text: Micro Finance and NGOs "Self realization and self initiative are the two most powerful weapons to wash poverty out from the world" – Chanakya World's Greatest Ancient Economic and Political Scholar Non-Governmental Organizations and voluntary action have been part of the historical legacy1. In the context of contemporary social empowerment, self realization and self initiative is the base for the formation of self help groups. This is the logic motivated NGOs to form SHGs in rural areas to empower them through developing their inherent skills. Thus, SHG movement among the rural poor in different parts of the country is emerging as a very reliable and efficient mode for technology transfer2. Chanakya's philosophical statement has transformed into the SHGs with the help of NGOs and their efforts. Microfinance is the tool to empower the rural poor and also tool against human deprivation. Microfinance is motivating sustainable development through the supportive NGOs. As a responsible welfare state in the democratic systems, it can be also say that the growth of micro-finance in India has been in response to the failure of institutional initiatives of rural credit system and involvement of informal credit system. Rural credits especially rural cooperatives. This is led to establishment of microfinance institutions under the guidelines of NABARD. This is quoted by Rimjhim Mousami Das's "Micro-finance through SHGs: A Boon for the Rural Poor" from S.B. Verma and Yaswant Tukaram Pawar, (Ed) Rural Empowerment through Self Help Groups, Non Governmental Organizations and Panchayati Raj Institutions, New Delhi: Deep and Deep Publication, 2005. p.16. 1 . S.B. Verma and Y.T. Pawar, 2005. p.99. 2 . Verma, S.B. and Pawar. Y.T. 2005, p. x. 1 Microfinance institutions are highly encouraging. Microfinance through SHG has become a ladder for the poor to bring them up not only economically but also socially, mentally and attitudinally3. Initially, SHGs and microfinance, as an instrument for social and economic empowerment, are established by the non governmental organizations. In the era of 21st century, NGOs are transforming from non-profit to profit making business model NGOs. Especially, the success formula of microfinance non profit model is learned from the PRODEM - Bolivia and Grameen Bank – Bangladesh. It is proved that committed for the social development NGOs can develop the society through providing finance accessibility to the poor based on self help model. Many NGOs (non- government organizations) in India came forward to promote micro- finance. At present more than 1000 NGOs are implementing micro- finance projects in India. Some of them are leading MFIs (micro-finance institutions) playing the role of social intermediation and building better society in rural areas. These MFIs have adopted different strategies of people's livelihood through micro-finance delivery. Microfinance Institutions: The following are the some of leading microfinance institutions in India working in the sector. Association for Sarva Seva Farms (ASSEFA) Mitrabharati - The Indian microfinance Information Hub Mysore Resettlement and Development Agency (MYRADA) SADHAN - The Association of Community Development Finance Institutions SEWA: Self-help Women's Association 3 . Ibid, p. 16. 2 SKS India - Swayam Krishi Sangam Streedhan - Banking with Rural Women Working Women's Forum, Madras, India The goals are Eradicate Extreme Poverty & Hunger. Achieve Universal Education. Promote Gender Equality & Women's Empowerment. Reduce Child Mortality Combat Diseases Developing Entrepreneurial Spirit Between the 1950s and 1970s, governments and donors focused on providing agricultural credit to small and marginal farmers, in hopes of raising productivity and incomes. These efforts to expand access to agricultural credit emphasized supply-led government interventions in the form of targeted credit through state-owned development finance institutions, or farmers' cooperatives in some cases, that received concessional loans and on-lent to customers at below-market interest rates. These subsidized schemes were rarely successful. Rural development banks suffered massive erosion of their capital base due to subsidized lending rates and poor repayment discipline and the funds did not always reach the poor, often ending up concentrated in the hands of better-off farmers. Meanwhile, starting in the 1970s, experimental programs in Bangladesh, Brazil, and a few other countries extended tiny loans to groups of poor women to invest in micro-businesses. This type of micro enterprise credit was based on solidarity group lending in which every member of a group guaranteed the repayment of all members. These "micro enterprise lending" programs had an almost exclusive focus on 3 credit for income generating activities (in some cases accompanied by forced savings schemes) targeting very poor (often women) borrowers. • ACCION International, it is a Latin America's one of the prime microfinance institution working with the poor. In an early pioneer, ACCION was founded by a law student, Joseph Blatchford, to address poverty in Latin America's cities. Begun as a student-run volunteer effort in the shantytowns of Caracas with $90,000 raised from private companies, ACCION today is one of the premier microfinance organizations in the world, with a network of lending partners that spans Latin America, the United States and Africa. • SEWA Bank. In 1972 the Self Employed Women's Association (SEWA) was registered as a trade union in Gujarat (India), with the main objective of "strengthening its members' bargaining power to improve income, employment and access to social security." In 1973, to address their lack of access to financial services, the members of SEWA decided to found "a bank of their own". Four thousand women contributed share capital to establish the Mahila SEWA Co-operative Bank. Since then it has been providing banking services to poor, illiterate, self-employed women and has become a viable financial venture with today around 30,000 active clients. • Grameen Bank. In Bangladesh, Professor Muhammad Yunus addressed the banking problem faced by the poor through a programme of action-research. With his graduate students in Chittagong University in 1976, he designed an experimental credit programme to serve them. It spread rapidly to hundreds of villages. Through a special relationship with rural banks, he disbursed and recovered thousands of loans, but the bankers refused to take over the project at the end of the pilot phase. They feared it was too expensive and risky in spite of his success. Eventually, through the support of donors, the Grameen Bank was 4 founded in 1983 and now serves more than 4 million borrowers. The initial success of Grameen Bank also stimulated the establishment of several other giant microfinance institutions like BRAC, ASA, Proshika, etc. Through the 1980s, the policy of targeted, subsidized rural credit came under a slow but increasing attack as evidence mounted of the disappointing performance of directed credit programs, especially poor loan recovery, high administrative costs, agricultural development bank insolvency, and accrual of a disproportionate share of the benefits of subsidized credit to larger farmers. The basic tenets underlying the traditional directed credit approach were debunked and supplanted by a new school of thought called the "financial systems approach", which viewed credit not as a productive input necessary for agricultural development but as just one type of financial service that should be freely priced to guarantee its permanent supply and eliminate rationing. The financial systems school held that the emphasis on interest rate ceilings and credit subsidies retarded the development of financial intermediaries, discouraged intermediation between savers and investors, and benefited larger scale producers more than small scale, low-income producers. Concept of Micro-Finance Before we understand the concept of micro-finance, it would be worthwhile to understand the term micro-credit as the two terms are closely related to each other. Poor people need micro credit for various and different purposes. It may be to meet the major household expenses; emergency needs or even basic livelihood support. There are two main 5 systems of micro credit4. One is formal financial institutions, banks and co-operatives, which provide micro-credit to the poor people under different schemes for livelihood support or helping them to start micro- enterprises. The other is informal system comprising traditional moneylenders, pawnbrokers and trade specific lenders. Both the systems have their own positive and negative aspects. Concept and Features of Micro-Finance Micro-finance, as is being practiced by the National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK), could be defined as a set of services comprising the following activities: Micro-credit: Here, the following activities can be activated such as Small loans; primarily for income generation activities, but also for consumption and contingency needs. Micro-savings: SHGs micro savings are called as thrift. The thrift is the basic element for the success of microfinance. Thrift or small savings from borrowers' own resources. The main features of the micro-finance 1. It is a tool for empowerment of the poorest women. 4 . Chauhan, Brij Raj (1990). Rural – Urban Articulations, Etawah: A. C. Brothers. Chippa, M.L. (1987). Commercial Banking Development in India: A Study in Regional Disparity. Jaipur: Printwell Publishers. p. 50-51. 6 2. It is essentially for promoting self-employment; the opportunities of wage employment are limited in developing countries - micro finance increases the productivity of self-employment in the informal sector of the economy - generally used for (a) direct income generation (b) rearrangement of assets and liabilities for the household to participate in future opportunities and (c) consumption smoothing. 