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Query: National Level Model Act on SHGs and SHG Federations- Advice; Examples

Compiled by Navin Anand, Resource Person and Mohammad Anas, Research Associate

Issue Date: 30 September 2014

From GV Krishnagopal, Access Livelihood Consulting India, Secunderabad Closed 18 August 2014

Dear Members,

In India, the banking sector witnessed large scale branch expansion after the nationalization of

banks in 1969, which facilitated a shift in focus of banking from class banking to mass banking. It was, however, realised that, notwithstanding the wide spread of formal financial institutions,

these institutions were not able to cater completely to the small and frequent credit needs of most of the poor. This led to a search for alternative policies and reforms for reaching out to the

poor to satisfy their credit needs. As an alternative to the formal financing system, the SHG

Movement was initiated by some of the civil society organizations way back in the 1970's. After the initial struggle from these civil society organizations for long time, bank linkages for

enhancing the credit access to women members took off as an important activity. Given this innovation, both Government and Formal Banking System started reacting favorably.

The National Bank for Agricultural and Rural Development (NABARD) started Self-help group (SHG) - bank linkage programme (SBLP) as a pilot project in 1992. This programme not only

proved to be very successful, but has also emerged as the most popular model of micro finance in India. However, the limitations of an informal small group to undertake substantial

investments in productive activities and also to provide universal financial inclusion (with wide range of financial services like savings, credit, insurance, pension and other services) become

visible very soon. Therefore, Self Help Promotion Institutions (SHPIs) started promoting the

concept of Federations of SHGs.

Despite tremendous achievements of the self-help groups, recognized as the largest decentralized institutional mechanism to extend basic financial services in the World, the growth

Poverty _____________________________ Microfinance Community

of the Self Help Groups and Federations are getting limited due to lack of appropriate legal

framework. Most SHPIs are initiating SHG Federations as either Public Societies, Trusts or Cooperatives. In seven states of the country, the most frequently used legal act is the Self

Reliant Cooperative Societies Acts. Post 97th Amendment of Constitution, where in Republic of India recognized that it is fundamental right of citizens of India to form cooperatives, there was a

ray of hope that a member/citizen centric framework independent of government control will be

established. However, in 97th Amendment, part IXB goes on to prescribe provisions of bylaws of cooperative societies. Keeping this as ruse, both Madhya Pradesh and Odisha State Governments

quickly repealed the Self Reliant Cooperative Societies Acts operational in their states.

Given this background, it is clear that at the National Level there is no appropriate legal framework which is sensitive to the needs of informal Self Help Groups and their federations.

Under the context of National Level scaling up of Self Help Groups as part of National Rural

Livelihoods Mission, it will be quite appropriate to debate and discuss on the appropriate legal framework for SHGs and SHG Federations. This will be equally relevant for National Urban

Livelihood Mission.

In this context, the members of Microfinance Community are requested to share their insights

and suggestions on the following questions-

Based on your experience and knowledge, what are key factors and issues

that validate the need of a National Level Act for supporting appropriate legal recognition and support to SHGs and SHG Federations?

What are the principles and broader framework based suggestions that need

to be carefully considered in preparation of National Level Model Act on SHG

and SHG Federations? What are the international examples of legislations, which can be used for

reference to prepare the National Level Act?

Your views and suggestions will be useful in preparation of a draft of National Level Model Act on

SHG and SHG Federations. All information shared by the community members and used in

preparation of a National Level Model Act on SHG and SHG Federations would be duly acknowledged.

Responses were received, with thanks, from

1. Navin Anand, UNDP, New Delhi 2. K. Ravichandran, Department of Cooperation, Gandhigram Rural Institute,

Dindigul District, Tamil Nadu

3. Indu Chandra Nagar, Janhit Foundation, Lucknow 4. Girija Srinivasan, Consultant, Pune

5. Hemantha Kumar Pamarthy, Independent Consultant and Adviser (Development Sector, CSR, Microfinance and Marketing) Chennai, India

6. K S Gopal, Centre for Environment Concerns, Hyderabad

7. Arshad Ajmal, Sahulat Microfinance Society, New Delhi 8. Resham Singh ,Param Self Help Foundation , Mohali, Punjab

9. Bibhu Prasad Mohanty, Independent Development Consultant, Coach and

Trainer, Bhubaneshwar, Odisha 10. Anuj Jain , COADY International Institute, Antigonish, Canada Response 1 and

Response 2

11. Neeta Dubey, Independent Development Consultant - MGNREGA/ Non- Formal

Education, New Delhi 12. Smita Premchander, Faculty, Microfinance Management, IIM, Ahmedabad, and

Secretary Sampark and M. Chidambaranathan, Sampark, Bangalore 13. Manik Lal Bose, Economist and Social Scientist, Independent Consultant, Kolkata

14. Balaji Ramakrishnan, CARE INDIA, Chennai

Further contributions are welcome!

Summary of Responses Comparative Experiences Related Resources Responses in Full

Summary of Responses

Summary

Considering SHGs and SHG Federations as a part of the national financial system, members

advocated for the need of a national level, simple and easily understandable Model Act on SHGs

and SHG Federations that protects the rights of SHGs and their members. In the present scenario, this also looks important in the context of two big flagship programmes - National Rural

Livelihood Mission (NRLM) and National Urban Livelihood Mission (NULM) and several other initiatives of various ministries and institutions.

Members also justified the need of an Act for SHGs and their federations, informing that there are more than 7.3 million Self-help groups in India that are savings linked and the scenario of

establishing, promoting and monitoring SHGs and their federations is complex as the promoters of these institutions are different in terms of their legal status, functions and objectives. This

demands for integrating, converging and streamlining the structures under a common umbrella.

A set of members have opined that SHGs are informal institutions and therefore there is no need

of any legal framework or law to recognise them further. However, there is an urgent need to provide more resources for their capacity building and skill up-gradation so as to enable them to

go for second level of interventions of undertaking various income generating activities (IGAs). Further, for SHG federations, perhaps a new legislation is not required and the existing

cooperative laws can be tweaked and made appropriate for Federations. If tweaking cooperative

Act to accommodate federations has more road blocks, only then it will make sense to have a separate Act for the federations. Cooperatives and mutual cooperatives Acts can form the basic

framework for the new Act. For the federations that chooses to become financial intermediaries, the requirement of governance, reporting, audit, rating, etc. needs to be much more stringent.

Issues that validate the need of an Act for SHGs and Federations and Suggestions

No System of Enlisting of SHGs at the State and National Level: While NABARD brings out a useful report on micro finance that incorporates the information of number of SHGs that

are savings linked, number of SHGs that are credit linked, region wise progress of SHGs, Bank

wise progress of SHGs on various financial parameters, it covers the progress of only those SHGs that are linked with banks. There is no reliable data base on the number of the groups and its

membership. Multiplicity of membership and multiple borrowing is a cause of concern for banks

in many states. There is no single agency at the state and national level that functions as a nodal agency for whole SHG movement.

Members suggested for creating a department in a ministry that can look into the work of

enlisting and recognizing SHGs and their federations. A system can be developed for enlisting

each and every SHG at the district, state and also at the national level. Basic data about SHGs can also be collated and disseminated. The Model Act can include a system of maintaining a

database of all the SHGs. This can be applied for Federations also.

SHGs transformed from savings groups to development change Agents: The Self-Help Groups have now become multipurpose institutions of poor as several ministries and programmes

use them for implementation of their schemes. The Model Act on SHGs may consider the SHGs

as grassroots organisations working as change agents and consider recommending incentives to these collectives if they function as a management group for various initiatives.

No mechanism of universal grading of SHGs and Federations: In the present scenario,

different agencies, programmes and projects are doing grading of SHGs in different ways by

applying their own tools and mechanisms. There needs to be a certified agency that can grade SHGs on some commonly agreed parameters. This will help flagship programmes like NRLM and

NULM and many other programmes and ministries. The model Act can specify about the system of grading and also about the appropriate grading agencies.

