetermined honorarium (say at the rate of Rs. 25 per audit) may be paid by the CDS. The audit report should reach the next higher tier and these reports can be utilised to draw up action points for taking corrective action wherever necessary. Formats of reports to be submitted by the internal auditors for NHG and ADS are given in Annexure I and II respectively.
The Town/Panchayat CDS will have to report the progress with regard to auditing of NHGs and ADSs to the District CDS on a quarterly basis. Proformae of the quarterly progress report to be submitted by the Town/Panchayat CDS and District CDS are given in Annexure III and IV respectively.
Time schedule
The audit of NHGs may be conducted on a quarterly basis. The audit report of all NHGs should reach the respective ADSs by the end of month succeeding the relevant quarter.
The audit of ADSs would also be for the same period and done on a quarterly basis. the audit of the ADS would be taken up in the first week of second month succeeding the relevant quarter. In other words, the audit reports of all NHGs functioning under the ADS should have been received at the ADS before the audit of ADS is taken up. The ADS audit report should reach the Town/Panchayat CDS within one week of completion of audit.
The last dates for submission of audit reports/progress reports at different levels are given below:-
Quarter |
NHG audit report to ADS |
ADS audit report to town/ panc. CDS |
Town/ Panchayat CDS to Dist. CDS/ Kerala CDS |
District CDS to Kerala CDS |
Jan - March |
30 April |
7 May |
15 May |
31 May |
Apr - June |
31 July |
7 August |
15 August |
31 August |
July - Sept. |
31 October |
7 November |
15 November |
30 November |
Oct - Dec. |
31 January |
7 February |
15 February |
28 February |
Training
To ensure success of the above system, it is essential that the audit team is trained on the aspects to be seen and reported during the audit. This training can be arranged by the Chartered Accountants who are now auditing the accounts of CDS books. Alternatively, NABARD Officers also can take up this task.
2. Monitoring
While auditing can well provide the clues and feedback with regard to incipient problems at different levels, there is need for a forum to periodically meet and review the feedback obtained from the audit report and to initiate suitable corrective measures wherever necessary. The ADS and Panchayat/Town CDS Governing Committees can take up this issue as a regular agenda item in their periodical meetings. At district level, a monitoring and advisory committee may be formed with NABARD's AGM (DD) as the Chairman with representatives of district CDS, Lead District Manager and other participating banks in the district to monitor the CDS activities. The CDS can, after its annual election appoint 4 members as internal auditors who may by rotation, conduct internal audit of the Town/ Panchayat CDS under the guidance of the monitoring and advisory committee members. Periodically, associated bank managers may be requested to guide these internal auditors.
Conclusion
It needs to be remembered that success of the monitoring system will largerly depend on regular conduct of audit and prompt submission of audit report. Further, the efficiency of the system will also be evident only if suitable and timely corrective actions are initiated. Proper training input to the audit team will ensure better success to the system.
ANNEXURE - I
COMMUNITY MONITORING SYSTEM
QUARTERLY AUDIT REPORT - NHGs
Period of audit :
Name of NHG : January - March
April - June
July - September
October- December
Meetings
1. a) No. of group meetings held during
the period of audit
b) Whether group meetings are held
regularly? If not, indicate the
reasons.
2. Whether savings are collected during
the meeting?
3. a) Whether loan proposals are
discussed in the meeting?
b) Whether loans are disbursed
during the meeting?
4. Whether minutes book is
written promptly?
5. Savings
Amount of savings during the quarter |
Amount withdrawn during the quarter |
Total cumulative amount saved by all members |
Balance amount of savings of all members |
6. Loans for Income Generating Activities in NHG
No. of loans given during the period of audit |
Total amount given during the period of audit |
Total cumulative no. of loans given in NHG |
Total cumulative amount given in NHG |
Total balance amount for all members |
7. Loans for Consumption Purposes in NHG
No. of loans given during the quarter |
Total amount given during quarter |
Total cumulative no. of loans given in NHG |
Total cumulative amount given in NHG |
Total balance amount of loans |
8. a) Whether repayments of loans are
made regularly by the members?
b) If defaults are there, given details
No. of defaulters |
Amount of default |
Reasons for default |
Action proposed against defaulters |
9. Whether interest on loans is calculated
correctly? If not, type of mistakes
noticed and corrected by the auditor
10. Maintenance of books
a) Whether the following registers
are maintained properly:
a) Weekly Register
b) Consolidated Register
c) Savings Register
d) Loans Register
b) Whether passbooks are entered regularly?
11. Transactions with ADS
a) Whether weekly collections are remitted
to ADS correctly and promptly?
b) Whether loans availed from ADS
are fully disbursed without delay?
c) Whether dues to ADS are repaid promptly?