3. It is not just a financing system, but a tool for social change, specially for women 4. Micro credit is aimed at the poorest; micro-finance lending technology needs to mimic the informal lenders rather than the formal sector lending. It has to: a) Provide for seasonality (b) Allow repayment flexibility (c) Eschew bureaucratic and legal formalities (d) Fix a ceiling on loan sizes. The positive aspects of formal financial system are that under this system, micro-credit is available at low rate of interest with easy and periodical repayments and moratorium period. The most important aspect of this type of credit is that it is available for income generating activities. But at the same time micro-credit from formal financial system is not easily available. The system requires collateral or security. It has complex legal and operational procedures, involving lot of paper work. Since the process of credit disbursement is time consuming, many times credit is not available in time. Finally, there is a stigma attached to the poor people so that the bankers do not think them credit-worthy and feel 7 that the recovery rate is unsatisfactory. But this may not necessarily be true. The positive aspects of informal system of micro-credit are that the credit disbursement is easy and relatively quick. No collateral is required and there is least paper work. Credit can be given for any activity, especially for consumption and emergency purposes. Credit is generally given for non-productive purposes as well. But at the same time there is very high interest rate in informal micro-credit system. Exploitation is also attached with this system. Moneylender takes repayment at one time only. Based on these two systems of micro-credit, we can define ―micro-credit as the provision wherein debtor takes money either from formal or informal sources of credit on unilaterally decided terms by the creditor‖. If we combine together positive aspects of both the systems like, low rate of interest, easy and periodical repayments with moratorium period, credit for income generating activities, easy process of disbursement, no collateral or security and less paper work etc., we come closer to understanding the concept of micro-finance. The ‗Task Force on Supportive Policy and Regulatory Framework for Micro-Finance' constituted by NABARD (National Bank for Agriculture & Rural Development) defines ―micro-finance as the provision of thrift, saving, credit and financial services and products of very small amounts to the poor in rural, semi-urban and urban areas for enabling them to raise their income levels and improve their standard of living‖. The emergence of microfinance's prime objective is to bridge the gap between demand and supply of funds in the lower rungs of the rural economy, the formal sector took the initiative to develop a supplementary credit delivery mechanism by encouraging institutional arrangements outside the financial system with the launching of NABARD's pilot 8 scheme, microfinance to cure the illness of rural poverty gained visibility ion the India development landscape5. Services of micro-finance are being provided by various MFIs. In India, the Task Force mentioned above, has classified these MFIs under three categories as mentioned below: 3 Not-for-Profit MFIs: These include Societies registered under Societies Registration Act 1860 or similar State Acts, Public Trusts registered under the Indian Trust Act 1882 and Non- Profit Companies registered under Section 25 of the Companies Act 1956. Mutual Benefit MFIs: Such as State Credit Co-operatives, National Credit Co-operatives and Mutually Aided Co-operative Societies (MACS). For-Profit MFIs: Bodies like Non-Banking Financial Companies (NBFCs) registered under the Companies Act 1956 and Banks which provide micro finance along with their other usual banking services could be termed as micro-finance service providers of this type. Examples of Recent Innovations in World's Financial Services for the Poor: 1. CCACN (Central de Cooperativas de Ahorroy Crédito Financieras de Nicaragua) is marketing its "Agriculture Salary" savings product to farmers. The goal of the product is to smooth the flow of income from the proceeds of an annual or semi-annual harvest. Each credit union works with its farmers to identify their individual expenses and determine a monthly "salary" (portion of harvest proceeds on deposit combined with an above-market interest rate) to be withdrawn from the credit union. In its infancy stage, the credit unions have noted an interest from agriculture-based clients in such a savings management program. 5 . S.B. Verma and Y.T. Pawar, 2005. p.100. 9 2. Caja los Andes in Bolivia offers four loan repayment options that fit the cash flow of various agricultural activities, including an end-of-term payment for both principal and interest that fits single crop activities, and unequal payments at irregular intervals for farmers that have planted several crops with different harvesting periods. Flexibility is also provided in loan disbursements, and farmers can receive the sanctioned loan amount in as many as three installments. 3. PRODEM in Bolivia has introduced a combination of biometric fingerprint and Smart Cards to deliver financial services to its clients. Biometric technology measures an individual's unique physical or behavioral characteristics, such as fingerprints, facial characteristics, voice pattern, and gait, to recognize and confirm identity. Although the technology is still new, growing awareness of the importance of data security is increasing adoption steadily. Prodem's fingerprint verification has reduced fraud, error, and repudiation of transactions. Staff had not had to deal with forgotten PIN numbers or unauthorized use of cards and accounts so they have more time to provide personal service and advice to clients. 4. International Remittance Network (IRnet): In late 1999, WOCCU, in partnership with Vigo, a money transfer firm, launched IRnet. As of June 2003, 173 credit unions in Central America offer IRnet, expanding the possibilities for sending remittances through 800 US credit union points of service. The Central American credit unions distribute remittances primarily to rural clients. The distributing credit unions help to integrate remittance recipients into the formal financial sector through trained staff who cross-sell services. When a non-member enters a credit union to pick up a remittance, a staff person encourages this person to become 10 a credit union member and save a portion of the remittance in an interest-bearing voluntary savings account6. 5. Unibanka (Latvia): Prior to introducing credit scoring, Unibanka, a commercial bank, viewed microfinance loans as too costly to deliver. With the assistance of Bannock Consulting, Unibanka instituted a credit-scoring system based on qualitative client data because sufficient quantitative data was not available to develop a statistical model7. 6. Managed ASCAs: A number of local organisations in the Nyeri District of Kenya provide management services to group-based loan funds. The groups operate as Accumulating Savings and Credit Associations (ASCAs) and receive management services provided by ASCA Management Agencies (AMAs). The AMA model serves a wider client base than the mainstream donor funded MFIs who tend to focus their attention on micro and small entrepreneurs. The clientele of AMAs are also drawn from other socio-economic strata, including salaried workers such as nurses, teachers and civil servants as well as subsistence and semi-commercial farmers. Hence their reach into the rural areas is much greater than the MFIs8. 7. ICICI Bank (India): Two state banks in India (Corporation and Canara) partnered with an NGO to provide salaried low-income workers with access to savings. The project uses the already established 6 . WOCCU: A Technical Guide to Rural- Finance Exploring Products. WOCCU Technical Guide # 3, December 2003. 7 . CGAP it innovation series: Credit Scoring. 8 . Nthenya Mule, Susan Johnson, Robert Hickson. Wambui Mwangi. The Managed ASCA Model: Innovation in Kenya's Microfinance Industry. Micro-Save Africa. 2001. 11 automatic teller machines (ATMs) in the factories to offer a recurring savings product, along with education on personal finance9. 8. Microenterprise Access to Banking Services (MABS) in the Philippines nurtures the expanded use of the credit bureau by rural banks, which was started in 2001 to minimize client over indebtedness and defaults. MABS has helped to integrate the rural banks' microenterprise loan clients into an existing national credit bureau, by creating an e-mail encryption program that allows rural banks to share information electronically at a low cost10. 9. The National Microfinance Bank in Tanzania (NMB) was created to retain the extensive rural branch network of the National Bank of Commerce (NBC) when it was privatized in 1997. The key to making it commercially viable has been rigorous control of costs through drastic simplification of the business model and tight managerial oversight. Key initiatives have been correct pricing of products, particularly payments and remittance services, which had traditionally been cross-subsidized by other product lines, and the development of microfinance products, mainly small (average US $400) individual loans11. 10. ADOPEM (Dominican Republic) thoroughly evaluated its PDA (Personal Digital Assistants) program and recorded dramatic improvements. Client retention improved significantly, and the number 9 . CGAP it innovation series 10 . Anita Campion and John Owens, MABS: A Sustainable Approach to Rural Microfinance, Microbanking Bulletin, July 2003. 11 . Rural financial services: Implementing the bank's strategy to reach the rural poor (Work in Progress). Rural Private Sector, Markets, Finance and Infrastructure Thematic Group. Rural Sector Board, The World Bank. Washington, D.C. March 2003. 12 of days between application and disbursement dropped from five days to two days. Expenses for paperwork dropped by 60% and data entry expenses dropped by 50%12. 11 The international NGO Technoserve has developed an inventory credit scheme in Ghana that enables farmers' groups to obtain higher value for their crops by providing post-harvest credit through linkage with a rural financial institution. Instead of selling their entire crop at harvest - when prices are lowest - in order to meet cash needs, small- scale farmers in the scheme store their crop in a cooperatively-managed warehouse and receive a loan of about 75-80% of the value of the stored crop, which serves as collateral. This loan permits them to clear their accumulated debts and satisfy immediate cash requirements. Then, when prices have risen in the off-season, the farmers either sell the stored crop or redeem it for home consumption13. 12. Savings-based, Agriculture-oriented Rural Credit Unions - SICREDI - Brazil specializes in agricultural lending, primarily for the production of rice, wheat, beef, fodder, fish, vegetables and for agricultural equipment. Loan approvals are based upon the members' savings history and credit record, with the size limited to 50 percent of production costs and dependent upon the potential return of crop sale at harvest as well as household income and debt obligations. The borrower makes monthly interest payments and then a balloon payment of the principal at harvest time. In addition, SICREDI participates in the 12 . CGAP IT Innovation Series. Washington, D.C.: CGAP, October 2003. 13 . Rural financial services: Implementing the bank's strategy to reach the rural poor (Work in Progress). Rural Private Sector, Markets, Finance and Infrastructure Thematic Group. Rural Sector Board, The World Bank. Washington, D.C. March 2003. 13 PROAGRO national crop insurance, for which a premium is added on the loan rate. PROAGRO pays 100% of the loan loss if the crop fails14. 