No System of maintaining digital copies of financial records: The promoting institutions

of SHGs normally do the consolidating the data of SHGs and their members. In order to ensure

that member’s information in SHG registers are also recorded at one other place, periodic digitalization of records is useful. This will help in ensuring transparency, minimizing conflict and

protecting members’ deposits. Model Act may include provision of doing digitalization of records of SHGs and Federations, periodically.

SHGs not considered to get Contracts/ Subcontracts: SHGs are informal primary level institutions and often they are not able to take up contract and sub-contracts due to the

requirement of legal status. Duly graded and enlisted SHGs may be considered as quasi legal entities to apply for the subcontracts. The same may be made applicable for the unregistered

federations that are graded well and also enlisted with a prescribed agency. The model Act may

clearly specify that SHGs and some of the informal federations may be considered for subcontracting if they are in the category of “graded well and enlisted”.

Categorisation of Federations: There are variety of SHG federations in the country. Some

are doing financial intermediation, some focus on non-financial intermediation and many of them do both. In term of legal status, there are registered as well as unregistered federations. Further

federations are registered under different Acts - Societies/Trust Act, section 25 companies Act,

cooperative societies Act or companies Act.

Members suggested that the model Act may recognise different type of federations – formal as well as informal. It should provide flexibility to promoters/SHPIs and members of SHGs to

register their federations under any of the suitable Act, based on their functions and

requirements. The act should clearly mention the system of regulation for all the federations especially those which are functioning as financial intermediaries.

Regular capacity development of SHGs and arrangement of safe savings: The quality of

the Self-help groups are varying in terms of their capacities. A regular system of capacity building is required for SHGs. Moreover, savings is an important component of SHGs as high savings rate

stabilizes household and assist the national economy with investment capital. The time has come

for an institutional framework for SHG super imposed with SHG federations, however arrangements for safety of savings needs to be maintained. The model Act may cover this aspect

especially in cases where SHG federations are functioning as financial intermediaries.

Business challenges faced by SHG Federations: In the absence of any framework, SHGs

and SHG federations face a number of problems in the area of – Registration and recognition by the states as business entities; training and capacity building of the representatives of SHGs/

federations; percolation of information to SHGs/federations about policies and rules related to business; obtaining permits to carry out business (particularly for Non-timber Forest Produce);

and Branding & advertising.

Learning from international experiences

Mentioning about the line of thinking in places like Germany, Holland, Ireland and Canada, members suggested that we can see community based and commercial financial institutions as

part of co-exiting and inter-connected institutions, offering different value propositions. The idea

then would be to allow Community based MFIs to have unique set of products and services - personal banking, portfolio management, investors in local economy, affinity based incentives

and disincentives, etc. Members shared arrangements in various countries -

The Chars Livelihoods Programme (CLP) in Bangladesh, boasts Village Savings and Loan

Groups (VSSLGs), which are like savings groups formed among the ultra-poor. Since last seven years they are doing well. Members mentioned that these groups should not be

federated, as their small size and closed operations currently protect them.

In Nepal, financial cooperatives work under the supervision of the Registrar of

Cooperative Societies. In 2002, the central bank of Nepal issued a directive for these

cooperatives to apply for a limited banking transactions license, so that they can be supervised as financial institutions.

The approach in South Africa is quite different, they regulate all agencies providing

microfinance, through a registration with the Microfinance Regulatory Council (MFRC),

where the type of organisation can be an NGO, cooperative or a non-banking company.

In Laos, there is an enabling framework for operations of village banks which are

community owned and managed. It also provides for four to five different types of institutions depending on the activities they undertake.

Different approaches to look at the federations

There are two ways of looking at the SHGs and federations within the whole institutional architecture frame-work – First, as subordinate to main-street banks wherein their purpose and

existence will remain ‘tentative’ in nature and these institutions will promote the products and services of the upper level financial institution; Second, as an alternative, independent,

permanent institutions having the choice of dealing with multiple banks and other institutions.

In the first option, the key issue is that banks have really not designed new and value added financial products or those new products are few and far in between such as larger asset loans, different savings products that are closely linked with formal banking system, access to other

loan products such as housing upgrading, education, etc. In the second option, commercial

Banks need not be seen as institutions providing higher ends of products always. The links

between community based and owned institutions and commercial banks can then be a factor of how local bank views such a system as a worthy and attractive client. SEWA Bank and Mann

Deshi bank provide some similarities to this idea; but not quite the same. Members suggested that Ireland, Germany, Canada would be good examples to look at.

Members suggested that we need to think of federations as a village based and owned banks – something similar to credit unions in some European countries, allowing economy of scale and

uniformity. One of the key factor of the success of village based Credit Unions is that these unions network for sharing support services such as IT, HR, product development, quality

assurance, training etc. Moreover, in almost all the successful cases, the legislation and financial

management guidelines are quite strict and reporting requirements stringent – giving confidence to the members to use them as alternatives to Banks.

If we opt for the second approach, it will result in a very different institutional architecture frame-

work that incorporates SHGs and federations as more stable and permanent institutions. In this

case, the legislation could be modelled on different lines and articulation of a new Act can be quite different than seeing them as a short-term vehicle for the last-mile delivery and outreach

by the commercial banks.

The lesson from these seems to be that we do not need to have separate laws for federations. We need clarity about how federations which conduct financial operations could operate, and

whether cooperatives or NBFCs are the best institutional format for them. Once this is clear, and

if cooperatives are considered the most transparent, accountable and equitable institution, we should turn our attention to creating a positive enabling environment for cooperatives, especially

self-reliant cooperatives.

Referring to the history of cooperative movement in the country and the situation of cooperative

regulation which was quite similar to today’s requirement for a separate Act for SHG and federations, members informed that the British Government enacted a separate law for

cooperatives in 1904. The first Cooperative Credit Societies Act 1904 contained only 29 Sections; whereas now the Tamil Nadu Cooperative Societies Act 1983 contains 184 Sections. More or less

the same trend prevails in all other States and also with the Multi State Cooperative Societies Act 2002 and all these Act have become volumes.

Giving reference of the old Acts, members raised a question that how an ordinary farmer will be able to understand the provisions of these Acts and Rules. Members mentioned that without the

active participation of primary member users, super structures were created in cooperatives at all levels, wherein the super structures started dictating terms and conditions to lower structures.

Members fear that the same trend may happen to SHGs. Hence, caution is needed in framing

new legal system for SHGs.

Members also shared about the initiative of Shaulat Microfinance Society which promotes interest free loans and formed SHG type groups with nomenclature of Sahulat business cooperation

groups (groups of small business persons), convert these groups in to credit cooperative society

and thereby argue for acts recognizing SHGs as members.

Referring to a presentation, members informed about a fact that the financial federations are more viable than non-financial federations as member centred processes leads to financial

sustainability of member-owned and driven financial federations. Giving the reference of the report of a workshop on best practices on SHG federations, members emphasized on the point of

recognizing SHGs as members in cooperative Acts as several self-reliant Acts and also traditional

Acts do not recognize SHGs as members of cooperatives.

Given the example of SHG federations promoted and registered as cooperatives by an NGO - ‘Sampark’, members informed that these cooperatives are worth financing and therefore NABARD

promoted organisation – ‘NABFINS’ is providing cash/credit facilities to these cooperatives. Members highlighted that even the District Credit Cooperative Bank (DCCB) whose mandate it is

to extend loans to cooperatives, has to seek special permission to do so to a self-reliant

cooperative. Banks are also reluctant to finance to the self-reliant cooperatives. Since banks do not extend loans to cooperatives, their information does not enter district and state level bankers’

committee reports. Within the microfinance sector, self-reliant cooperatives therefore remain unrecognized and unreported. Members also questioned that why the Karnataka State Rural

Livelihoods Mission is not partnering with cooperatives registered under self-reliant Act whereas they partner with cooperatives register under the traditional cooperative Act. Members also

suggested for a quick comparison of the self-reliant cooperative Acts like Souharda Act of

Karnataka and the regular cooperative societies Act.

