1 / 23

Deepening Microfinance

Deepening Microfinance. Tata-Dhan Academy 04.03.2010. Context. Micro finance for poverty reduction. Context Millennium Development Goals - an appropriate framework for micro finance industry to address poverty and development issues Scope for Beyond MDGs

bao
Download Presentation

Deepening Microfinance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Deepening Microfinance Tata-Dhan Academy 04.03.2010

  2. Context

  3. Micro finance for poverty reduction Context • Millennium Development Goals - an appropriate framework for micro finance industry to address poverty and development issues • Scope for Beyond MDGs • Characterizing poverty and development issues • Contextualizing microfinance • Micro credit microfinance development finance

  4. Poverty reduction - Household • Outreaching poorest of the poor • Ensuring food security • Providing security of shelter • Promoting educational security • Providing health security • Promoting and sustaining income security • Sustaining social security • Ensuring gender equality and equity • Protecting from risks and vulnerabilities

  5. Poverty reduction – large scale phenomena • Disaster situations • Mass migration • Climate change • Sectoral development – agriculture, business development, service sector, processing, manufacturing, marketing, etc • Remoteness and isolations • Conservation – common property resources and energy • Narrow skill base • Infrastructure – electricity, communication, transport, water, drainage, services (health, education etc) • Diseases out breaks • Social and cultural issues related to children, adolescent girls, women, men, physically and mentally challenged • Political environment • Any localized issues

  6. Available experience

  7. Current status • microfinance has only reached about 10% of its potential market so far • microfinance is now a tested business model offers variety of financial products such as savings account, productive loans including working capital loans, micro insurance, and even housing finance. • Still evolution continues through experimentation • Established social capitals: SHG - federation, cooperatives, trade-unions, NHG – PRIs, SHG – PLFs etc • Conceptualized into different phases

  8. Microfinance components • Social capital • Financial services • Micro savings, micro credit, micro insurance, remittance transfers and payment services • Livelihoods promotion and development • Beyond microfinance (Civic intermediation)

  9. Deepening microfinance - Social capital Structure • Self Help Groups and Cooperatives with mutual concept • Apex bodies: federations and associations of cooperatives • Distinct governance and executive systems Systems • Simple to complex operational systems such as accounts, audit, meetings, byelaws, policies and procedures, and management information, monitoring and evaluation, impact assessment etc • External linkages – banks, PRIs, networks, government and private service providers, and other local informal and formal associations • Institutional building processes: defined goals and objectives, HR processes, growth and development related mechanisms, sustainability areas such as financial, institutional and development

  10. Deepening microfinance - Financial Savings • Diversified savings products: voluntary, purpose oriented, compulsory, need based, cash and kind • Incentives: with or without interest on savings, withdrawal/non withdrawal savings, flexibility • Security: deposit in the bank, rotate among the members as loans, temporary tapping in S/B account, keep it in the apex bodies, as investments etc Credit • lending policies • Loan products-consumption, productive, housing and basic amenities etc • using savings only or with external funds for lending • Appraisals, loan graduation, credit absorption, term or multiple loans, ROC • Repayment – flexible or fixed amounts, period, monitoring/lack of monitoring PAR at group/cooperatives, follow-up by banks or federations or promoters, loan cards etc

  11. Deepening microfinance - Financial • Collaboration with government: SGSY • Handling subsidized credit, revolving funds, grants etc • Financial inclusion and financial literacy • Linkages – different models, BC and BF • Cost coverage (financial sustainability) • Multiple sources of funding and cross subsidization • Promotional cost • Corpus creation • Creation of development funds

  12. Deepening microfinance - Financial Micro Insurance • Different models: Partner agent model, community based model • Products: life, livestock, health, and weather index • Micro pension: concept phase • Reinsurance • Policy to facilitate promotion of pro-poor products by formal insurance companies • Capacity building: concepts, principles, product design and administration, insurance literacy and piloting