13. Producer Associations as Clients of a Financial Institution: GAPI and CLUSA in Mozambique: GAPI offers investment and working capital loans to fora (federations of associations) of small farmers and small and micro-enterprises. Loans are secured through a solidarity group-like guarantee between the participating fora. Each forum on-lends to its member associations, who collect the produce from their individual members and other area farmers and deliver it to the forum in return for the loan. About 80% of the profits from the sale of produce are handed back to the associations - the remaining 20% of the profits are kept by the forum as interest payments15. 14. Equity Building Society (EBS) in Kenya has emerged as one of Kenya's leading microfinance institutions, with over 155,000 savings clients and 41,000 borrowers. Once insolvent, EBS transformed itself into a profitable financial-service provider by rigorously focusing on the needs of its clients - in particular, by developing a wide range of market- based financial products and services, including a mobile banking service16. 14 . WOCCU: A Technical Guide to Rural- Finance Exploring Products. WOCCU Technical Guide # 3, December 2003. 15 . Pearce, Douglas. "Buyer and Supplier Credit to Farmers: Do Donors Have a Role to Play?" prepared for Paving the Way Forward for Rural Finance: An International Conference on Best Practices, held June 2-4, 2003. 16 . Source: CGAP Case Studies In Donor Good Practices No. 8. Donors as Silent Partners in MFI Product Development: Micro Save-Africa and Equity Building Society in Kenya. July 2003. 14 The above mentioned experiences shows that effective functioning with focus group oriented will success in the area of microfinance. At the global microfinance scenario, most of the institutions are providing loans for the purpose of agriculture and allied services, micro enterprises and other rural based micro economic activities. Growth of Micro-Finance Sector at Global Level Let us look at the historical account of the emergence and growth of micro finance sector at the global level. The Grameen Bank, Bangladesh, was started as an experiment in 1976 and accorded a special banking charter in 1983. In 1981 NDF (National Development Foundation), Jamaica, was started with support of Pan American Development Foundation. In 1983 ADEMI (Association for Development of Micro Enterprises) was established in Dominican Republic, Santo Domingo with support from ACCION, an International Agency. In 1984 BRI (Bank Rakayat Indonesia) started micro-finance in Indonesia. In 1984, K-REP (Kenya Rural Enterprise Programme) was set up by USAID (United States Agency for International Development) to develop credit programmes for micro-enterprises through NGOs intermediation. In 1986 ACEP (Agence de Credit Pour ‗L Enterprise Privee) was established in Senegal with the support of USAID. In 1986, PRODEM (Foundation for the Promotion and Development of Micro Enterprises) which was established by USAID and ACCION International in Bolivia, started micro finance. Later on it was converted into a bank called Bancosol (Banco Solidario) in 1992. In 1987 IDH (Instituto de Desarrollo Hondurando) was started in Honduras with the support of Opportunity International. In 1992, BANPECO (Banco Nacional del Pequeno Comercio) that is, National Bank for Small Traders was renamed as BNCI (Banco Nacional de Comercio Interior), that is 15 National Bank for Domestic Commerce and started micro-financing in urban areas of Mexico. Micro-Credit Summit (2-4 February, 1997) held at Washington D.C. was organized to launch a global movement to reach 100 million of the world's poorest families, especially the women of those families, with credit for self-employment, by the year 2005. Meanwhile, micro credit programs throughout the world improved upon the original methodologies and defied conventional wisdom about financing the poor. First, they showed that poor people, especially women, had excellent repayment rates among the better programs, rates that were better than the formal financial sectors of most developing countries. Second, the poor were willing and able to pay interest rates that allowed microfinance institutions (MFIs) to cover their costs. 1990s These two features - high repayment and cost-recovery interest rates - permitted some MFIs to achieve long-term sustainability and reach large numbers of clients. Another flagship of the microfinance movement is the village banking unit system of the Bank Rakyat Indonesia (BRI), the largest microfinance institution in developing countries. This state-owned bank serves about 22 million micro savers with autonomously managed micro banks. The micro banks of BRI are the product of a successful transformation by the state of a state-owned agricultural bank during the mid-1980s. The 1990s saw growing enthusiasm for promoting microfinance as a strategy for poverty alleviation. The microfinance sector blossomed in many countries, leading to multiple financial services firms serving the needs of micro entrepreneurs and poor households. These gains, however, tended to concentrate in urban and densely populated rural areas. 16 It was not until the mid-1990s that the term "micro credit" began to be replaced by a new term that included not only credit, but also savings and other financial services. "Microfinance" emerged as the term of choice to refer to a range of financial services to the poor, that included not only credit, but also savings and other services such as insurance and money transfers. Today, practitioners and donors are increasingly focusing on expanded financial services to the poor in frontier markets and on the integration of microfinance in financial systems development. The recent introduction by some donors of the financial systems approach in microfinance - which emphasizes favorable policy environment and institution-building - has improved the overall effectiveness of microfinance interventions. But numerous challenges remain, especially in rural and agricultural finance and other frontier markets. Today, the microfinance industry and the greater development community share the view that permanent poverty reduction requires addressing the multiple dimensions of poverty. For the international community, this means reaching specific Millennium Development Goals (MDGs) in education, women's empowerment, and health, among others. For microfinance, this means viewing microfinance as an essential element in any country's financial system. Non-Institutional or Informal Sources of Micro-Credit in India In nutshell, one can say that RFIs do not fulfill the credit needs of the farmers, rural producers and the rural poor in general, resulting in non-institutional sources of credit. The indirect reason responsible for the growth of non-institutional sources of credit was also the economic weakness of the Jajmani System*. The non-institutional sources of credit would include big farmers, big farmer-cum-money-lenders, commission 17 agents, friends/ relatives, moneylenders, traders, village shopkeepers and others. The All India Rural Credit Survey Committee, appointed by the RBI in 1951 under the Chairmanship of Gorwala, undertook a comprehensive survey of rural credit and submitted its report in August 1954. The survey revealed that shares of institutional and non- institutional sources of rural credit were 7.3 per cent and 92.7 per cent respectively. At present about two-third of the credit need in rural areas is met out by informal sources. But the moneylenders have yet to disappear. Though they charge very high rate of interest, varied between 36 per cent to 30.00 per cent per annum. The is also need to sensitize the issue of informal rural banks that they provide timely and adequate credit to the rural poor without much paperwork and for any purpose, especially for meeting consumption and other social needs. But physical, economic and social exploitation of the poor people is attached with this system. In brief analysis micro finance chronology can be evaluated by the following steps: • Microfinance has been in practice for ages (though informally). • Legal framework for establishing the co-operative movement set up in 1904. • Reserve Bank of India Act, 1934 provided for the establishment of the Agricultural Credit Department. • Nationalisation of banks in 1969 • Regional Rural Banks created in 1975. • NABARD established as an apex agency for rural finance in 1982. • Passing of Mutually Aided Co-op. Act in AP in 1995. 18 The Profile of Microfinance in India The profile of micro finance in India at present can be traced out in terms of poverty, it is estimated that 350 million people live Below Poverty Line and this translates to approximately 75 million households with annual credit demand by the poor in the country is estimated to be about Rs. 60,000 crores. The following are some of important components of microfinance: • Cumulative disbursements under all microfinance programmes is only about Rs. 5000 crores.(Mar. 04) • Total outstanding of all microfinance initiatives in India estimated to be Rs. 1600 crores. (March 04) • Only about 5 % of rural poor have access to microfinance. • Though a cumulative of about 20 million families have accessed microfinance to the extent of Rs. 5000 crores, the total outstanding is estimated to be only about Rs. 1600 crores. The active borrowers are estimated to have a per capita outstanding of only Rs. 2500. • While 10 % lending to weaker sections is required for commercial banks, they neither have the network for lending and supervision on a large scale nor the confidence to offer term loans to big MFIs. • The non poor comprise of 29 % of the outreach. The Status of Microfinance • Considerable gap between demand and supply for all financial services • Majority of poor are excluded from financial services. This is due to, inter-alia, the following reasons 19 • Bankers feel that it is fraught with risks and uncertainties. • High transaction costs • Unfavourable policies like caps on interest rates which effectively limits the viability of serving the poor. • While MFIs have shown that serving the poor is not an unviable proposition there are issues that have constrained MFIs while scaling up. These include • Lack of an appropriate legal vehicle • Limited access to equity • Difficulty in accessing low cost on-lending funds (as of now they are unable to offer savings services in a legitimate manner. • Limited access to Capacity Building support which is an important variable in terms of quality of the portfolio, MIS, and the sustainability of operations. • About 56 % of the poor still borrow from informal sources. • 70 % of the rural poor do not have a deposit account • 87 % have no access to credit from formal sources. • Less than 15 % of the households have any kind of insurance. • Negligible numbers have access to health insurance (0.4 %) and crop insurance (0.2 %). • NABARD's bank linkage program has cumulatively reached a total of 9.4 lakh SHGs with about 1.4 crore households. Related Issues • Designing financially sustainable models • Aim for community participation & ownership • Increase outreach and scale up operations • Demonstrate that banking with the poor is viable • Build professional systems and processes. • Ensure transparency and enhance credibility through disclosures. 