In Indian context, where State is the largest and by far most important donor, the issue of providing grants and equity investment to the self-reliant cooperatives is an important issue of a

policy debate. SHGs should be allowed to grow naturally and the members must be given

opportunity to manage their affairs by themselves. Any external intervention either through law or administration must strictly be restricted to the role of facilitator only.

Members analysed both SHG- federations/ cooperative format and MFI format in terms of

financial and social empowerment and expressed that SHGs, their federations, and cooperatives, result in greater financial and social empowerment than the MFI format for financial services

provision. Members highlighted that the low investment in the cooperative model as well as

limited capacity development and policy support, results in the sector growing at a slower pace. This is a self-perpetuating cycle, of lower policy attention, fewer funds, lower capacities in

cooperatives, lower scale of expansion and therefore the sector continues to be less attractive to potential donors.

The biggest regulatory hurdle for the self-reliant cooperatives is that they are not getting external grants or equity investments and as a result not able to scale up their business. There is a need

of more donors, policy makers, NGOs who believe in facilitating and strengthening self-reliant cooperatives. Giving the example of systems for auditing of SHGs and cooperatives,

computerized MIS and transparent and accountable financial management set up by a national

level NGO, members find usefulness of getting an estimate of the costs starting from registration of such a federation as cooperative until the organization reach the point of self-management.

Members shared their concerns regarding the SHG and federations Act and questioned that -

How poor will capitalize the proposed SHG Act, while most of them are illiterate and incapable to give themselves good leadership for economic development without external help. They

suggested that the Act should follow a step forward method from flexible to hardbound

situations. It is better to avoid hard core legal bindings at the beginning but to formulate a mechanism of gradual shift.

Members shared and suggested referring to the outputs of three discussions that have taken up

earlier on SHG federations in Microfinance Community of Practice - SHG Federations as Vehicles

for Social Change; National federation of SHGs; and Objectives, Functions and Legal Entity of National Federation of SHGs. Members suggested the following on the Model Act for SHGs and federations:

Ensuring that the Act is a national level Act and uniform across the country

Examining the possibility of making this law supersede any other similar law in any of the

state

Referring to Self-Reliant Cooperative Acts of different States and also MGNREG Act and

its guidelines as model Studying successful Acts and best practices from different states and adapting those

which are not limiting the growth of SHG Federations

Analysing the State-wise Society and Cooperative Acts, Rules and Bylaws, National level Acts and International Acts that are relevant for the preparation of the proposed Act

Giving formal recognition to SHGs and SHG Federations across the country

Giving details of registration and identity of organisation; selection criteria of

membership; effectiveness of members and discontinuation of membership; Long-term membership and commitment

Providing clarity on ability to accept savings, prescribing safe-guards, limits if any, interest

/ dividend payable on savings, ability to lend / or invest; guidance on safeguards / precautions to be taken

Giving clarity on Transparency/clarity on size/limitation of pooled up resources/capital

/Taxes/ Tax – exemptions Prescribing the nature/characteristics /constitution of Governing Board, qualifications,

methods of electing the board, period of occupancy by the member directors

Incorporating areas like “Social Audit” in the Act and making external auditing mandatory

on a yearly basis

Linking government and corporate responsibility to improve condition of SHGs and SHG

federations as part of the national poverty alleviation program Suggesting institutional support mechanism to provide financial and human resources by

RBI, NABARD, Rural Development Authority, National Savings Institute, etc.

Incorporating provision for awards and incentive mechanism of good work to the leaders

and members that undertake several activities Suggesting a common framework for accounting practices and also compliance

mechanism – a system of reporting on a quarterly basis to the regulating organisation

and also internal reporting/monitoring process

Provision of financial literacy through a structured financial literacy programme

Suggesting resource mobilization, ownership and share holding pattern of members and

adequate access to hassle-free and affordable institutional support and facilities Providing clarity on accountability of SHG Federations to provide active and efficient

support to SHGs in all respects

Suggesting mechanism to minimize internal and external conflicts and conflict resolution

Considering producer groups that have emerged out of the SHGs as a part of the

framework

In the nutshell, members enumerated several reasons for having a framework and the Act for SHGs and SHG federations, shared useful international experiences, provided different possible

approaches and models for aggregation and finally suggested several actions to prepare the Act

and also aspects that needs to be incorporated in the new Act.

Comparative Experiences

India

From Anuj Jain ,COADY International Institute, Antigonish, Canada

Multiple States

Cooperative Bank for the Unorganised Workers, Ahmedabad In 1974, 4,000 self-employed women established the SEWA Bank as a cooperative bank with the

specific objective to provide credit to self-employed women. The bank is professionally run by qualified managers hired by the Board and its operations are supervised by the Reserve Bank of

India. Currently, SEWA Bank has 125,000 self employed women depositors and has disbursed

loans without the need for traditional collateral, of over Rs. 350 million. Read more

Maharashtra

Mann Deshi Mahila Sahakari Bank (MDMSB) Promoting and Practicing Financial Inclusion, Satara District, Pune

MDMSB provides a wide range of services including savings, credit and non-financial services in

an integrated manner. The bank today has four fully computerized branches and has more than 3800 members with a share holding of Rs. 51 lakh. It serves around 40000 clients with 80

percent of the clients from the unorganised sector. It has a loan recovery rate of over 98 percent.

From Smita Premchander, and M. Chidambaranathan, Sampark, Bangalore Karnataka

Sampark has federated its SHGs as registered cooperatives under the Souharda Act, which is the

self-reliant cooperatives Act in Karnataka. The membership of 4 cooperatives is 10,000 women, their collective savings are over Rs. 2.5 crores, external loans (mostly from NABFINs and some

bridge fund Sampark operates) Rs. 2.5 crores. The repayments range from 98% to 100%, and

operational sustainability has been achieved. They are creditworthy enough for NABFINS to sanction them cash/credit facilities of Rs. 2 crores per cooperative

On lending to PACS and SHGs

The District Co-operative Central Bank Limited (in Karnataka) which had earned great name for creating and lending to SHGs. It has more than 9000 SHGs and almost every PACS and branch of

DCCB Bidar was receptive to lending to SHGs. Cooperative institutions from all over India came to Bidar to understand Bidar model. Yet, the total SHG business was just 1% of total lending of

DCCB and the Bank is feels the need for innovative products and service delivery models. Read

more. From Mohammad Anas, UNDP, New Delhi Odisha

Transforming SHGs into Self Help Cooperatives With the introduction of Orissa Self Help Cooperative Act in 2001, Adhikar transformed the Self Help Groups in to Self Help Cooperatives. Further, to safeguard and support the member primary

co-operatives in its functioning, Adhikar promoted its apex structure named as Madhyamika Mahila Samabaya Sangha (KMMSS). Through 45 cooperatives, Adhikar is reaching out to 12550

members and it had disbursed 4.1 Crores at the co-operative level. Read more

Tamil Nadu

Indian Cooperative Network for Women offering Micro Credit Services to the

Members, Chennai

ICNW is a financial wing of Working Women Forum. It provides micro-credit services through

neighbourhood groups formed in the slums and villages. It offers loan starting from Rs. 1600 and reaches up to Rs.30,000. It ensures participatory and personalised attention in the credit

delivery. The co-operative network has achieved full operational self sufficiency and financial self sufficiency to meet growing demands of its members. Read more

International

From Smita Premchander, and M. Chidambaranathan, Sampark, Bangalore Bangladesh

Creating Village Savings and Loan Groups among the ultra-poor The Chars Livelihoods Programme (CLP) in Bangladesh, boasts Village Savings and Loan Groups

(VSSLGs), which are like savings groups formed among the ultra-poor. Since last seven years they are doing well. Members mentioned that these groups should not be federated, as their

small size and closed operations currently protect them.