(Give details of default to ADS, If any)
12. Other social and welfare activities
Activity & funding Agency |
No. of members benefitted |
Amount received |
Amount utilised |
Balance |
Remarks |
1 | |||||
2 | |||||
3 | |||||
Total |
13. Any other issues
Place : Signature
Date : (Community Internal Auditor)
Name :
Address:
NHG President : Name: Signature:
NHG Secretary: Name: Signature:
----------------------------------------------------------------------------------------------------------------
To be submitted to ADS before:
30 April/31 July/31 October/31 January
ANNEXURE - II
COMMUNITY MONITORING SYSTEM
QUARTERLY AUDIT REPORT - ADS
Period of audit :
Name of ADS : January - March
No. of NHGs : April - June
July -September
October- December
1. Status of audit at NHG level :
a) No. of NHGs audited
during the period
b)Reasons for shortfall, if any:
2. If any NHG is inactive, give details:
NHG |
Reason for inactivity |
Action proposed to be taken |
1 | ||
2 | ||
3 |
3. Whether the ADS is remitting the thrift
collections to the bank SB account
immediately? If not, specify reasons:
4. Balance in SB a/c as on date:
5. Details of savings mobilised by NHGs during the period:
NHG |
Amount of Savings during the quarter Received Withdrawn |
Total comumulative amount saved by all members |
Total balance amount of all members | |
1 | ||||
2 | ||||
3 | ||||
Total | ||||
6. Loans for Income Generating Activities
NHG |
No. of loans given during the quarter |
Amount of loan given during the quarter |
Total cumulative no. of loans given |
Total cumulative amount of loan given |
Total balance amount of loan |
1 | |||||
2 | |||||
3 | |||||
Total |
7. Loans for Consumption Purposes
NHG |
No. of loans given during the quarter |
Amount of loan given during the quarter |
Total cumulative no. of loans given |
Total cumulative amount of loan given |
Total balance amount of loan |
1 | |||||
2 | |||||
3 | |||||
Total |
8. a) Whether repayment of loans are made regularly by
NHGs to ADS? Give details of default by NHGs to
ADS, if any :
No. of NHGs in default |
Amount of default |
Reasons for default |
Action proposed against defaulters |
b) Details of repayment default by members at NHG level (Consolidated position)
NHG |
No. of defaulters |
Amount of default |
Reasons for default |
Action proposed |
1 | ||||
2 | ||||
3 | ||||
Total |
9. Whether interest calculation at NHG and ADS levels are made correctly?
10. Maintenance of Books
Whether the following books at ADS
are maintained promptly and properly?
Indicate nature of errors and whether
the same have been rectified?
i) Membership Register
ii) Savings Register
iii) Day Book
iv) Loan Register
11. Transactions with CDS
Dues to CDS from ADS:
Cumulative amount of loan received from Bank/CDS |
Cumulative amount Repaid |
Balance payable |
Amount of default, if any, |
Reason for default |
Action proposed to clear the default |
12. Details of other social and welfare activities
Activity and funding agency |
Benefitted NHGs Members |
Amount received |
Amount utilised |
Balance |
1 2 3 |
||||
Total |
13. Any other issues
Place : Signature
Date : Community Internal Auditor
Name :
Address:
Chairperson of ADS: Name: Signature :
Member-Secretary of ADS : Name: Signature:
--------------------------------------------------------------------------------------------------------
To be submitted to Panchayat/Town CDS before:
7 May/7 August/7 November/ 7 February
ANNEXURE - III
COMMUNITY MONITORING SYSTEM
QUARTERLY AUDIT REPORT -CDS
( To be prepared in duplicate)
Period of audit :
Name of Panchayat/Town CDS: January - March
No. of ADSs in the CDS: April - June
No. of NHGs in the CDS: July - Sept.
October- Dec.
1. Whether all NHGs have been audited?
if not, give ADS-wise details:
ADS |
No. of NHGs not audited |
Reasons for shortfall |
Action proposed |
1 | |||
2 | |||
3 | |||
Total |
2. Status of audit at ADS level
i) No. of ADSs audited during the quarter:
ii) Reasons for shortfall, if any:
3. a) No. of ADS and CDS functionaries who have been trained
in Community Financial Management:
b) No. of functionaries yet to be trained:
4. a) No. of NHG volunteers who have been trained
in Community financial Management:
5. ADS- Wise details of savings mobilised in the NHGs
ADS |
Savings received during quarter |
Savings withdrawn during quarter |
Total cumulative amount saved |
Total Balance amount of savings |
1 | ||||
2 | ||||
3 | ||||
Total |
6. ADS-Wise details of loans for Income Generating Activities in NHGs
ADS |
No. of loans given during the quarter |
Amount of loans given during the quarter |
Total loans given so far No. Amount |
Total Balance amount of loan | |
7. ADS-wise details of loans for consumption Purposes in NHGs
ADS |
No. of loans given during the quarter |
Amount of loans given during the quarter |
Total loans given so far No. Amount |
Total Balance amount of loan | |
1 2 3 | |||||
Total | |||||
8. a) Whether repayment of loans to CDS
are made regularly by ADS?
b) ADS-wise details of repayment default by
members at NHG level
ADS |
No. of defaulters |
Amount of default |
Reasons for default |
Action proposed |
1 | ||||
2 | ||||
3 | ||||
Total |
c) Direct loan transactions of Panchayat/Town CDS
with banks (if any)
Bank |
Cumulative amount of loan Received Repaid |
Balance payable |
Default, if any |
Reason for Default |
Action proposed to clearn the default | |
1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
9. Whether interest calculation at NHG,
ADS and CDS levels are made correctly?