20 • Provide support for capacity building initiatives. Opportunities for Micro-Finance Sector in India Keeping in view of above mentioned issues relating to how and why the rural informal credit system is strengthened, NGOs are need to sensitize the state institutions and NGOs it self has to take initiatives for the rural banking in micro rural credit system. Moreover, rural population is a major population segment in India. According to the 2001 Census of India 2001, 72.22 percent of the total population is rural and dependent on agriculture and allied activities for their livelihood. Due to the failure of agricultural reforms and not adopting a farmer-oriented agricultural policy, growth rate of employment in agriculture sector has declined from 2.32 per cent in 1972-73 to 1.2 per cent in 1983 to 0.65 per cent in 1985. Agriculture contributed only 31.7 percent to GDP in 1993-94 down from 56.5 per cent in 1951. But this is not the complete picture of the rural economy. The rural economy has a strong base for employment generation. Rural economy still accounts nearly 40 per cent of India's GDP including 10 per cent of RNFS. Share of exports in GDP has increased from 6.2 per cent in 1991-92 to 9.2 per cent in 1994-95. Major contribution to exports comes from the agricultural and allied sectors such as handloom, power loom, gem and jewellery, handicrafts, carpets, leather and mineral products, all of which have at least one primary rural production base. 21 The rural market share of both consumer durable and non-durable products exceeds 40- 50 per cent for most items and is growing every year. Papola (1991) while analysing the trends in rural non-farm employment, based on the analysis of the data from the quinquennial rounds of the National Sample Survey during the 1970s and 1980s, reveals that the share of rural area in total employment has declined from around 82 per cent in 1977-78 to 78 per cent in 1987-88; that the share of the rural nonagricultural employment has increased from around 14 per cent to 17 per cent in total employment; and from 17 per cent to 22 per cent in rural employment. Employment in the * W H. Wiser in his study of Karimpur village of United Provinces of India during 1930s found that Jajmani System is an example of solidarity in inter-caste relationships, but at the same time it does not represent symmetrical interrelationship for the members of different castes involved in the system. He found that the system has economic weakness. Rural non-agricultural activities have thus been growing much more rapidly than the overall employment, agricultural employment and also urban employment. In fact, the non-agricultural rural employment has grown at an average rate of about 5 per cent during the ten-year period 1977-78 to 1987-88. Consequently, there has been a shift from agriculture in which employment has grown at a rate of only 0.74 per cent, to the non-agricultural activities. It is because of decrease in self-employment and regular wages/ salaried employment in agriculture and increase in employment in non- agricultural sector. Micro-enterprises established in RNFS contribute about 40 per cent of the gross industrial turnover and 34 per cent of 22 total exports. RNFS is the potential sector for employment generation through establishment of micro-enterprises. There is a need to match the decline in agriculture sector with the gain in non-farm activities, to absorb the surplus labour from agriculture. Eighth Five-Year Plan document (Government of India 1992: 122) states that: "In the long run, however, it must be recognized that agriculture and other land-based activities, ever with a reasonably high rate and possible diversification of growth, will not be able to provide employment to all the rural workers at adequate levels of incomes. Indian microfinance continued growing rapidly towards the main objective of financial inclusion, extending outreach to a growing share of poor households, and to the approximately 80 percent of the population which has yet to be reached directly by the banks. The larger of the two main models, the Self-Help Group (SHG) Bank Linkage Programme (SBLP) covered about 143 million poor households in March 2006 and provided indirect access to the banking system to another 14 million, including the "borderline poor". Although firm estimates are lacking, the other, Microfinance Institution (MFI) model served 7.3 million households, of which 3.2 million were poor. Even allowing for a degree of overlap of borrowers from both models, the total number of poor households being reached was roughly a fifth of all poor households, as well as a smaller share of the larger number of non-poor households who have yet to be reached by the formal financial sector. Apart from providing financial services to both these segments of the population, there is widespread evidence that much stronger competition provided to the informal sector has significantly improved 23 the terms of credit provided to both segments by the informal sector, which is losing share to both the formal and (semi-formal) MFI sector17. SHG Bank Linkage Programme Of the two major models of microfinance in India, the SHG Bank Linkage Programme (SBLP) is by far the dominant model in terms of number of borrowers and loans outstanding18. The cumulative number of SHGs linked has grown almost tenfold in the last five years, to achieve an outreach of about 31 million families through women's membership in about 2.2 million SHGs by March 2006. Not all SHGs are currently "linked" in the sense of having loans outstanding to the banks or federations, and only an estimated half of their members are poor. However, this still means about 14 million poor households have been reached so far. Moreover the entire membership is saving regularly, and has access to a ready source of small emergency and consumption loans in the form of loans extended out of the group's own funds19. NGOs Involvement in Micro-Finance and Strategies of People's Livelihood However, there is no smooth flow of funds from any sources to provide loans to the rural poor for establishing their micro enterprises in the RNFS. Karmakar20 laments that: ―Moneylenders rarely provide credit for capital assets acquisition. They concentrate on lending for consumption needs and social/ medical contingencies while trader lenders provide working capital. Thus, venture capital for the rural non- 17 . Prabhu Ghate, Microfinance in India: A state of the sector Report 2006, New Delhi, Microfinance India, p.11. 18 . Ibid. p. 27. 19 . Ibid, 20 . Karmakar, K.G. (1999). Rural Credit and Self-Help Groups: Micro-finance Needs and Concepts in India. New Delhi: Sage Publications, p 164. 24 farm sector is generally financed from own resources and supplemented by loans from friends and relatives. The time taken for getting a loan sanctioned by a bank for the rural non-farm sector can very from two months to 18 months. Some moneylenders do provide bridge loans to those rural borrowers who have been sanctioned bank loans but have yet to receive the funds.‖ Based on the observations of the failure of development policy and administration, with a weak role played by the State in supporting the institutions of development, Shah (1996) emphasized the importance of developing NGOs as change agents. Government of India21 also realized its failure in properly implementing development projects and decided to involve NGOs during the Seventh Five-Year Plan, in executing development projects. The NGO's strength lies in target group approach, flexibility, experimentation, innovation, grassroots presence and motivation. By learning from the example of Grameen Bank, Bangladesh, many NGOs in India, came forward to provide financial services to the rural poor and RNFS enterprises. For NGOs, it is also a shift in approach from development to empowerment wherein they can plan their withdrawal strategy from service delivery projects and think of their own sustainability by providing financial services. At present there are almost 600 NGOs involved in micro-finance delivery systems in India. These NGOs have adopted different strategies of promoting people's livelihood through micro-finance. These strategies are based on their clientele, approach, focus area, interest rate, savings linkages, collateral, coverage 21 . Government of India, Seventh Five Year Plan (Vol. I): Perspective, Objectives, Strategy, Macro- dimensions and Resources and (Vol. II): Sectoral-Programmes of Development. New Delhi: Planning Commission. 25 and organisational/ legal structure. These strategies can be classified into four broad categories, namely, SHG promotion, MFI, micro- enterprise development and social development. The SHG promotion approach is based on the premise that the NGO promotes SHGs and provides them services as financial advisor. This ultimately leads to build the capacity of SHGs in terms of savings mobilization, linking them with banks and providing technical support in starting viable micro enterprises by the members of SHGs members. In this approach NGO basically is a mediating contact between SHGs and banks. NGO also examines creditworthiness of the SHGs so that bank can lend money to the SHGs. In all this NGO gets some financial support in terms of grant from Apex Financial Institutions (AFIs) like NABARD and RMK (Rashtriya Mahila Kosh). The examples of such NGOs who are following SHG promotion approach are: MYRADA in Karnataka, SHARE in Andhra Pradesh, RDO (Rural Development Organisation) in Manipur, PREM (People's Right and Environment Movement) in Orissa & Andhra Pradesh, YCO (Youth Charitable Organisation) in Andhra Pradesh, Anarde (Acil Navsarjan Rural Development Foundation) in Gujarat, PRADAN (Professional Assistance for Development Action) & RUDSOVAT (Rural Development Society for Vocational Training) in Rajasthan and ADITHI in Bihar. Micro-Finance Institution Strategy The approach of promoting MFIs is based on the premise that AFIs like SIDBI (Small Industries Development Bank of India), RMK and other donor agencies provide bulk lending, soft loan and some grant to such NGOs which can act as MFIs by on-lending the money to the poor 26 people/ SHGs/ Federations/ smaller NGOs. These MFIs stimulate the credit demand of the poor people. They also provide technical support for the beneficiaries to ensure proper utilization of loans and repayment. At the same time they meet their cost of funds, cost of credit management and cost of default through the spread of interest and generate surplus for the viable operation of micro-finance. The examples of such MFIs are Sewa Bank & FWWB in Gujarat, BASIX in Andhra Pradesh and RGVN (Rashtriya Grameen Vikas Nidhi) in north-eastern states, Orissa and Bihar. 