Nepal

Cooperatives with a Limited Banking Transaction License Cooperatives in Nepal are under the supervision of the Registrar of Cooperative Societies. In 2002, Central Bank issued a directive stipulating regulatory requirements. This directive brings all

financial cooperatives under the purview of the central bank without curtailing the responsibilities

of the Registrar of Cooperative Societies. The central bank now has the authority to issue directives for all cooperatives with a limited banking transaction license and to supervise these

institutions.

South Africa

Regulating the Microfinance Service Providers

The approach in South Africa is quite different, they regulate all agencies providing microfinance, through a registration with the Microfinance Regulatory Council (MFRC), where the type of

organisation can be an NGO, cooperative or a non-banking company.

Laos

Community owned management of village banks (From Girija Srinivasan, Consultant, Pune) In Laos, there is an enabling framework for operations of village banks which are community

owned and managed. It also provides for four to five different types of institutions depending on

the activities they undertake.

Germany

Members Manage Apex Cooperative Organization (From Anuj Jain ,COADY International Institute, Antigonish, Canada) Deutscher Genossenschafts und Raiffeisenverband e.V. (DGRV) is confederation of the cooperative banks. It is fully funded by its members and activities like auditing, training and

handling the protection fund are run by autonomous and professionally managed bodies owned

by the cooperative movement. Due to its strong orientation system and independence from the

Government, the confederation has been successful over the past 150 years. Read more

Related Resources

Recommended Documentation Status of Microfinance in India-2012-2013, NABARD (From Navin Anand , UNDP, New Delhi) Report; mCID, National Bank for Agriculture and Development (NABARD), May 2013 Available at: https://www.nabard.org/Publication/Status_of_Microfinance_in_India_2012-13.pdf

(Pdf.6.4 MB)

Provides an overview on the status and outreach of NABARD promoted SHGs under its SHG Bank Linkage Programme in India.

From K. Ravichandran, Department of Cooperation, Gandhigram Rural Institute, Dindigul The first Cooperative Credit Societies Act 1904 Paper; One Hundred Years: Co-operative Credit Societies Act in India – A Unique Experience of Legal Social

Engineering; University of Marburg

Available at: http://www.aruc-es.uqam.ca/Portals/0/cahiers/C-04-2006.pdf (Pdf. 159 KB)

This paper traces the origins of state-sponsored co-operation, which was introduced by the British in India in 1904.

Tamil Nadu Cooperative Societies Act 1983 Act; Tamil Nadu Government Gazzette; October 2008

Available at: https://www.nabard.org/pdf/TamilNadu_CSA_Act.pdf (pdf. 344 KB) Provides special provisions applicable to short term credit cooperative structure societies in the state.

The Laos Government decree on Associations 2009 (From Hemantha Kumar Pamarthy, Independent Consultant and Adviser, Chennai) Decree; Lao People's Democratic Republic Peace Independence Democracy Unity Prosperity 2009

Available at: http://www.iccsl.org/pubs/lao_pdr_decree_law_on_associations.pdf (Pdf: 60.1 KB)

The decree sets the rules and regulations governing the establishment, operation and management of associations registered as legal entities in Lao PDR

Report of the workshop on Best Practices in SHG’s Federations (From Arshad Ajmal,

Sahulat Microfinance Society, New Delhi) Report; Debarati Datta, M. Rammohan Rao, G. Bhaskara Ra, APMAS Hyderabad, 2010

Available At: http://www.enableindia.net/Report%20of%20the%20best%20practices%20workshop%20v1.pdf

The Report throws lots of issues and challenge to all the stakeholders and promoting institutions to work with holistic vision while strengthening the federations in the country.

The Karnataka Souharda Sahakari Act, 1997 (From Smita Premchander, and M. Chidambaranathan, Sampark, Bangalore ) Act; Souharda Sahakari, Government of Karnataka, 1997 Available at: http://dpal.kar.nic.in/pdf_files/17%20of%202000%20%28E%29.pdf (Pdf: 590 KB)

The Act provides for the recognition, encouragement and voluntary formation of co-operatives based on self help, mutual aid, wholly owned, managed and controlled by members

From Mohammad Anas, UNDP, New Delhi Uttaranchal Self Reliant Cooperative Act 2003 Act; 21 November 2003

Available at http://www.cdf-sahavikasa.net/Uttaranchal%20Act.pdf (PDF Size: 248 KB) Aims to provide for the formation and transformation of cooperatives to be managed and controlled by members for their economic and social betterment

Gujarat Cooperative Societies (Amendment) Act, 2008

Act; 23 January 2008 Available at http://www.nabard.org/departments/pdf/Gujarat.pdf (PDF; Size: 595 KB)

Amendment in the Gujarat Co-operative Societies Act 1961

The Kerala Self Reliant Co Operative Bill, 2002

Act; 2002 Available at http://www.keralalawsect.org/law_reforms_report/page%20169-223.htm

Provides greater autonomy and encouragement to pursue the legitimate interest of the members in an effective, self-reliant, responsible, accountable and democratic manner

The German Co-operative and Raiffeisen System Report; by Susanne Sudradjat

Available at: http://www.solutionexchange-un.net.in/mf/cr/res11090801.pdf (PDF; Size: 714 KB) Provides a brief outline of the German Cooperatives and shares the major factors that influenced the development of German Cooperative System

Rural Credit Cooperatives in India

Article; Compare Infobase Limited Available at: http://finance.mapsofworld.com/banks/rural-credit/cooperatives-india.html

Mentions that in spite of efforts towards setting rural banks, the supply of credit for agriculture has not matched demand

The National Bank for Agriculture and Rural Development Act, 1981 Act; 30 December 1981

Available at http://finmin.nic.in/the_ministry/dept_fin_services/banking/Nabard%20Act.pdf (PDF; Size: 129 KB)

To establish NABARD for providing and regulating credit and other facilities for the promotion and development of economic activities in the rural areas

Report of the Study Team on Self- Reliant Cooperative Laws Study Report; Canadian centre For International Studies and Cooperation, Delhi, December 2005

Available at: ftp://ftp.solutionexchange.net.in/public/mf/resource/res02051401.pdf (PDF; Size: 3.3 MB)

This study on self-reliant cooperative laws in various states, assess the status of cooperatives registered with the new laws, and takes note of existing and required support systems.

Status of Self-reliant Cooperatives – A study in furtherance of the resurgence of a

Vibrant Cooperative Movement across India Research Study; WASSAN, Access Livelihoods Consulting India, Hyderabad 2011

Available at : ftp://ftp.solutionexchange.net.in/public/mf/resource/res02051402.pdf ;(PDF; Size:

1.0 MB) ftp://ftp.solutionexchange.net.in/public/mf/resource/res02051403.pdf (PDF; Size:

393 KB) The study provides an overview of the current legal environment for cooperatives in the nine states with liberal laws and the pending constitutional amendment on cooperatives along with law governing multi- state cooperatives.