10. Maintenance of Books
Whether the following books at CDS are
maintained promptly and properly?
i) Day Book
ii) Bank loan Account
iii) Petty Cash Book
iv) Activities Register
11. ADS-Wise loan transactions with CDS
ADS |
Cumulative amount of loan Received Repaid from CDS to CDS |
Balance payable |
Default, if any |
Reason for default |
Action proposed to clear the default | |
1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
12. Other social and welfare activities:
Activity & funding Agency |
No. benefitted NHGs Members |
Amount received |
Amount spent |
Balance |
Remarks | |
1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
13. Any other issues:
Place : Signature
Date : Community Internal Auditors
Name:
Address:
President of CDS : Name : Signature :
Member-Sec. CDS : Name : Signature;
--------------------------------------------------------------------------------------------------------
To be submitted to district CDS/Kerala CDS before:
15 May/15 August/15 November/15 February
ANNEXURE - IV
COMMUNITY MONITORING SYSTEM
QUARTERLY AUDIT REPORT - NHGs
( To be prepared in duplicate)
Name of District CDS: Period of audit :
No. of Panchayat/Town CDS: January - March
No. of ADSs in the district: April - June
No. of NHGs in the district: July - Sept.
October- Dec.
1. Whether all NHGs have been audited?
if not, give Blockwise CDS-wise details:
CDS |
No. of NHGs not audited |
Reasons for shortfall |
Action proposed |
Name of Block: 1. 2. 3. | |||
Total |
2. Status of audit at ADS level
Whether all ADSs have been audited?
if not, give blockwise CDS-wise details:
CDS |
No. of NHGs not audited |
Reasons for shortfall |
Action proposed |
Name of Block: 1. 2. 3. | |||
Total |
3. a) No. of ADS and CDS functionaries who
have been trained in Community Financial
Management:
b) No. of functionaries yet to be trained:
4. a) No. of NHG volunteers who have
been trained in Community
Financial Management:
b) No. of volunteers yet to be trained:
5. Block-wise, CDS-wise details of savings mobilised in the NHGs
CDS |
Savings received during quarter |
Savings withdrawn during quarter |
Total cumulative amount saved |
Total balance amount of savings |
Name of Block: 1. 2. 3. | ||||
Total |
6. Block-wise, CDS-wise details of loans for income Generating Activities in NHGs
CDS |
No. of loans given during the quarter |
Amount of loans given during the quarter |
Total loans given so far No. Amount |
Total Balance amount of loan | |
Name of Block : 1. 2. 3. | |||||
Total | |||||
7. Block-wise, CDS-wise details of loans
for consumption purposes in NHGs
CDS |
No. of loans given during the quarter |
Amount of loans given during the quarter |
Total loans given so far No. Amount |
Total Balance amount of loan | |
Name of Block : 1. 2. 3. | |||||
Total | |||||
8. a) Whether repayment of loans to Banks
are made regularly by CDSs?
b) Block-wise, CDS-wise details of repayment default by members at NHG level.
CDS |
No. of defaulters |
Amount of default |
Reasons for default |
Action proposed |
Name of Block: 1. 2. 3. | ||||
Total | ||||
c) Direct Loan transactions of Town/Panchayat CDS with banks (if any)
Bank |
Cumulative amount of loan Received Repaid |
Balance payable |
Default, if any |
Reason for default |
Action proposed to clear the default | |
1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
d) Loan transactions of District CDS with Banks
Bank |
Cumulative amount of loan Received Repaid |
Balance payable |
Default, if any |
Reason for default |
Action proposed to clear the default | |
1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
9. Whether interest calculation at NHG, ADS
and CDSs and district CDS levels are made
correctly?
10. Maintenance of Books
Whether the following books at Dist. CDS are
maintained promptly and properly? Indicate
nature of errors and whether the same have
been rectified?
i) Day Book
ii) Bank Loan Account
iii) Petty Cash Book
iv) Activities Register
11. Block-wise, CDS-wise Loan transactions with Dist. CDS (DCDS)
Bank |
Cumulative amount of loan Received Repaid from DCDS to DCDS |
Balance payable |
Default, if any |
Reason for default |
Action proposed to clear the default | |
Name of Block 1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
12. Other Social and Welfare activities:
Activity & Funding Agency |
No. benefitted NHGs Members |
Amount received |
Amount spent |
Balance |
Remarks | |
1 | ||||||
2 | ||||||
3 | ||||||
Total | ||||||
13. Any other issues:
Place :
Date : Signature
CDS District Co-ordinator
Name :
President of Dist. CDS :
Name: ---------------------------------------
Signature : ------------------------------------
----------------------------------------------------------------------------------------------------------------
To be submitted to Kerala CDS before :
31 May/31 August/ 30 November/ 28 February
Prepared by: National Bank for Agriculture and Rural Development, Thiruvananthapuram