8.3 Micro-Enterprise Development Strategy Entrepreneurship is one of the most important inputs in the economic development of a country and of the regions within the country. Economic growth and industrialization are the by- products of entrepreneurship. It is a breeding ground for the development of small-scale enterprises. The term EDP (Entrepreneurship Development Programme) means a programme of entrepreneurship development designed to help a person in strengthening his/ her entrepreneurial motive and in acquiring skills and capabilities necessary for playing his/her entrepreneurial role effectively. It inculcates entrepreneurial traits into a person and develops his/her personnel, financial, technical, managerial and marketing skills. There are number of programmes which are aimed at providing informational or managerial inputs required by a new entrepreneur. However, a programme not touching upon entrepreneurial motivation and behaviour cannot be called an EDP22. 22 . Desai, Vasant. Entrepreneurial Development (Vol. I): Principle, Programmes and Polices. Bombay: Himalaya Publishing House. 1991. 27 NGOs are actively involving in microfinance to make successful and effective in terms of identification of place or location, pre- promotional activities, selection of potential entrepreneurs, entrepreneurial training, monitoring and follow-up mechanism. NGOs are playing important role as catalyst in helping the rural unemployed persons to acquire training through MEDPs (Micro-Enterprise Development Programmes) so that they can become self-employed by starting their enterprises in RNFS. Moreover, they can also become job providers instead of job seekers. Thus, institutionalization of MEDPs through NGOs can be an alternative approach of rural development in India. The success of any MEDP in terms of starting the enterprises by the trainees trained under it depends mainly upon the availability of loan. Micro-finance sector can provide help to solve this problem. Micro-finance for micro-enterprise development is a proper approach in India. Some of the NGOs in India have adopted the approach of micro- enterprise development through micro-finance. The examples are CDF (Co-operative Development Foundation) in Andhra Pradesh, LHWRF (Lupin Human Welfare Research Foundation) in Rajasthan, UPLDC (Uttar Pradesh Land Development Corporation) in Uttar Pradesh and Group Enterprise Development Project of EDI (Entrepreneurship Development Institute of India) in Nagaland. 28 Growth trends in the SHGs Bank Linkage Programme Source: NABARD annual reports and data sheet for 2005-06published in Prabhu Ghate, Microfinance in India: A state of the sector Report 2006, New Delhi, Microfinance India, p.28. Social Development Strategy The social development approach of micro-finance is based on the premise that people should earn money by investing in viable micro- enterprises. They should earn profit from their enterprises. Major share of the profit should be reinvested in enterprises for their growth. The other share of the profit should be spent on social development that is, health, education, housing, sanitation etc. By earning profit from the viable micro-enterprises, people will increase their paying ability for services delivered to them under different social development projects run by NGO and States/ Central 29 Government. For the NGOs and Government it can be a process of gradual withdrawal and for people, decrease dependency on the NGOs and Government. Such projects have micro-finance as a major component coupled with social service delivery. These projects have demonstrably positive effects. The examples of such projects are Indo- Canada Agriculture Extension Project in Uttar Pradesh, IFFDC (Indian Farm & Forestry Development Corporation) project of farm and forestry development in Uttar Pradesh and Rajasthan, ICDS (Integrated Child Development Services) project of RASS (Rayalseema Sewa Samiti) in Andhra Pradesh and Conversion of ICDS project into Indira Mahila Yojana. Role of Financial Institutions in Micro-Finance Especially during 1991-92, NABARD launched projects to provide micro credits to SHGs by bank linkages. In the same way, NGOs also have done excellent work in the areas of microfinance. tSince the emergence of micro-finance sector in India, role of AFIs has become significant. NABARD initiated the process of micro-finance in India through linkage programme of SHGs under Automatic Refinance Scheme. SIDBI is second important player in microfinance, providing bulk lending to MFIs. RMK is the third player providing loans to NGOs for on lending to the women SHGs. These are the three major AFIs in India. Each has a different approach in micro-finance sector. 30 Achievements under SHG – NABARD linkage scheme YEAR Amoun Groups t (in lakhs) (Rs. in Crores) 1998-1999 41.90 0.12 1999-2000 88.63 0.44 2000-2001 173.38 1.03 2001-2002 255.00 0.75 While NABARD's emphasis is entirely on SHGs linkage programme by mobilizing their own savings also, SIDBI is focusing on building and creating larger MFIs and RMK is lending money to smaller NGOs as well. Taking into consideration the growth and potential of micro-finance sector in India, other organizations and international agencies have also made their entry in the micro-finance sector by providing loans and grants to NGOs for different income generating projects as well as for incorporating micro-finance component in the service delivery projects of social development. Exposure to Commercial Banks as on March 2006 31 Bank No. of MFIs Loan O/s. March Exposure to Commercial Banks as on Rs. Crores 2006 ICICI Bank 100 2350 * HDFC Bank 250 UTI Bank 40 103 ABN AMRO Bank 19 87 ING Vysya Bank 19 61 Standard Chartered Bank 12 50 HSBC 8 15 Rishikulya Grameen Bank, Ganjam 3 6 Some Public Sector banks 9 10 Total 1991 ** The important names among them are HUDCO, NBCFDC (National Backward Classes Finance Development Corporation), NMFDC (National Minorities Finance Development Corporation), National Handicrafts Development Corporation (NHDC), OXFAM (Oxford Committee for Famine & Relief), NOVIP (Dutch International Development Agency), GTZ (Gesellschaftfur Tecnische Zusammenarbeit), CIDA (Canadian International Development Agency), ActionAid, CARE India, International Fund for Agriculture Development (IFAD), UNDP, UNIFEM (United Nations Development Fund for Women), British Department of Foreign and International Development (DFID) and Consultative Group to Assist the Poorest (CGAP). It is seen as an important phenomenon in the process of development, especially in context of globalisation and liberalisation wherein subsidy and grant based programmes / schemes are losing their importance. Micro-finance sector is seen as the best option based on saving mobilisation of the poor people and credit linkages. In India, many AFIs have come forward to lend money to the MFIs. MFIs of different nature (NGO registered under Societies Registration Act, Trusts under Public Trust Act, Co-operatives under Co-operative Act, NBFCs under 32 Company Act and LABs under Banking Act etc.) have also come up with different strategies of promoting people's livelihood. Microfinance Support Institutions in the Formal Sector The following are the major support institutions in India. National Bank for Agriculture and Rural Development Rashtriya Mahila Kosh SIDBI - Small Industries Development Bank of India Tamil Nadu Women's' Development Corporation Commercial banks exposure to Microfinance of selected banks, March 2006 Models of Micro Finance There are different models followed by the different microfinance institutions in India. The following are the some of established microfinance and their activities in microfinance can be seen here. Grameen bank Spandana 33 Grameen koota Swayam krishi sangam Danda credit society Grameen Bank Grameen Bank (GB) has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any collateral. Professor Muhammad Yunus, the founder of "Grameen Bank" As of July, 2004, it has 3.7 million borrowers, 96 percent of whom are women. With 1267 branches, GB provides services in 46,000 villages, covering more than 68 percent of the total villages in Bangladesh. Interest Rate of Grameen Bank Savings Schemes Product Interest Rate Savings : 8.5% Fixed Deposit : 8.45-9.50% Double in Seven Years : 10.40% Fixed Deposit (5 years) with monthly 10.04% income : Fixed Deposit (10 years) with monthly 10.67% income : Grameen Pension Savings (Five 10% Years) : Grameen Pension Savings (Ten 12% Years) : General features of Grameen credit are : a. It promotes credit as a human right b. Its mission is to help the poor families to help themselves to 34 overcome poverty. It is targeted to the poor, particularly poor women. c. Most distinctive feature of Grameen credit is that it is not based on any collateral, or legally enforceable contracts. It is based on "trust", not on legal procedures and system. d. It is offered for creating self-employment for income-generating activities and housing for the poor, as opposed to consumption e. It was initiated as a challenge to the conventional banking which rejected the poor by classifying them to be "not creditworthy". As a result it rejected the basic methodology of the conventional banking and created its own methodology. f. It provides service at the door-step of the poor based on the principle that the people should not go to the bank, bank should go to the people. g. In order to obtain loans a borrower must join a group of borrowers. h. Loans can be received in a continuous sequence. New loan becomes available to a borrower if her previous loan is repaid. i. All loans are to be paid back in installments (weekly, or bi- weekly). j. Simultaneously more than one loan can be received by a borrower. k. It comes with both obligatory and voluntary savings programmes for the borrowers. l. Grameen credit's thumb-rule is to keep the interest rate as close to the market rate, prevailing in the commercial banking sector, as possible, without sacrificing sustain-ability. Reaching the poor is its non-negotiable mission. Reaching sustainability is a directional goal. It must reach sustainability as soon as possible, so that it can expand its outreach without fund constraints. 35 Grameen credit gives high priority on building social capital. It is promoted through formation of groups and centres, developing leadership quality through annual election of group and centre leaders electing board members when the institution is owned by the borrowers Savings Products with Balance : October,2006 Description Balance (In Million) Personal Savings (open to all) TK. 11,211.70 (US$ 164.97) Grameen Pension Savings (GPS)– (GB Mem.