The Banking Regulation Act 1949 Act; 10 March 1949

Available at: http://www.microfinancegateway.org/gm/document-1.9.26945/32964_file_Banking_Regulation_Act_1949.pdf (PDF; Size: 1.92 MB)

The Act has various sections that discusses its application to cooperative societies, situations in which it can be suspended, its interpretation, etc

Regulation and Legislation of Cooperative Banks and Credit Unions Report; by Andrew Poprawa; Deposit Insurance Corporation of Ontario; New York; 2009

Available at: http://www.un.org/esa/socdev/egms/docs/2009/cooperatives/Poprawa.pdf (PDF;

Size: 40 KB) Shares the recommendations suggested by the United Nations Expert Group on Cooperatives

Antodaya: Unto the Last A Case of Revitalizing PACS through SHGs Case Study; by Medha Dubhashi; Vaikunth Vaikunth Mehta National Institute of Co-operative

Management; Pune; January 2003

Available with Resource Team of Microfinance Community, Solution Exchange, for more details please contact: se-mf@solutionexchange-un.net.in

Shares case study of Bidar District Central Cooperative Bank that promotes SHGs and link them through the PACS

Primary Agricultural Credit Society Linkage, India: The Best Remote Rural Self-Help Groups Can Do?

Case Study; by Rewa Misra; Coady International Institute; Nova Scotia, Canada; June 2008 Available at http://coady.stfx.ca/tinroom/assets/file/ford/docs/Coady_IndiaPAC_Final.pdf (PDF;

Size: 378 KB)

Shares comparative study of a member-owned financial institutions in remote rural areas

Self-Help Groups (SHG) and Mutually Aided Cooperative Societies (MACS): Does Federating Enable Remote Outreach?

Case Study; by Rewa Misra; Coady International Institute; Nova Scotia, Canada; June 2008 Available at http://coady.stfx.ca/tinroom/assets/file/ford/docs/Coady_IndiaMACS_Final.pdf (PDF;

Size: 350 KB)

Shares that member-ownership is not enough to ensure loyalty from the lowest-tier clients, mandal, MACS and SHGs, if inputs and services are not adequate

Financing Small and Marginal Farmers in India: Some Policy Issues

Paper; by A. Patel; The Micro Finance Gateway; 2005

Available at: http://www.microfinancegateway.org/content/article/detail/32893 Examines the scenario for agricultural credit in India and makes suggestions for a policy framework that would make rural financial intermediaries operationally sustainable

Roundtable on Implementation Framework of Aajeevika

Synthesis Document; Solution Exchange; Microfinance and Work & Employment Community; UNDP; 2012

Available at: http://in.one.un.org/img/uploads/SolEx_FTP/MF/res10041301.pdf. (PDF Size: 5.6 MB)

Report of the national level round table conducted to share the results of regional consultation and outputs of the discussions taken up by Microfinance Community of Practice, Solution Exchange on the NRLM design and implementation framework

Strategies for implementation of National Rural Livelihood Mission

Synthesis Document; Solution Exchange; Microfinance Community; UNDP; 2012 Available at: http://www.in.undp.org/content/dam/india/docs/poverty/strategies-for-

implementation-of-national-rural-livelihood-missi.pdf (PDF Size: 3.77 MB)

This document clearly informs about the possible strategies that can be applied for the implementation of the NRLM. The publication not only incorporates outputs of the discussions on NRLM design but also on NRLM implementation framework

Identifying Livelihood Promotion Strategies for Particularly Vulnerable Tribal Groups

under NRLM Report: United Nations Development Programme 2012

Available at: http://in.one.un.org/img/uploads/SolEx_FTP/MF/res17081301.pdf (PDF Size: 2.66 MB)

The report highlights methodologies and analytical tools to study the status of particularly vulnerable tribal groups under the NRLM. It also presents broad principles, strategies and recommendations that can be used to enhance their livelihoods.

Microfinance Regulations and NRLM

RBI Circular; Reserve Bank of India; June 2013 Available at: http://www.aajeevika.gov.in/nrlm/NRLM27062013.pdf (PDF Size: 702 KB)

The circular identifies NRLM as the flagship program of Govt. of India for promoting poverty reduction through building strong institutions of the poor, enabling access a range of financial services and livelihoods services. NRLM would work on both demand and supply side of Financial Inclusion.

Suggestion for Designing of National Rural Livelihood Mission

Note; by National Network Enabling Self Help Movement; September 2009 Available at: http://www.apmas.org/pdf/NNRO%20paper%20on%20NRLM.pdf (PDF; 208 KB)

Provides suggestions to the Government towards designing of the NRLM based on the learnings and feedback of the SGSY.

Recommended Organizations and Programmes From Multiple Sources National Bank for Agriculture and Rural Development (NABARD), Maharashtra

Plot No. C-24, "G" Block, Bandra-Kurla Complex, P. B. No 8121, Bandra (E), Mumbai 400051; Tel.: 91-22-2653 9244; Fax: 91-22-2652-8141; nabmcid@vsnl.com;

http://www.nabard.org/roles/microfinance/index.htm

Apex institution providing loan funds for microfinance services in the form of revolving fund assistance to NGO-MFIs, SHG Federations and NGOs to lend to SHGs.

Reserve Bank of India (RBI), Maharashtra

Rural Planning and Credit Department, Central Office Building, 13th Floor, Mumbai 400001; Tel.: 91-22- 22610261; Fax: 91-22- 22658276;

http://www.rbi.org.in/scripts/AboutUsDisplay.aspx?pg=Depts.htm#RPCD Rural Planning and Credit Department of RBI formulates policies relating to rural credit and monitors timely and adequate flow of credit.

NABARD Financial Services Limited, NABFINS, Bangalore

# 190, Rashtriya Vidyalaya Road, Jayanagar 2nd Block, Bangalore-560 004, India; Tel : 080 26563443, 26574222; Fax: 91 80 26563442; ho@nabfins.org ; http://nabfins.org/

NABFINS is a subsidiary of National Bank for Agriculture and Rural Development (NABARD). It is a non-deposit taking NBFC that provides credit and other facilities for promotion, expansion, commercialization and modernization of agriculture and allied activities.

Ministry of Finance, Government of India, New Delhi Department of Financial Services, Room No. 32, Jeevan Deep Building, Parliament Street

New Delhi - 110 001; Tel: 011 - 23748705/23342287; http://finmin.nic.in/index.asp

Apex body that deals with policy formulations related to savings and financial services for the poor.

Ministry of Rural Development (MoRD), New Delhi

Krishi Bhawan, New Delhi 110001; Tel: 91-11-23782373, 23782327; Fax: 91-11-23385876 http://www.rural.nic.in

Nodal Ministry for implementation of NRLM, it also initiates various programmes for poverty alleviation and skills development in rural areas of the country.

National Rural Livelihood Mission Ministry of Rural Development, Government of India , 6th Floor, Hotel Samrat Kautilya Marg,

Chanakyapuri, New Delhi – 110021; Tel: 011 24122947; http://aajeevika.gov.in/index.html

NRLM is a flagship programme of Government of India aiming to increase household income through sustainable livelihood enhancements and improved access to financial services

SEWA Bank, Gujarat

109, Sakar II, Opp. Town Hall, Ellisbridge, Ahmedabad 380006; Tel: 91-79-26576054; Fax: 91-79-26576074; mail@sewabank.com; http://www.sewabank.com

Provides financial services for the value chain activities to the poor, illiterate and self-employed women, who work in the informal sector of the economy.

Mann Deshi Mahila Sahakari Bank Ltd. Mhaswad

Tal Mann Dist- Satara, Maharashtra, Postal Code 415509; Tel: +91-23732-70141; Fax: +91-

23732-70788; manndeshi.mahila@rediffmail.com; http://www.manndeshi.org/index.html Mann Deshi is a regulated cooperative bank run by and for women, it was India’s first rural financial institution to receive a cooperative license from the Reserve Bank of India.

