some facts of how SHG_bank LInkage programme started in India

1. NABARD
Committed to Rural Prosperity
Dr.B.S.Suran
General Manager
NABARD, Ahmedabad

2. Bank network for rural credit
June 2002
NABARD
Reserve Bank of India Government of India
NABARD
Public Sector Private Foreign
Banks (27) RRBs (196) Banks (31) Banks (41)
TOTAL
Rural 19,275 12,060 1,138 0 32,473
Semi-urban 10,903 2,037 1,761 2 14,703
Urban 8,737 359 1,322 20 10,438
Metro 7,203 17 1,155 180 8,555
Total 46,118 14,473 5,376 202 66,169
+ the cooperative banks , about 92,000 Primary agri. Credit Societies
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

3. The Dilemma of ….. The Inverted Pyramid
NABARD
Banks
Rural
population
 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 1980s
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

4. Findings from Research studies …..
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
So we were
looking for…
the POOR just wanted…. Or just Sustainable approaches
•Mechanism to keep their limited Hassle-free Products that match
resources safely financial Needs & capacities
• Credit to meet emergencies services Reduce trans costs
• Credit for mEs
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

5. NABARD The Self Help Group (SHG). . What is it ?
 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 name
transaction 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
Every 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!
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

6. NABARD
Design features
 Enables exclusion of rich
 Self-selection
Self-
 Focus on women
 Saving first and credit later
 Intra group appraisal systems and
prioritization:
 Credit rationing
 Shorter repayment terms
 Market rates of interest
 Progressive lending
 Multi-eyed operation
Multi-
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

7. landmarks
NABARD
YEARWISE SHGs CREDIT LINKED News letter
Distance Edn Tech..
10
Other New Fund
200000 SHPIs
Banks
150000 Working as SHPI
Group
100000 Reorienting Vision
Training + TF
Separate Fund
50000
Pilot
0 Rating,
1 2 3 4 5 6 7 8 Documentation,
9 10
YEARS
“WE MAKE BANKING POSSIBLE WITH THE Recg, THE LOST AND THE LEAST”
Govt . LAST Training

8. NABARD
Stages of YEARWISE SHGs CREDIT LINKED Programme
SHG Bank Linkage
200000 Growth
& Expansion
150000
100000 Mainstreaming
Introduction
and Validation
50000
0
1 2 3 4 5 6 7 8 9 10
YEARS
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

9. NABARD
The Product converges…..
 FORMAL and INFORMAL
Systems
 FINANCE Capital and SOCIAL
Capital
 Systems & procedures and
FLEXIBILITY
 PROFESSIONALISM and Local
Knowledge
An Indianised Product –
Researched, Tested,
Piloted, Grown, Expanded,
……….. and Now A
MOVEMENT……….
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

10. 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+
• 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)
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

11. NABARD
Building social capital..
NGOs
Banks
Socially committed SHPIs
individuals
Government
Farmers’ clubs functionaries
Mobilizing Communities …..
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

12. Commitment building thru capacity building …
NABARD
Stakeholders
Cadre of
Trg centre trainers
Partnership
IGNOU Training Training
partnership Approaches consultation
Dissemination TNA
of materials Designing
Trg modules
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

13. Our manpower building approaches …
NABARD
 Bankers
6 different training and exposure programmes for CEOs,
Directors on Boards, middle management, branch
managers, field staff
 NGOs
3 different training and exposure programmes for CEOs
and field staff, Refresher programmes
 Govt officials
3 different training and exposure programmes for senior
bureaucrats, middle level operational functionaries, and
field staff
 Trainers
3 different programmes to equip trainers from Banks,
Government, and NGOs.
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

14. NABARD
What was the impact ?…..contd…
Infrastructure building microFinance Income Generation
(physical, social & community assets
(Savings and credit) (Encouragement and advice)
Emergency Prevention
Banker friendly Leveraging Govt contracts-
(recurring natural calamities)
market/recovery/image hatts/ quarrying/fish pond/
milestone/ health related
Peace Social Evil Eradication
(Interfaith, (Alcohol abuse,
inter-caste tolerance Self-Help spousal abuse,
and conflict resolution)
Initiatives excessive dowry,
Undesirable social practices
gender space,)
Watershed Management
Education
(Water users groups, (School for children, Civil Society
infrastructure maintenance, (Women members
adult literacy. run for elected office)
share practices)
Peer education )
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

15. NABARD and microFinance
NABARD
INFLUENCING INVOLVING ENCOURAGING
POLICY INSTITUTIONS INNOVATIONS
MOTIVATING
CREDIT SUPPORT
PARTNERS
NABARD
TECHNICAL COORDINATION
SUPPORT WITH PARTNERS
GROUP GROUP
FORMATION TRAINING AND LINKAGE
CAPACITY BUILDING
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

16. NABARD
Other initiatives
Grain banks and SHGs
Computer munshi
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
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

17. Our simple strategy . . . . . .
NABARD
 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
 Address post-finance management issues of banks
 Integrate IT in mF systems – enhancing efficiency !!
 Diffuse learnings and share good practices
 Contain supply side anxieties
“WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

18. Thank you
NABARD
Committed to Rural Prosperity
For more details log on to
www.nabard.org