& Staff) TK. 11,113.50 (US$ 163.53) Special savings (GB Members) TK. 2,565.10 (US$ 37.74) Loan Insurance Savings Fund (GB Mem & Staff) TK.3,591.30 (US$ (52.84) Double in 7 years-Term Deposit (open to all) TK. 6,653.20 (US$ 97.90) Fixed Deposit (open to all) TK. 698.80 (US$ 10.28) Fixed Deposit with Monthly Income (open to all) TK. 1,742.30 (US$ 25.64) Other Fund (GB Members & others) TK. 2,744.70 (US$ 40.39) Total TK. 40,320.50 (US$ 593.30) SPANDANA Institution's Mission Spandana envisions itself as a financially self sustainable Micro Finance Institution with a diversified ownership. It is committed to strengthening significantly the socio-econmic status of poor women in Rural and Urban areas by providing technical and financial services on a continued basis for establishing their identity and self-image Background and Main Challenges There are two important challeges ahead. Spandana at present is a non profit making society and has initiated the process of transformation into a regulated Company. Spandana has outperfromed the most performing organisations by setting up trends with high level of efficiency, productivity and thereby profitability levels. Thus the 36 biggest challenge lies in retaining these levels in the pace of increasing competition. Products Loans Voluntary Savings Insurance Main Funding Sources Grants Loans Savings Largest funder for Micro Finance The following institutions are the important funders: ICICI Bank, SIDBI, Indian Overseas Bank, HDFC Bank, IDBI Bank, ABN AMRO Bank, ING Vysys Bank, HDFC, FWWB, UTI Bank Swayam Krishi Sangam Swayam Krishi Sangam (self-cultivation society) is an initiative in rural India to empower the poorest of the poor to become self-reliant. In June 1998, SKS began operating its main activity, microfinance, which follows the Grameen Bank model by seeking to eradicate poverty by providing small loans for income generating activities through a process of collective peer lending. SKS established its first women's banking sangams (centers) in the Narayankhed region. As of July 2005, SKS Microfinance has grown to include 32 branches in Six Districts of Telangana and serves over 100,000 clients. Swayam Krishi Sangam began its education activities by 37 implementing a Preschool (Balwadi) Program in February 2001 in one of the poorest parts of India—the Narayankhed region of Medak district in Andhra Pradesh. RASHTRIYA MAHILA KOSH - Its Profile, Aims & Objectives, Roles It has been felt for some time in India that the credit needs of poor women, particularly in the unorganized sector, have not been adequately addressed by the formal financial institutions in the country. The vast gap between demand for and supply of credit to this sector established the need for a National Credit Fund for Women. The National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK) was set up in March 1993 as an independent registered society by the Department of Women & Child Development in Government of India's Ministry of Human Resource Development with an initial corpus of Rs. 310,000,000 - not to replace the banking sector but to fill the gap between what the banking sector offers and what the poor need. Its main objectives are: • To provide or promote the provision of micro-credit to poor women for income generation activities or for asset creation. • To adopt a quasi-informal delivery system, which is client friendly, uses simple and minimal procedures, disburses quickly and repeatedly, has flexibility of approach, links thrift and savings with credit and has low transaction costs both for the borrower and for the lender. • To demonstrate and replicate participatory approaches in the organization of women's groups for thrift and savings and effective utilization of credit. 38 • To use the group concept and the provision of credit as an instrument of women's empowerment, socio-economic change and development. • To cooperate with and secure the cooperation of the Government of India, State Governments, Union Territory administrations, credit institutions, industrial and commercial organizations, NGOs and others in promoting the objectives of the Kosh. • To disseminate information and experience among all these above agencies in the Government and non-government sectors in the area of microfinance for poor women. • To receive grants, donations, loans, etc., for the furtherance of the aims and objectives of the Kosh. The office of the Kosh is situated in New Delhi. The Kosh does not have any branch offices. The Executive Director is the chief executive officer of the Kosh. The Executive Director functions under the overall supervision, direction and control of the Governing Board. The Governing Board comprises 16 members consisting of senior officers of the Government of India and State Governments, specialists and representatives of NGOs active in the field of microfinance for women. The Governing Board is chaired by the Minister in charge of the Department of Women & Child Development in the Government of India. The General Body of the Kosh consists of all members of the Board, institutional members and individual members. RMK- Main Roles: Wholesaling Role - It acts as a wholesaling apex organization for channelising funds from government and donors to retailing intermediate microfinance organizations (IMOs). [The Kosh has so far received only a one-time grant from government and has not needed to raise funds from any other sources]. 39 Market Development Role - It develops the supply side of the micro finance market by offering institution building support to new and existing-but-inexperienced IMOs by structures of incentives, transfers of technology, training of staff and other non-financial services - [The Kosh realizes that it can play a value adding wholesaling role only when a sufficiently large and well established micro finance sector already exists - this depends on the number of IMOs and the sustainability of IMOs - subsidized institution building increases the equity of any IMO as much as grants do - large and premature disbursement of funds to the IMO can reduce the effectiveness of any institution building effort. Micro finance programmes of CAPART The Council for Advancement of People's Action and Rural Technology (CAPART) is set up by the Ministry of Rural Development, Government of India, to fund voluntary organizations and community based organizations engaged in serving rural areas. CAPART occupies a significant space in shaping the development innovations of NGOs and catalyzing development initiatives to reach the poor. The main objective of the scheme is: • To fund VOs and CBOs already working with self help groups to extend their reach to new areas and improve the quality of existing groups • To extend training support to potential VOs and registered CBOs who are desirous of working in the area of micro finance and self help groups. 40 • To identify and support VOs and registered CBOs having outstanding experience in formation of SHGs and micro finance who would act as resource centers. The unit cost for the promotion of group is worked out to a maximum of Rs.9, 000/- per group, which includes expenditure for a 3-year project cycle. • To fund Rs.10, 000/- per SHG without interest, where bank linkages are not available as revolving fund. • to finance up to Rs.2.00 lakhs as bridge funds for a federation of over 100 active SHGs SHARE Micro Finance Limited Introduction SML started operations in 1989 as a not-for-profit society. It was the first MFI in India to obtain a NBFC (non-deposit accepting) license and also the first Indian MFI to carry out a microfinance securitization transaction. SML has employed a for-profit approach to create social returns by channeling funds from development institutions and commercial banks as collateral-free loans to Joint Liability Groups (JLGs). JLGs are the central element of the Grameen lending methodology adopted by SML. Vision To improve the quality of life of the poor by providing access to financial and support services add to be a viable financial institution developing sustainable communities. Our Mission 41 • To mobilize resources to provide financial and support services to the poor, particularly women, for viable productive income generation enterprises enabling them to reduce their poverty Objectives • To provide financial services predominantly to poor women. • To create opportunities for self- employment for the underprivileged. • To train rural poor in simple skills and enable them to utilize the available resources and contribute to employment and income generation in rural areas. MFI loans outstanding to the apex funding institutions and banks (Rs crores) Apex financing Outstanding loans Outstanding loans institutions and to partners in March to partners in comercial banks 2005* March 2006 SIDBI 329 FWWB 67 RMK 37 RGVN 6 Commercial banks 2,000 (approximately) Loan Proposals and their Processing In the first step, every member who intends to access credit from the company has to complete the compulsory group training programme and Group Recognition Test organized by the company. This programme is conducted by the Field Credit Assistant (FCA) or a designated staff member, authorised by SML. 42 Primary data is collected in a prescribed format from borrower/member to comply with the KYC (Know your Customer) norms. FCA should verify the loan application and completely fill the following information: • Date of application • Borrower identification particulars • Loan product details • Loan Amount • Need for Loan • Applicable interest rates • Term of the Loan • Repayment particulars • Acceptance by the borrower's family member / the relevant SHG members The expected date of loan disbursement should be mentioned on the loan application form and to be intimated to the borrower / member. Loan appraisal and Terms & conditions FCA or designated staff of the Company should convey to the borrower/member the amount of loan sanctioned along with the terms and conditions including the annualized rate of interest and method of repayment of the loan. Disbursement procedure of loans Authorized staff of SML should verify the Loan application along with all securities, sureties and approvals, which is applicable as per the applicable policy of the company. • Demand promissory Note • Surety or guarantee 43 • SHG members/Group acceptance • Family members' acceptance • Acceptance of the terms and conditions by the borrower/member for rate of interest, processing charges if any and repayment terms Documentation for Hypothecation or charge creation or any security or surety/guarantee • The acceptance letter • Letter of confirmation of deposit of security documents The Company keeps all the documents in the safe custody in the respective premises by the authorized persons. Loan passbook has to be given to every borrower/member for each loan. The loan passbook contains the repayment schedule, effective interest rate and other processing charges etc. The company gives prior notice of any change in the interest rate and other charges to the borrower / member. The company takes a decision whether to recall / accelerate the payment or performance under the loan agreement / Promissory Note as agreed with the borrower/member under intimation. Microfinance and Enterprises Income change across sector for clients from enterprises with credit support Enterprises No. Increase Decrease No change Total 1,555 76% 08% 17% Agriculture 168 55% 23% 22% Animal husbandry 282 72% 07% 21% Non Farm 1,105 80% 05% 15% The Role of NGOs 44 Non-Government Organizations (NGOs) have emerged as an integral part of the institutional structure for addressing poverty as well as rural development, gender equality, environmental conservation, disaster management, human rights and other social issues. The NGOs, in order to support social and economic empowerment of the poor, have vastly widened their activities