From Smita Premchander, and M. Chidambaranathan, Sampark, Bangalore Sahulat Microfinance Society, New Delhi

F. A. 18, Ground Floor, Near Ankur Public School, Thokar No. 4, Abul Fazal Enclave, Jamia Nagar, New Delhi-110025; Tel: +91 11 29940031/32; sahulat2010@gmail.com ;

http://www.sahulat.org/index.php

Sahulat Microfinance Society is facilitating the establishment of 500 interest free microfinance cooperative branches all over the country to uplift the poor families by the end of 2016

SAMPARK, Bangalore

No. 39, First Avenue, Teachers Colony, 1st Block, Koramangala, Bangalore - 560 034, Karnataka,

India; Tel : 080 - 25530196 , 25521268; sampark@sampark.org ; http://www.sampark.org/philosophy.php

Sampark has federated its SHGs as registered cooperatives under the Souharda Act, which is the self-reliant cooperatives (SRC) Act in Karnataka. It has also offered comprehensive training programmes for the leaders and members, on cooperative management, financial literacy, enterprise training, and social issues.

From Manik Lal Bose, Economist and Social Scientist, Independent Consultant, Kolkata Grameen Bank, Bangladesh Grameen Bank Bhavan, Mirpur-1, Dhaka-1216, Bangladesh; Tel: 88-02-9005257-69;

grameen.bank@grameen.net;

http://www.grameen-info.org/index.php?option=com_content&task=view&id=28&Itemid=108 Largest Microfinance Institution in Bangladesh, provides interest based microfinance services including housing loans to the poor section

BRAC, Bangladesh

BRAC Centre, 75 Mohakhali, Dhaka 1212; Tel: +880-2-9881265; Fax: +880-2-8823542; info@brac.net; http://www.brac.net/content/what-we-do

Works for poverty alleviation; implemented the Challenging Frontiers of Poverty Reduction, the first programme that worked with the Ultra Poor in Bangladesh.

From K S Gopal, Centre for Environment Concerns, Hyderabad Andhra Pradesh Mahila Abhivruddhi Society (APMAS), Andhra Pradesh Plot 20, Rao & Raju Colony, Road 2, Banjara Hills, Hyderabad 500034; Tel: 91-40-23547952; Fax: 91-40-23547926; info@apmas.org; http://www.apmas.org/lh.aspx

A technical support organization - works for poverty alleviation by strengthening the capacities of SHGs; can help in business development to support the artisans.

Society for Elimination of Rural Poverty (SERP), Hyderabad 5-10-192,3rd 4th Floor, Hermitage Office Complex, Huda Building, Hill Fort Road, Nampally,

Hyderabad - 500004; Tel: 91-40-23298469; Fax: 91-40-23211848; http://www.serp.ap.gov.in/index.jsp

One of its core functions is to develop grassroots institutions to deliver microfinance services starting from SHGs and building up to VOs and Mandal Samakhyas.

Mysore Resettlement and Development Agency (MYRADA), Karnataka No.2, Service Road, Domlur Layout, Bangalore 560071; Tel: 91-80-25352028; Fax: 91-80-

25350982; myrada@vsnl.com; http://www.myrada.org/projects.htm

Supports microfinance programmes through Sangahamitra Rural Financial Services & provides non-farm skills & enterprise development through technical training institutes.

From Navin Anand , UNDP, New Delhi Char Livelihood Programme (CLP), Bangladesh

CLP Secretariat, Rural Development Academy Campus, Sherpur, Bogra 5842; Tel:

+8801730006936; info@clp-bangladesh.org; http://www.clp-bangladesh.org/index.php Works with the poor by helping them adapt with adverse situations in the riverine island chars on the Brahmaputra basin.

National Savings Institute (NSI), Nagpur, India

CGO Complex, ‘A’ Wing, 4th Floor Seminary Hills, Nagpur – 440006; Tel : 0712 - 2510039, 2510608 ;Fax: 2510424, 2510413; nsi@nsiindia.gov.in ; www.nsiindia.gov.in

NSI mobilizes small savings through national level publicity of small savings with feed back to the ministry for policy intervention and redressal of customer's queries and grievances

National Urban Livelihood Mission (NULM)

Presentation; Ministry of Housing & Urban Poverty Alleviation, Government of India; 2013 Available at: http://mhupa.gov.in/W_new/NULM-Launch-ppt.pdf (PDF Size: 2.9 MB)

Presentation by Ministry of Housing & Urban Poverty Alleviation, outlining the background, strategies and components of National Urban Livelihood Mission

Ministry of Housing and Urban Poverty Alleviation (MoHUPA), New Delhi Nirman Bhawan, Maulana Azad Road, New Delhi – 110011; housing2.muepa@nic.in;

http://mhupa.gov.in/ The Ministry of Housing and Urban Poverty Alleviation is the apex authority of Government of India at the national level to formulate policies, sponsor and support programme, coordinate the activities related to housing issues of the urban poor

From Mohammad Anas, UNDP, New Delhi CAMEL, Nellore Nagarajapuram Sullurpet 524 121 SPSR Nellore District Andhra Pradesh; Tel: 08623-242590;

camel_eswar@yahoo.com

CAMEL is a cooperative that works for the empowerment and development of Daliths and Yanadi Tribals. It has Promoted Mahila Mutually Aided Cooperative thrift society for federation of SHGs and got it registered under MACTS Act.

Ankuram Sangamam Poram, Hyderabad

Plot No: 142 & 143, AP Text Book Colony, Transport Road, Karkhana, Secunderabad - 500009; Tel: 91-40-27894574; Fax: 91-40-27894573; info@ankuram.com;

http://www.ankuram.com/macatwork.htm Mutually Aided Cooperative Society encourages and facilitates SHG members to become a legal entity at the mandal level, by registering themselves under the APMACS Act 1995

International Fund for Agriculture and Development, New Delhi

WFP Regional Office 2, Poorvi Marg , Vasant Vihar, New Delhi , Tel: +91 11 46554056; m.mishra@ifad.org; http://www.ifad.org/index.htm

IFAD works on improving poor rural people's access to economic and social resources. IFAD funds projects for rural development, tribal development, women's empowerment, natural resource management and rural finance.

Cooperative Development Foundation, Hyderabad House No. 3-5-43/B, Opposite, Jagruti College, Ramkote, Hyderabad–500001; Tel: 91-40-24750327; Fax: 91-40-24750327; http://www.sahavikasa.coop/thrift.htm

Assists small and marginal farmers in forming and developing self-reliant cooperatives under the Andhra Pradesh Mutually Aided Cooperative Societies Act of 1995 (Macs Act)

Trickle Up, United States of America 104 W 27th Street, 12th floor, New York, NY 10001; Tel: 212-255-9980; Fax: 212-255-9974;

info@trickleup.org; http://www.trickleup.org/solution/our-approach.cfm Works for the development of the ultra poor in developing countries including India by helping them set up enterprises, organizing into SHGs and building their capacity.

Swarna Jayanti Gram Swarozgar Yojana (SGSY), New Delhi

Krishi Bhawan, New Delhi 110001; Tel: 91-11-23782373/27; Fax: 91-11-23385876; http://www.rural.nic.in

Poverty alleviation programme that provides micro-credit and group insurance services to the poor through SHGs for livelihood enhancement; now replaced by NRLM.

Self-Reliant Initiatives through Joint Action (SRIJAN), New Delhi 4, Community Shopping Centre, First Floor, Anupam Apartments, Mehrauli-Badarpur Road,

Saidullajab, New Delhi–110068, Tel: 91-11-51664521/25936411; Fax: 91-11-51664521; delhi@srijanindia.org; http://www.srijanindia.org/project_dunni.htm

Works for rural development and poverty alleviation through soil water conservation, SHGs, dairy promotion as a livelihood activity for the poor.

Professional Assistance for Development Action (PRADAN), Delhi E-1/A, Kailash Colony, Ground Floor and Basement, Kailash Colony, New Delhi 110048; Tel: 91-

11-29248826; Fax: 91-11-26514682; headoffice@pradan.net; http://www.pradan.net/ Promotes Self-Help Groups, develops locally suitable economic activities, mobilizes finances and introduces systems to improve sustainable livelihoods of the rural poor.

