nabard and microfinance
DESCRIPTION
some facts of how SHG_bank LInkage programme started in IndiaTRANSCRIPT
NABARDNABARDCommitted to Rural ProsperityCommitted to Rural Prosperity
Dr.B.S.SuranGeneral Manager NABARD, Ahmedabad
NABARD
Bank network for rural creditBank network for rural credit
Reserve Bank of India Government of India
NABARDNABARD
Public SectorBanks (27) RRBs (196)
June 2002
PrivateBanks (31)
Rural
Foreign Banks (41)
TOTAL
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
RuralSemi-urban
UrbanMetroTotal
19,27510,9038,7377,203
46,118
12,0602,037
35917
14,473
1,1381,7611,3221,1555,376
02
20 180 202
TOTAL32,47314,70310,4388,555
66,169
+ the cooperative banks , about 92,000 Primary agri. Credit Societies
NABARD
Banks
Rural population
The Dilemma of ….. The Inverted Pyramid
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
Large Banking infrastructure, enhanced outreach in rural areas , 70 million small loans, pro-poor policies, subventions, programmes and intentions like directing credit to the rural areas, large resource base of banks, good manpower and sound control systems…….
….BUT …the Debt and investment surveys revealed skewness in credit flow, declining household debt from non- institutional agencies still formed a sizable measure.
The search for reasons and the mismatches started….in the 1980sThe search for reasons and the mismatches started….in the 1980s
NABARD …… in the 1980s Savings and credit products did not suit the needs of the poor Procedures were complicated and cumbersome High transaction costs for the poor and the delivery system System did not provide for anything to fall back on Even special poverty alleviation programmes did not recognise importance of
savings Resources handled were often larger than the poor’s capacity to handle “Others” decided everything
Findings from Research studies …..
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
“Others” decided everything
the POOR just wanted….the POOR just wanted….•Mechanism to keep their limited
resources safely • Credit to meet emergencies
• Credit for mEs
Or just Hassle-free
financial services
So we were looking for…
Sustainable approachesProducts that match Needs & capacitiesReduce trans costs
NABARD
A homogeneous group of about 15 to 20 Every member to save a small amount regularly. Pooled savings
kept in a savings bank account in SHG’s nametransaction costs of both the poor and bank reduced !
SHG to use pooled thrift to give interest bearing loans to members – decisions taken in group meetings
The Self Help Group (SHG). . The Self Help Group (SHG). . What is it ?What is it ?
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
members – decisions taken in group meetingsEvery member learns prioritisation and financial discipline.
Their capacities to think and handle larger resources improves!
Depending on the SHG’s maturity, bank gives loan to the SHG as a multiple of the pooled savings. Bank loan added to the SHG kitty.Adequate & sustained access to financial services!
NABARD
Design featuresEnables exclusion of rich Enables exclusion of rich SelfSelf--selection selection Focus on women Focus on women Saving first and credit later Saving first and credit later Intra group appraisal systems and Intra group appraisal systems and
prioritization: prioritization:
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
prioritization: prioritization: Credit rationing Credit rationing Shorter repayment terms Shorter repayment terms Market rates of interest Market rates of interest Progressive lending Progressive lending MultiMulti--eyed operation eyed operation
NABARD
150000
200000
YEARWISE SHGs CREDIT LINKED
Banks as SHPIWorking
Group
News letterDistance Edn
New FundOther SHPIs
landmarks
1010 Tech..
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
0
50000
100000
YEARS1 2 3 4 5 6 7 8 9 10
Pilot
Separate Fund
Group
ReorientingTraining
Govt . Recg
Vision+ TF
Rating,Documentation,
Training
NABARD
150000
200000
YEARWISE SHGs CREDIT LINKED
Growth
& Expansion
Stages of SHG Bank Linkage Programme
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
0
50000
100000
YEARS1 2 3 4 5 6 7 8 9 10
Introduction and Validation
Mainstreaming
NABARD The Product converges…..The Product converges…..