to include group formation, micro credit, formal and non-formal education, training, health and nutrition, family planning and welfare, agriculture and related activities, water supply and sanitation, human rights and advocacy, legal aid and other areas. These organizations mostly follow the target-group strategy under which the poor with similar socioeconomic interests are organized into groups to achieve their objectives. Co-ordinating the role of NGOs In order to meet the need for a one-stop service to the NGOs, the Government created the NGO Affairs Bureau in 1990. Located in the Prime Minister's Secretariat, the Bureau enables the NGOs to obtain their registration clearance, approval and permission through a single agency of the Government within a specified time frame. The aim of the Bureau is to ensure quality performance of the NGO sector and its accountability to the state. With a view to providing a regular forum of dialogue between the Government and the NGOs for increased mutual understanding and cooperation, the Government-NGO Consultative Council (GNCC) has been formed with representatives from the Government, NGOs and the 45 civil society. The GNCC works as an advisory council toward resolving issues arising out of Government-NGO interaction and collaboration. Empowerment of Women through DWCRA / SHG Approach Self-help Groups: • SHG is a group of rural poor who have volunteered to organise themselves into a group for eradication of poverty of the members • The members of SHG save regularly and convert their savings into a common fund known as Group Corpus • The group agrees to use this common fund and such other funds that they may receive as a group through a common management • ―A small, economically homogeneous and affinity group of rural/urban poor, voluntarily formed to save and contribute to a common fund to be lent to its members as per the groups decision and for working together for social and economic uplift of Their families and community • Self-help group (SHG) or a ‗sangha' is a voluntary association of people, which functions democratically and accountably, to achieve the collective goals of the group. • Organizing disabled persons into ‗sanghas' unites and makes them visible in the larger community. • Members can support one another by sharing information on the availability of services and resources, help to make decisions on individual matters, help one another and so on. Concept of SHG: 46 Self – Help Group (SHG) is a small voluntary association of poor people, preferably from the same socioeconomic background. They come together for the purpose of solving their common problems through self-help and mutual help. The SHG promotes small savings among its members. The savings are kept with a bank. This common fund is in the name of the SHG. Usually, the number of members in one SHG does not exceed twenty. The concept of SHG is based on the following principles: • Self-help supplemented with mutual help can be a powerful vehicle for the poor in their socioeconomic development; • Participative financial services management is more responsive and efficient; • Poor need not only credit support, but also savings and other services; • Poor can save and are bankable and SHGs as clients, result in wider out reach, lower transaction cost and much lower risk costs for the banks; • Creation of a common fund by contributing small savings on a regular basis; • Flexible democratic system of working; • Loaning is done mainly on trust with a bare documentation and without any security; • Amounts loaned are small, frequent and for short duration; • Defaults are rare mainly due to group pressure; and • Periodic meetings non-traditional savings. Essential Features of SHGs: 47 The following are the major essential features to be kept in mind for successful functioning of SHG's. • Group members come together voluntarily. • Basis of coming together is mutual help. • Homogenous group. • Regular interaction among group members • Group independently takes decision and manages its activities. • Basis of people coming together is affinity. • All group members' participation is the process. • Cooperation and discussion are the cornerstone of its functioning group maintains its own accounts SHG's – ROLE OF NGOs • NGOs play the crucial role of facilitators in group formation and development • Quality of group can be influenced by the capacity of facilitator i.e., NGO • NGOs also help in training and capacity building of facilitators being used by DRDAs • DRDAs may support NGOs or Network of Community Coordinators who are engaged in the task of initiating and sustaining the group development process • Community Coordinator take up the responsibility of managing 10-15 SHGs in a cluster consisting of 4-5 villages with in a radius of 4-5Kms. The poor people, on whose shoulders the success of sector is depending, are also participating in the growth of this sector. Government is also interested and is closely monitoring the sector from 48 the policy and regulatory point of view. The sector has also opened scope for research, training and consultancy. In a holistic perspective micro- finance is a process of social intermediation and building social capital. Process of Social intermediation is an investment that is made for development of both human resources and institutional capital to make marginalized groups self-reliant in preparing them to engage in formal financial intermediation. According to Elaine and Barton23, social intermediation is a financial intermediation with a capacity building component, aimed at those sectors of society that lack access to credit and savings facilities. It can be understood by transformation of beneficiaries into clients or customers and creation of local institutions that bridge the gap between the formal financial institutions and marginalized groups. The concept of social capital is the key theoretical element in social intermediation, derived from the anthropological and sociological literature. It is quite fact that the involvement of banks with grass root NGOs/SHGs also improves their appreciation of the problems of the poor in accessing formal credit and brings about change in their outlook, responsiveness and perception. NGO as financial intermediation, the success of microfinance is seen in the rural areas. NGOs can be expected to fast internalize the culture and practice associated with efficient conduct of the business of microfinance. The rise of NGOs doing business in microfinance has opened the floodgates of aid in at least in rural India24. 23 . Elaine, Edgcomb & Barton, Laura "Social Intermediation and Microfinance Programmes: A Literature Review", USA: Micro-Enterprises Best Practices. The SEEP Network. 1998. 24 . S.B. Verma and Y.T. Pawar, 2005. p.101. 49 50


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August Cool Today Weather Photo Contest Winner
Date: 08/30/2012
by: Observer Staff
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- I asked a friend who is in the weather business what I was looking at.... "It is an entire storm system called a supercell. It looks like a view of the back end with the anvil cloud "sticking out". There are all types of clouds in the picture! There are cumulus in the lower left, cirrus, altostratus."
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A fitting tribute
A day after receiving an Ageless Creativity Award from the Ringling College/Longboat Key Center for the Arts in honor of their late father, Ed Brickman, daughter Carol Diamant and son Eli Brickman held a celebration of life service Saturday.
Alma mater honors Harold Ronson
Philadelphia University presented Longboat Key resident Harold Ronson with its "Leadership in Philanthropy" award Oct. 11, at its Homecoming Dinner Dance.


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The Consent of The Governed---How the Government Really Works!Submitted by E. Oregon 4 Ron on Sun, 07/25/2010 - 13:51
Some food for thought here---- I think the second paragraph of the Declaration of Independence, where it says, "That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive to these Ends, it is the Right of the People to alter or to abolish it--" So now what do we do? Our government is not protecting our Rights to Life, Liberty, and Property.
Subject: Brasscheck TV: How the government really works
> You'll laugh. You'll cry
> And by the end of this short video you will never look at "government"
> the same way again.
> In humor there is sometimes great truth.
> This guy is a genius.
> Video:
> http://www.brasschecktv.com/page/900.html
> - Brasscheck
> P.S. Please share Brasscheck TV e-mails and videos with friends and
> colleagues.
> That's how we grow. Thanks.
> ================================
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Grand Canyon Education took all corrective actions required by DOE
In its Current Report on Form 8-K filed April 16, Grand Canyon Education disclosed that the University had received official notification from the U.S. Department of Education, or DOE, of the DOE's intent to conduct a program review of the University's administration of the Title IV programs in which it participates, as well as its administration of the Clery Act and related regulations, and its compliance with the requirements of the Drug-Free Schools and Communities Act, in each case for the 2012-2013 and 2013-2014 award years. On June 13 following completion of the program review, the University received from the DOE an expedited final program review determination letter. The final program review determination letter set forth three findings, each of which involved individual student-specific information gathering and/or reporting errors and all of which the University promptly corrected to the DOE's satisfaction. Accordingly, the final program review determination letter concluded that the University had taken all corrective actions necessary to resolve the findings and that the program review has been closed with no further action required.
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It's Friday, which means that we're hungover as hell from our very own Silent Drape Runners' Lil B party last night, and also that it's time for our regular roundup of new music to get your hands on this week. Happily, the music industry is back in full swing after the holiday season, so much so that we're back on the downloading kick from this week onwards. This week stuff you can get for free includes an Outkast reunion, sort of, along with new tracks from Lost Animal, Pissed Jeans and Junip, a bunch of antipodean indie pop, Blood Orange covering Kindness, and three entire albums (a new one from rising NYC rapper MaG, a rarities comp from Four Tet, and a new EP from Raekwon.) Get hold of all this action after the jump. … Read More
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I woke up at that very moment. My heart was pounding. Sweat was running down my forehead. Tom Riddle. I know he's gone, but he's still wonderful. How do I know? Well I met him at Hogwarts. Just last year, in fact.