BAIF Development Research Foundation, Maharashtra Dr. Manibhai Desai Nagar, Warje, Pune 411058; Tel: 91-20-25231661; Fax: 91-20-25231662; baif@vsnl.com; http://www.baif.org.in/aspx_pages/programs.asp

Works to promote sustainable livelihoods through research, effective use of resources, technology transfers and skills up gradation; can implement NRLM well.

Bihar Rural Livelihoods Project (BRLP), Bihar Bihar Rural Livelihoods Promotion Society, Vidyut Bhawan, Annexe II 1st Floor (Southern Wing),

Bailey Road Patna 800021; Tel: 91-612-2504980/6452349; info@brlp.in;

http://www.brlp.in/livelihoods.php# A poverty alleviation project for the social and economic empowerment of the poor; a collaboration of the State Government, World Bank and the Poor.

Chaitanya, Maharashtra 787, Bhandarkar Road, Deccan Gymkhan, Kothrud, Pune 411004; Tel: 91-20-25660581;

chaitanya_pune@yahoo.co.in

Provides training and capacity building support to NGOs on institution building; their work with SHGs on pickle making and subcontracting can be replicated under NRLM.

Entrepreneurship Development Institute of India (EDII), Uttar Pradesh

265, Chandralok Colony, Aliganj, Lucknow 226024; Tel: 91-522-2330820; Fax: 91-522-2330856;

edinro@rediffmail.com; http://www.ediindia.org/Index.asp Engages in entrepreneurship education, research and training; implemented a rubber product manufacturing project in Tripura funded by SIDBI.

SEWA Bharat, Delhi

7/5, First Floor, South Patel Nagar, New Delhi - 110008; Tel: 91-11-25841369; Fax: 91-11-

25840937; mail@sewabharat.org; http://www.sewabharat.org/ Aims to facilitate the formation of new membership-based organizations of women informal workers across the country and to promote their growth and development.

The Livelihood School - Basix, Andhra Pradesh 3rd Floor, Surabhi Arcade Bank Street, Koti, Hyderabad 1; Tel: 91-40-39172500; Fax: 91-40-39172502; ho@thelivelihoodschool.org;

http://www.thelivelihoodschool.in/programmes/customized-product Mandated to build up scientific knowledge base on livelihoods and disseminate it to livelihood practitioners; it can also tie up with IRMA, IIFM, IGNOU etc.

Area Networking and Development Initiatives (ANANDI), Gujarat

D-173, Ravi Ratna Park, Street No. 3, University Road, Rajkot; Tel: 91-281-2586091; Fax: 91-22-26673156; rajkot@anandiindia.net.in; http://anandi-india.org/health%20interventions.htm

Works with marginalized communities for poverty alleviation through holistic approaches which can be followed in NRLM too for reducing poverty and vulnerability of the poor.

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), New Delhi Ministry of Rural Development, Krishi Bhawan, New Delhi 110001; Tel: 91-11-23782373, 23782327; Fax: 91-11-23385876; http://www.rural.nic.in

A poverty alleviation scheme of the Government that guarantees 100 days of employment to the poor; can be used for ensuring social inclusion.

Indira Gandhi National Open University (IGNOU), Delhi Electronic Media Production Centre (EMPC) Indira Gandhi National Open University Maidan Garhi,

New Delhi -110068, India, Tel: Ph. 91-11- 29532163, 29532164, 29533065 http://www.ignou.ac.in/ignou/aboutignou/icc/empc/facility

Indira Gandhi National Open University (IGNOU) a premier distance education university of India is using several FM radio stations for broadcasting educational programs and giving replies to the queries of their students and community.

Small Farmers Agri Business Consortium (SFAC), Delhi

NCUI Auditorium Building, 5h Floor, 3 Siri Institutional Area, August Kranti Marg, Hauz Khas, New

Delhi 110016; Tel: 91-11-26862365; Fax: 91-11-26862367; info@sfacindia.com; http://www.sfacindia.com/;

Finances agri-business projects with venture capital assistance to set up a Project Development Facility to help producer groups develop economically viable projects.

JHARCRAFT, Jharkhand

DIC Campus, Ratu Road, Ranchi; Tel: 91-9263068980; info@buyjharcraft.com;

http://www.buyjharcraft.com/Shop/ Works to open up livelihood opportunities for the poor by utilization of locally available resources; sericulture promoted by it can be taken up by NRLM.

Aadhaar-Financial Information Network and Operations (FINO), Mumbai

C-401, Business Square, Opp. Popular Car Bazaar, Andheri kurla Rd. Andheri East Mumbai - 400793 Maharashtra; Tel: 91-22-40973466; Fax: 91-22-40973300 info@fino.co.in ;

http://www.fino.co.in/bcs.htm Aadhaar is direct lending and Business Correspondence initiative of FINO that builds technologies to enable Financial Institutions to serve the unbanked sector, lower transactions costs, and increase outreach and transparency.

Gramin Vikas Trust (GVT), Uttar Pradesh KRIBHCO Bhawan, 5th Floor, Sector 1A-10, District Gautam Budha Nagar, Noida 210301; Tel: 91-

120-2535619; Fax: 91-120-2535619; info@gvtindia.org ; http://www.gvtindia.org Works to develop seed villages; the work can be taken up on a commercial scale under NRLM to serve the livelihood needs of the poor and the marginalized.

Rashtriya Mahila Kosh (RMK), New Delhi

1, Abul Fazal Road, Bengali Market, New Delhi 110001; Tel: 91-11-23354619; Fax: 91-11-23354621; ed_rmk@nic.in; http://www.rmk.nic.in/chap2.htm#sec3

Acts as a wholesaler in microfinance sector and on lends to smaller organizations to promote thrift and credit, has partnered with Women Development Organisation in Uttarakhand

CARE India, New Delhi

E-46/12, Okhla Industrial Area - Phase II, New Delhi – 110020; Tel: 011 - 49101100, 49101101;

Fax: 011- 26385291, 26385292; contactus@careindia.org , info@careindia.org ; http://www.careindia.org/care-india

CARE India works for ending poverty and social injustice through comprehensive programmes in health, education, livelihoods and disaster preparedness and response

Sa Dhan, New Delhi

12 & 13, 2nd Floor, MPTCD Building, Special Institutional Area, Shaheed Jeet Singh Marg, New Delhi-

110067; Tel: 91-11-47174400 ; Fax: 91-11-47174405; info@sa-dhan.org; http://www.sa-dhan.net/Default.aspx

A forum for organisations and individuals engaged in the field of community development finance to meet, share and exchange their experiences, expertise and resources

Jharkhand State Livelihood Promotion Society (JSLPS), Jharkhand 3rd Floor, F.F.P. Building, HEC, Dhurwa, Ranchi 83400; Tel: 91-651-2401782;

jslps.ranchi@gmail.com; http://www.jslps.in/nrlm.html Works for livelihood promotion in 10 selected blocks in 5 districts; its model of drip irrigation for vegetable cultivation can be replicated under NRLM.

United Nations Development Programme (UNDP), Delhi Post Box No. 3059, 55 Lodhi Estate, New Delhi 110003; Tel: 91-11-46532333; Fax: 91-11-24627612; info.in@undp.org; http://www.undp.org.in/whatwedo/poverty_reduction

Works for poverty alleviation, inter alia and supports the social enterprise initiative of Nedan Foundation that creates alternative livelihood for women and girls.

