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MCID -SHGS PPT-.ppt

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    SHGs:Issues and Challenges

    Presentation by :

    Micro Credit Innovations Department (MCID)

    National Bank for Agricltre and !ral Development(NABA!D)"ead #$ce% Mmbai% India

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    P&' Banks ()% Pvt* CBs (+)% !!Bs (,) -.%/// Branc0es (12%/// !ral3&emi 'rban)

    &tate Coop* Banks 4 5+% DCCBs 4 5-/% &CA!DB 4/% PCA!DB 4 2 and PAC& 4 11-

     'rban Coop Banks (+-1)% 6oreign Banks (5)

    "o7ever:

    Net7ork of informal credit 4 Money lenders%landlords% traders 4still acconted for sbstantial

    portion of rral credit

    Banking Network and Multi-agencyBanking Network and Multi-agency

    approachapproach

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      80e Dilemma of t0e Inverted 80e Dilemma of t0e Inverted

    PyramidPyramid  Banks 

    !ral

    Poplation

    9arge Banking Infrastrctre% en0anced otreac0 in rralareas% -/ million small loans% pro poor policies% priority sectorlending% sbsidy and sbventions% programmes andintensions like directing credit to rral areas% large resorcebase of banks% large banking manpo7er and sond controlsystems *

    B'8% t0e Debt and investment srveys revealed ske7ness incredit ;o7% 0ose0old debt from non

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    6indings from &tdies6indings from &tdies **in t0e eig0ties**in t0e eig0ties &avings and credit prodcts did not sit t0e poor

    Procedres 7ere complicated and cmbersome

    "ig0 transaction cost for t0e poor in availing >nancial services &ystem did not provide for anyt0ing to fall back on

    ?ven special poverty alleviation programmes did not recognise t0eimportance of savings

    !esorce asked to 0andle often larger t0an t0e capacity of poor to

    0andle @#t0ers decided everyt0ing

    &o% poor 7antedMec0anism tokeep t0eirresorces safelyCredit to meett0eir emergenciesCredit for m?s

    #r st

    0asslefree>nancialservices

    &o need 7asfor%

    &stainableapproac0es%Prodcts t0atmatc0 needs capacities %redce

    transactioncosts

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    "o7 &" came into eEistence"o7 &" came into eEistence

    • Presence of informal grops 7it0 variety of prposes*

    C0its or c0it fnds% nid0is% bis0is etc* eEtending loans tomembers*

    • By mid eig0ties% MF!ADA @Credit Management ropsstarted 7eekly savings and loan facility to grop members <renamed as @&elf "elp rops in +2,-*

    • ICD& programmes in Ma0aras0tra% I6AD piloted 8amilnadGomen Development Proect in D0arampri districtlanc0ed arond same period*

    • Absence of legal frame7ork for >nancing nregisteredgrops denied credits from banking sector*

    • 'pscaling of lending activity not possible only ot ofmembersH o7n savings*

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    NABA!D &tepped inNABA!D &tepped in In +22% NABA!D pilot proect to form and credit link

    .// &"s from +22nance informal grops*

    9oan linkage 7it0ot collaterals and 7it0otascertaining t0e prpose*

    Banks 7ere to c0arge interest +J per annm from&"s*

    &"s 7ere given freedom to >E interest rate frommembers*

    !e>nance spport to banks by NABA!D etc* Dring pilot p0ase% 1-./ &"s credit linked 7it0 bank

    loan of !s*/*., million covering , CBs% / !!Bs and- Coop banks*

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    Mainstreaming of &"s

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     80e &elf 0elp rop (&") 80e &elf 0elp rop (&") G0at is itG0at is it

    A 0omogeneos grop of abot +/

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    Design featresDesign featres