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The polystyrene frame of our Through French Doors Wall Art features an espresso finish with silver lining to complement our dark print. Lots of shadows create a moody, picturesque view of the Eiffel Tower in Paris, France. If you can't visit it yourself, add this beautiful print to your home.
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Exelon to pay $400,000 settlement for Constellation violation
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Exelon Corp. has agreed to pay $400,000 to settle alleged violations related to its $7.9 billion acquisition of Constellation Energy Group Inc. earlier this year.
The settlement was announced Thursday by the Justice Department, though a federal judge will have to approve it before it's final, according to the Associated Press.
Exelon was required to sell three electricity plants in Maryland to settle antitrust concerns about the acquisition of Constellation, which owned Baltimore Gas & Electric as well as a number of nuclear-power plants and a retail power business.
The Justice Department says before the plants were sold, Exelon agreed to sell their power at or below cost to ensure it wouldn't raise electricity rates. The Justice Department says Exelon sold power above cost, but that once it realized the sales had been made, the company notified regulators and returned the profits, the AP reported.
Exelon (NYSE: EXC) said it was an error for which it accepts responsibility and added it had little impact on the market or customers, according to the AP.
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The Honeymooners
None of the new years stuff on channel 7. Recorded. On my sa8300 with the new guide. It was listed to record in the guide when when I tried to change it because it was not recording. I selected cancel recording then it said "recording not found". Why am I paying for dvr service!


text: Well, based on these two recommendations we went all the way to this Petit Journal Crepestand at Luxembourg today. How disappointing to see that the cols crepes were just laying there on a pile, waiting to be reheated. Nothing freshly made, there isn't even a possibility to make them as there are no hotplates. If I wanted reheated crepes I would buy them in the supermarket.


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Nina (Portman) is a ballerina in a New York City ballet company whose life, like all those in her profession, is completely consumed with dance. She lives with her obsessive former ballerina mother Erica (Hershey) who exerts a suffocating control over her. When artistic director Thomas Leroy (Cassel) decides to replace prima ballerina Beth MacIntyre (Ryder) for the opening production of their new season, Swan Lake, Nina is his first choice. But Nina has competition: a new dancer, Lily (Kunis), who impresses Leroy as well. Swan Lake requires a dancer who can play both the White Swan with innocence and grace, and the Black Swan, who represents guile and sensuality. Nina fits the White Swan role perfectly but Lily is the personification of the Black Swan. As the two young dancers expand their rivalry into a twisted friendship, Nina begins to get more in touch with her dark side – a recklessness that threatens to destroy her.
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Originally written on Kramerica Sports | Last updated 10/21/14
Jordy Nelson is considered a "long shot" to play this weekend against the Bears, leaving fantasy owners looking for other options. In fact, I wouldn't recommend starting or even rostering Nelson in anything but keeper leagues, as he will not be a full strength until after the regular season. Aaron Rodgers' struggles of late (0 passing touchdowns last week against a less than stellar Lions pass defense) are more correlated to the lack of protection than to the absence of Nelson. Greg Jennings has yet to prove he is 100%, but he has played in back to back games, which is enough for me to endorse him. The Packers are going to be throwing the ball, and with Jennings the most talented pass catcher, I have him ranked as a WR2 the rest of the way. Dance with the girl who brought you to the dance – don't get cute and bench Rodgers in ANY circumstance. He is an elite signal caller and is to be considered as such for the rest of this season, regardless of the health of the players around him. With Nelson likely out, James Jones remains a WR3 in most formats. His value relies on his ability to score, so the absence of a player who scored 15 times last season (and 21 times in his last 27 games) plays nicely into his skill set. Rodgers is accounting for nearly two scores per game against the Bears in his career and you'd be hard pressed to find WR more likely to be on the receiving end of those tosses.
Original Story: http://www.kramericasports.com/jordy-...
PLAYERS: Jordy Nelson, Aaron Rodgers, Greg Jennings, James Jones
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How to Purchase khl.ru Live Broadcasts?
Has anyone been able to purchase a live broadcast from khl.ru? An entire month of all games is twice as expensive as NHL Game Center Online, at around €25, so not an option for me.
However, a single game costs only 49 roubles, around €1.25, which I'd be happy to pay. The trouble is, I can't. Around 30 payment options are offered -- all of them Russian banks. My Slovak VISA card got rejected for payment several times (it works for online payments on other sites). PayPal is not offered. I wrote to khl.ru support twice, asking them how I can purchase a broadcast from Slovakia, but they ignore the questions. I read somewhere that a Finnish fan was able to purchase a broadcast from khl.ru. How did you accomplish this, please? :amazed:
The atrocious Czech sports TV channel Sport 1/Sport 2 was supposed to show today's game of Avtomobilist vs. Slovan, even if tape-delayed by 4 hours. It was announced on their site as late as this morning. In reality, they cancelled the hockey broadcast without explanation, and they're now showing silly archived football clips instead. No pirate streams were available either in the course of the game. For my turn, I'll be cancelling my Sport 1/Sport 2 subscription. They are worthless. :rant: :rant: :rant:
If the KHL wants to seriously compete with the NHL, they can't be this amateurish. I'm willing to pay them, but I can't? :shakehead Also, the pricing policy is questionable: why should a full monthly subscription be twice as expensive compared to the NHL? (On the other hand, khl.ru makes it possible to buy only individual games or games of only one team, something that's not possible in NHL Game Center.)
Thank you for any help in purchasing a live broadcast from khl.ru.
Last time I heard they were working on solution for that foreign payments bug. That was about a week ago. They said that they're making an english version of that live.khl.ru website with fully functional payment options.
Thank you for the information. I don't necessarily need an English version of the site, as I can read Russian, I just need a payment option. It's very surprising to me that PayPal isn't an option so far. The live site should make PayPal payments a priority, because that way the broadcasts would become instantly available pretty much world-wide, including for North American hockey fans. I mean, if any random porn/warez site :naughty: can offer PayPal payments, it's rather embarrassing for a legitimate "big-business" site like khl.ru to fail to do so.
The fact that Paypal isn't in the list is not surprising at all as it doesn't work with Russian banks (in result it's veeeery tricky to withdraw money from PayPal in Russia) and that service is aimed at Russian auditory.
Well, it's an international league now, and internationally, PayPal rules. :) The live site seems to have remained stuck in the "Russian SuperLeague" mode of 5 years ago. Making broadcasts available internationally seems a lot more important than token gestures, such as forcing Latin letters onto all the teams' jerseys. ;)
I thought I said they're working on it. Given that they don't have unlimited resources it's only natural that they have to prioritize. Unfortunately.
livetv.ru and sportlemon.tv ?
He doesn't want to pirate. Plus like he said there was no Slovan game stream on that websites.
That depends. If you're watching an illegal stream of paid channel without advertisements and stuff, you kinda do pirate it... KHL-TV is not a free channel btw.
This problem usually occurs when Slovan plays a lower-ranked team such as Chekhov or Avtomobilist. There was no problem getting the streams from Magnitka or Traktor games at sites like livetv.ru, but I'd still prefer to pay the 49 roubles for a hassle-free, fine-quality stream. The Traktor broadcast was particularly awful, with ads and logos splashed across much of the screen throughout the play (!), frequently obscuring the puck (!) and even the time indicator (!) in the top-left corner.
this is really cool, had no idea there was even an option to pay for the steams...(asked awhile back, but apparently in the wrong forum) ...really hope they make the site in English and unfortunately I don't speak Russian...might try to muddle through it with google translate once the payment bug is fixed...would love to watch Slovan's games also...
KHL streams here, it's free and legal :)
Now I have another problem. How can you buy a subscription for the entire season? When I visit my khl.ru user account and press the "Buy subscription" button (Купить абонемент), it only gives me the option to buy 1 game or 1 month. When you read these articles:
... they say you can buy all games from a club this season for 1495 roubles, or the entire season for 4495 roubles. Where, however, can you buy this? :amazed: :amazed: :amazed: I have now browsed through the entire http://www.khl.ru/video/online/ site several times, but can't find those season subscription options to buy them. Thank you for any help.
PS: The entire khl.ru site is extremely buggy these days. I wanted to ask khl.ru support what I have just asked you above, and concocted this in Russian (sorry for any mistakes):
They probably are a bit overwhelmed with the interest during the lockout. And the website seems to be the less loved child in the family. Someday they will figure it out. Right now thanks for your input about Yandex.
That's quite an adventure. I feel sorry for you, man. Just wait for the english version I guess. Especially since Slovan is on home series right now.
As to QIWI, it's true they have that English-language webpage, but what they actually offer seems rather confusing compared to Yandex. If you can read Russian, then the process of setting up a Yandex Dengi account and associating a credit card or debit card with it is easy to understand, because they guide you clearly, step-by-step.
At QIWI, when I tried to register, the first thing they wanted to know was my mobile phone number, but only a US/Canada dialing code (+1) or the UK dialing code (+4) was accepted. When I tested it with Slovakia (+421) or Germany (+49), it didn't work.
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