FORMAL and INFORMAL Systems
FINANCE Capital and SOCIAL Capital
Systems & procedures and FLEXIBILITY
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
FLEXIBILITY PROFESSIONALISM and Local
Knowledge
An Indianised Product An Indianised Product ––Researched, Tested, Researched, Tested, Piloted, Grown, Expanded, Piloted, Grown, Expanded, ……….. and Now ……….. and Now A A MOVEMENT……….MOVEMENT……….
NABARD SHG-Bank Linkage … Progress As at…… Mar 93 Mar 96 Mar 04 Mar 2009
• SHGs linked 255 4,757 10,79,000 42.24 lakh• % women’s groups 70 74 90 82• Families assisted 5,100 80,000 16.7 Million 59.10 Mil • Banks participating 14 95 560 570+
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
• Banks participating 14 95 560 570+• NGO Partners 32 127 3000 3400+• Districts covered 26 157 564 564• Aggregate bank loans 1.5 6.2 3901 22,679 (o/s)
handled (Rs Crore)• NABARD Refinance (Rs crore) 2124 4,200(app)
NABARD
SHPIsSHPIsSocially committedSocially committed
BanksBanksNGOsNGOs
Building social capital..Building social capital..
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
SHPIsSHPIs
Farmers’ clubsFarmers’ clubs
Socially committedSocially committedindividualsindividuals
GovernmentGovernmentfunctionariesfunctionaries
Mobilizing Communities …..Mobilizing Communities …..
NABARD
StakeholdersCadre of trainers
Training
Trg centre Partnership
Commitment building thru capacity building …Commitment building thru capacity building …
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
Training Approaches
Training consultation
Dissemination of materials
TNADesigning
Trg modules
IGNOU partnership
NABARD
BankersBankers6 different training and exposure programmes for CEOs, Directors on Boards, middle management, branch managers, field staff
NGOs NGOs 3 different training and exposure programmes for CEOs
Our manpower building approaches …Our manpower building approaches …
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
3 different training and exposure programmes for CEOs and field staff, Refresher programmes
Govt officialsGovt officials3 different training and exposure programmes for senior bureaucrats, middle level operational functionaries, and field staff
Trainers Trainers 3 different programmes to equip trainers from Banks, Government, and NGOs.
NABARD
Self-Help
Peace (Interfaith,
inter-caste tolerance
Social Evil Eradication(Alcohol abuse, spousal abuse,
Income Generation (Encouragement and advice) Leveraging Govt contracts-hatts/ quarrying/fish pond/ milestone/ health related
microFinance (Savings and credit)
Banker friendlymarket/recovery/image
Infrastructure building (physical, social & community assets
Emergency Prevention(recurring natural calamities)
What was the impact What was the impact ?…..contd…
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
Self-Help Initiatives
inter-caste toleranceand conflict resolution)
Education
(School for children,
adult literacy.
Peer education )
Civil Society (Women members
run for elected office)
spousal abuse, excessive dowry,
Undesirable social practices gender space,)
Watershed Management
(Water users groups,
infrastructure maintenance,
share practices)
NABARD
INFLUENCINGPOLICY
INVOLVINGINSTITUTIONS
ENCOURAGINGINNOVATIONS
MOTIVATINGPARTNERS
CREDIT SUPPORT
NABARD
NABARD and microFinance
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
TECHNICALSUPPORT
COORDINATION WITH PARTNERS
GROUPLINKAGETRAINING AND
CAPACITY BUILDING
GROUPFORMATION
NABARD
NABARD
Other initiatives
Grain banks and SHGs
Computer munshi
IT integration with processor cards
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
IT integration with processor cards
Rural Volunteers are book keepers
Project on e-grama
Social Security system for SHGs
Other Credit models – JLGs /Raithu Mitra Groups
NABARD
Our simple strategy . . . . . .
Continue to invest in development of Human Capital Strengthen outreach in infrastructurally weak areas
Intensify diverse training and sensitization approaches
Selectively meet costs of SHG promotion by different SHG promoting institutions
““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”
promoting institutions
Address post-finance management issues of banks
Integrate IT in mF systems – enhancing efficiency !!
Diffuse learnings and share good practices
Contain supply side anxieties
Thank youThank you
NABARDNABARDCommitted to Rural ProsperityCommitted to Rural Prosperity
For more details log on to
www.nabard.org