    ?nables eEclsion of ric0

    &elf selection 6ocs on 7omen

    &aving >rst and credit later

    Intra grop appraisal system

    Prioritisation of credit Credit rationing

    &0orter repayment terms

    Market rates of interest

     8rg for 8ablet basedacconting

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     80e grop s0old be in eEistence for at least mont0s

    rop s0old 0ave promoted savings 0abits

    &avings to loan ratio of +:1 or +: bt liberal

    for matred grops&imple docmentation

    Bank loans not to be sed for >nancingdefalters

    "redit #inkage with Banks

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    M?MB?!&"IP 6??&

     8"!I68 C#99?C8I#N&

    N#3#C#N8!IB'8I#N

    9#AN !?PAFM?N8&

    6IN?& P?NA98I?&BAN 9#AN&

    Group Funds

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     80e Prodct Converges 80e Prodct Converges

    6ormal and Informal &ystems

    6inancial capital and &ocial capital

    &ystems Procedres and 6leEibility

    Professionalism and 9ocal no7ledge 

     An Indian Product – researched,

    Tested, Piloted, Grown, Expanded,

    … and now A MOVEMENT 

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    Conceptalisation and pilot testing of &" 4 B9P

    Contribting to condcive policy frame7ork

    Convincing3cataly=ing all stake0olders

    rant Assistance to &"PIs Capacity bilding spport for all players

    !e>nance to banks

     Critical tools3parameters3gidelines for

    maintenance of acconts and records% rating% etc*

    $%& - B#'- (ole of N)B)(*$%& - B#'- (ole of N)B)(*

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    Book eeping by &" members t0rog0 a "and"eld Device

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    Commnicating data3information3inpts to !BI%

    oI etc !evie7 of progress

    Innovations% stdies% disseminations of bestpractices etc*

    Micro >nance Development and ?Kity 6nd(M6D?6) and G&" 6nd

    Consltative mec0anism at varios levels 4National% &tate and District

    $%& + B#' - (ole of$%& + B#' - (ole of

    N)B)(* .....N)B)(* .....

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     8rg for acconting t0rog0mobile based soft7are

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    Progress in &"s &aving and Credit 9inkedProgress in &"s &aving and Credit 9inked (No* in lak0s)(No* in lak0s)

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    &"

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      87o decades of &"

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    Where Have we reached ?

    Jammu &

    Kashmir 

    Himachal Pradesh

    Uttar 

    Pradesh

    Punja

    Har!ana

    "ajasthan

    G#a

    Karnata$a

    %ndhra

    Pradesh

    rissa

    'adh!a

    Pradesh

    (elhi

    Gujarat

    'aharashtra

    Kerala

    )amil

    *adu

    +ihar 

    West

    +engal

    Jhar$hand

    Si$$im

    %ssam

    %runachal

    Pradesh

    *agaland

    'ani,ur 

    'i-#ram)ri,ura

    'eghala!a

    Heartland #. SHG

    .#cus

    Chhattisgarh

    Green /0tent #. c#verage12345

    67 states

    "ed 8 93 4 c#verage states

     ;ell#w 1 93 < 73 4 = states

    Bro7n 

    173 > 234 states

    $%& sa,ingsco,erageMapping- March!1

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    Where Have we reached ?

    Jammu &

    Kashmir 

    Himachal Pradesh

    Uttar 

    Pradesh

    Har!ana

    "ajasthan

    G#a

    Karnata$a

    %ndhra

    Pradesh

    rissa

    'adh!a

    Pradesh

    (elhi

    Gujarat

    'aharashtra

    Kerala

    )amil

    *adu

    +ihar 

    Jhar$hand

    Si$$im

    %ssam

    %runachal

    Pradesh

    *agaland

    'ani,ur 

    'i-#ram)ri,ura

    'eghala!a

    Chhattisgarh

    Green /0tent #. c#verage1234

    3= states

    "ed 8 93 4 c#verage 6@ states

     ;ell#w 1 93 < 73 4 states

    +r#wn 173 > 23 4 A states

    $%& creditco,erageMapping- March!1

    PunjaUttara$hand

    West +engal

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    &trategy for 'pscaling &"