  13. Deepening microfinance – Livelihoods intermediation • Strengthening existing activities, revival of traditional activities, promotion of new activities, • Individual activities, PPGs, group activities • Registered companies: marketing, processing, input purchase and supply • Livelihoods framework: Basix, DHAN, PRADAN • Localized efforts • Community owned but professionally managed, facilitate tie ups with external agencies, promoters acts as agents • Sub-sectoral focus: agriculture, dairy, forestry, fishery, poultry, artisans, handicrafts, home based activities, cottage industries etc • Experimenting value chain • Migration – as livelihood option

  14. Deepening: Civic intermediation • Health: holistic or particular health issues – malaria, HIV/AIDS, malnutrition etc • De-addiction • Education: remedial, model schools, evening schools • Slum development: drainage, sanitation, road and other infrastructure • Rural and Tribal development: common property resources – rehabilitation and management, basic amenities • Conservation and management: coastal resources • Gender and development • Mainstreaming disaster management • Human rights • Old age, disabled, ultra poor who are excluded

  15. Areas for deepening

  16. Areas for deepening Social capital (SHGs and Cooperatives) • Special attention for hard- core poor through diversification and flexible products and establishing link between social safety net and subsidized program (Reaching the ultra poor – experiment similar to BRAC IGVGD (Income Generation for Vulnerable Groups Development) with government or direct TUP (Targeting Ultra Poor) • Families which have come out of poverty: Role in social capital • Legitimizing SHGs and cooperatives at panchayat level (Kudubashree, Kerala model) • Promotional and investment cost in building SHGs and Cooperatives as localized development institutions for generations • Local networking – banks, govt and development organizations

  17. Setting standard by practice and develop benchmark as a model • Mechanisms to ensure homogeneity and reach of equitable benefits • Positioning social capital as a development organization: clear institutional framework, purpose clarity with governance and executive system • Defined mission and vision for the organizations • Institutionalizing democratic process in SHGs and cooperatives • Satellite groups/cooperatives in remote areas

  18. Financial intermediation • Tapping the savings potential into the system through safety and security – mechanisms and guidelines • Sophisticated systems to track the financial performance at member and SHG/cooperatives level – investment on capacity building and providing necessary equipments and facilities • Individual subsidy to institutional subsidy • Financial inclusion and financial literacy through community organizations to make the reach of banking services to all eligible people • Lending only through SHGs or Cooperatives by banks to avoid multiple loans

  19. Financial intermediation • Remittance transfers and payments to experiment in places where the migration is traceable (within the state or across the states) • On-going capacity building for banks, NGOs and government through community organizations (as resource centres) in remote areas to initiate and intensify the linkages • Guidelines to sensitize insurance companies on providing pro-poor products • Strengthen the demand driven credit service • Corpus creation for sustainability

  20. Livelihood intermediation • SHGs/Cooperatives with NREGAs to ensure employment to the needy • Financial allocation (grant) for potential assessment for livelihood promotion in an area/location (SGSY) • Wage based permanent job and assets creation • Financial assistance for skill building and promoting entrepreneurship through SHGs and Cooperatives • Providing infrastructure to SHGs/Cooperatives for promoting local markets (shandy) • Promote community managed storage facilities for better marketing of the produces and goods (government can allocate, wherever it is possible and feasible) • Attention on building local economy vibrant

  21. Civic intermediation • Positioning the SHGs to avail primary health care services from PHCs and government hospitals (health card – Pondicherry), secondary and tertiary services through referrals • Grant support to SHG-federations/cooperatives for health literacy among their members • Experiment – running a few model primary schools by SHG-federations/cooperatives • Promote and strengthen the linkage with PRIs for inclusion of poor in the development planning, implementation and monitoring process. • Support for providing special care and services for the old age and disabled through SHGs/cooperatives (there are a few people initiatives)

  22. Connecting Microfinance and MDGs for further deepening

  23. Thank you

More Related