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    &trategy for 'pscaling &"

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    &" Meeting in Progress

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    Impact of the programmeImpact of the programme

    ?Etensive coverage of >nancially eEcldedpoor

    ?mpo7ered t0e disempo7ered 4 &pecially7omen

    ?conomic impact 4 Increase in net 0ose0old income

    C0anges in 4 eEpenditre pattern% saving 0abits

    Improvement in 4 asset 0oldings% >nancialstats% 0ealt0% 0ygiene and edcation

    &ocial empo7erment 4 Increased socialrole% social 0armony% collective action

    against social instice

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      &ome of t0e Innovative Initiatives of&ome of t0e Innovative Initiatives of

    NABA!DNABA!Drain bank and &"s

    Compter mns0i

    Nabykti &oft7are t0rog0 Myrada

    IC8 &oltion for &" Acconting  < Mobile Based% 8ablet Based "and "eld Device Based

    Geb based MI&

    !ral volnteer as book 7riter

    Post #$ce as &"PI and 6inancial Intermediary

     oint 9iability ropsAction !esearc0 for Oolntary &avings

    "ealt0 Package for &" members

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    Isses and c0allengesIsses and c0allengesConcentration in sot0ern states  < 1J of total saving linked &"s and .1J of total credit linked grops

    Qality of rops 4 lack of reglar meetings% poorbook 7riting% lack of adit of acconts% rating andgrading of grops

    G0ereas overall credit ;o7 increasing (from !s* +1.1, Crin /+/

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    Isses and C0allengesIsses and C0allenges

    • Individal &B A3C by only small percentage of

    individal members

    • NPA in &"s (*21J% 1*-J and */2J as at t0e end of Marc0/+/% /++ and /+ resp) 4 9ed by Central !egion 7it0 +5*J andGestern !egion 7it0 ,*J

    • &bsidised and C0eap credit eopardi=ing gropdynamics 4 Kality of grops declining

    • Importance of savings3t0rift in grop not recognised

    • ?Ecessive infsion of credit% mltiple members0ip%mltiple borro7ings

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    Isses and C0allenges***Isses and C0allenges***

    InadeKate gradation from consmptioncredit to credit for liveli0ood

    National !ral 9iveli0ood Mission

    Bilding of strctres 7it0 otside spport

    6ederations (CB#s) 7orking as >nancial intermediary

    Interest &bsidy and &bventions

    Income stabilisation to be >rst priority beforeen0ancing income

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    $%& $cheme$%& $cheme

    • +./ back7ard districts in , states

    Implementation in satration mode• Nodal N# 4 Identi>cation by 9DM DDM in

    consltation 7it0 D9CC

    • Participation by bank branc0es 7it0 CB&

    Mo' bet7een bank and N#• N# to promote and facilitate credit linkage% provide

    0and0olding spport% enable liveli0oods and beardefalt risk

    Creation of G&" 6nd in NABA!D• rant spport !s*+/%///3< per &" and training etc

    • &ervice c0arge from banks .J p*a* on o3s loanagainst &"s* Defalts% if any% to be netted ot*

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    Two *ecades of $%&-B#' +Two *ecades of $%&-B#' +

    Need for (e,istitng / $%& -Need for (e,istitng / $%& -• InadeKate otreac0 in many regions

    • Delays in opening of &" acconts anddisbrsement of loans

    • Imponding of savings by banks as collateral%

    • Nonrst loans 7ere repaid promptly

    • Mltiple members0ip and borro7ings by &"members 7it0in and otside &"s and

    • 9imited banker interface and monitoring

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    'roduct le,el changes in $%&-'roduct le,el changes in $%&-

    Allo7ing volntary savings:

    Cas0 Credit 3 overdraft for &"s

    ?nabling oint 9iability rops (9s) 7it0in&"s

    Improving !isk Mitigation &ystems

    Bilding second tier instittions

    &trengt0ening monitoring mec0anism 4 rating

    aditing Addressing 8raining reKirements

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