Uttarakhand Livelihoods Improvement Project for Himalayas (ULIPH), Uttaranchal Project Management Unit, Aajeevika, Bhandari Bhawan, P.O. Gauchar, District Chamoli 246429;

Tel: 91-1363-240519; uliph05@yahoo.com; http://www.ajeevika.org.in/empowerment.htm

Poverty alleviation project for the mountainous people; the strategies of working with the poor used in the project can be applied in the NRLM.

Related Consolidated Replies SHG Federations as Vehicles for Social Change (Revised), from C. S. Reddy, Andhra

Pradesh Mahila Abhivruddhi Society (APMAS), Hyderabad (Experiences) Issued 29 June 2007. Cross-posted with Gender Community

Download at : ftp://ftp.solutionexchange.net.in/public/mf/cr/cr-se-mf-gen-25050702-public.pdf

Shares experiences of SHG federations performing multiple roles, including financial

intermediation, capacity development and agents for addressing various social issues

Objectives, Functions and Legal Entity of National Federation of SHGs, from A. P. Fernandez, MYRADA, Bangalore (Discussion). Issued 4 May 2009. Download at: ftp://ftp.solutionexchange.net.in/public/mf/cr/cr-se-mf-27010901-public.pdf

Capture objectives, functions, legal entity and organizational structure of the proposed National Federation of SHGs

National federation of SHGs, from A P Fernandez, Mysore Rural Area Development

Agency, Bangalore (Discussion). Issued 30 December 2008 Download at: ftp://ftp.solutionexchange.net.in/public/mf/cr/cr-se-mf-08100801-public.pdf

Seeks views on rationale and process for establishing NFSHGs, potential sources of

funding and experiences of different countries in establishment of National Federations /

Unions of SHGs

Responses in Full

Navin Anand, UNDP, New Delhi

Thanks to Mr. Krishnagopal for putting up a query on the need of a Model Act on SHGs and SHG federations. Keeping in view the two big flagship programmes - National Rural Livelihood Mission

(NRLM) and National Urban Livelihood Mission (NULM), I believe it will be useful to have a National level Act for these entities. The scenario of establishing, promoting and monitoring SHGs

and their federations is complex as the promoters of these institutions are of different in nature

and having different objectives. This demands for integrating, converging and streamlining the structures under a common umbrella. Now, the movement of SHGs have grown big with more

than 7.3 million Self-help groups that are savings linked (NABARD’s - Status of Microfinance in India, 2012-13 report). The total number of SHGs must be much more than this as NABARD

documents and reports only those SHGs that are linked with banks. There are number of issues

that validates the need of a Model act for SHGs and Federations.

Issues that validate the need of a National Level Act for SHGs and SHG Federations

No System of Enlisting of SHGs at the State and National Level: While NABARD

brings out a useful report on Micro finance that incorporates the information of number

of SHGs that are savings linked, No. of SHGs that are credit linked, region wise progress of SHGs, Bank wise progress of SHGs on various financial parameters and many other

useful information about financial progress of SHGs, however it covers the progress of only those SHGs that are linked with banks. There is no single agency in the States and

at a national level that functions as a nodal agency for SHG movement. Since various

ministries like Ministry of Rural Development, Housing and Urban Poverty Alleviation, Finance, Social Justice and Empowerment , Agriculture, Women and Child Development

and several other ministries and their departments/specialised corporations promote and use SHGs as management groups for reaching their target groups and also fulfilling their

Agenda, so it will be useful to integrate the efforts at one place.

Suggestion: In order to converge and integrate variety of efforts by different Ministries,

NGOs and various other Self-Help Promotion Institutions, it will be good to create a

separate ministry or department in a ministry that can look into the work of enlisting and

recognising SHGs and their federations. A system can be developed for enlisting each

and every SHG at the district, state and also at the national level. Basic data about each

and every SHG can also be collated and disseminated. The Model Act can include a

system of maintaining a database of all the SHGs. This can be applied for Federations

also.

SHGs started as savings and credit groups but transformed to development

change Agents : The Self-Help Groups primarily started to fill the gaps that were

existing in the microfinance sector as formal financial institutions were not able to fulfil the needs of financial services of the poor. For any SHG, compulsory savings is one such

condition which is mandatory. Since SHGs have been used by various ministries and their

agencies for reaching the poor, therefore these institutions are gradually becoming multipurpose institutions. The two big livelihood programmes - NRLM and NULM also

adopt SHGs mechanism for promoting livelihoods.

Suggestion: The Model Act on SHGs may consider the SHGs as grassroots organisations

working as change agents and consider recommending incentives to these collectives if

they function as a management group for various initiatives. It is important to consider

that SHGs are Mutual benefit organisation and not the voluntary institutions. Like

cooperatives, these institutions work for providing services to the members and also for

earning profits.

No system of Universal Grading of SHGs and Federations : In the present

scenario, different agencies, programmes and projects are doing grading of SHGs in

different ways by applying their own tools and mechanisms. For Banks, NABARD has

prescribed a tool for grading. So, for SHG bank linkage programme, same tool is used by all the banks. There needs to be a certified agency that can grade SHGs on some

commonly agreed parameters. If any organisation needs some customised grading they can go for an assessment using additional parameters. In this way, grading can be

standardized up to a certain extent and duplication of efforts will be reduced. This will help flagship programmes like NRLM and NULM and many other programmes and

ministries.

Suggestion: The model Act can specify about the system of grading and also about the

appropriate grading agencies.

Minimum account and maintenance of financial records with creation of digital

copies periodically: The system of SHGs are going on well at present and at the SHPIs level consolidated data of SHGs are available. In order to ensure that member’s

information in SHG registers are also recorded at one other place, periodic digitalisation

of records is useful. This will help in ensuring transparency, minimising conflict and protecting members’ deposits.

Suggestion: Model Act may include provision of digitalization of records of SHGs and

Federations periodically.

SHGs as appropriate agencies for giving Contracts/ Subcontracts: SHGs are

informal primary level institutions. Often they do not take up contract and sub-contracts

due to the requirement of legal entities. Duly graded and enlisted SHGs may be considered as quasi legal entities to apply for subcontracts. The same may be made

applicable for the unregistered federations that are graded well and also enlisted with a

prescribed agency.

Suggestion: The model Act may clearly specify that SHGs and some of the informal

federations may be considered for subcontracting if they are in the category of “graded

well and enlisted”.

Categorisation of Federations: Various studies reveal the fact that there are variety

of SHG federations in the country. Some are doing financial intermediation, some non-financial intermediation and some are doing both. In term of legal status, both

registered and unregistered federations are there. Majority of the formal SHG-federations are either registered under Societies/Trust/ section 25 companies Act or

cooperative societies Act. Federations that function as financial intermediary and also take deposits from members prefer to register as financial cooperatives.

Suggestion : The model Act may recognise different type of federations – formal as

well as informal. It should provide flexibility to promoters/SHPIs and members of SHGs

to register their federations under any of the suitable Act, based on their functions and

requirements. It should clearly mention the system of regulation for all the federations

especially those which are functioning as financial intermediaries.

These are some of my views regarding issues and aspects that needs to be included in the model

Act.

Outputs of the earlier discussions : There were three important discussions conducted by

Microfinance Community of Practice on various issues of SHG federations. The first discussion was initiated by Mr. CS Reddy on the issue of - various roles being played by SHG federations to

function as a vehicle for the Social Change. The other two discussions initiated by Mr. A P Fernandez were focused towards the need of a national federation of SHGs, its objectives,

functions, legal entity and structure. I am sharing the links of the outputs ( Consolidated

Replies) of all the three discussions as there are many suggestions which will be useful for the Model Act.

SHG Federations as Vehicles for Social Change (Revised), from C. S. Reddy,

Andhra Pradesh Mahila Abhivruddhi Society (APMAS), Hyderabad

(Experiences) Issued 29 June 2007. Cross-posted with Gender Community

Download at : ftp://ftp.solutionexchange.net.in/public/mf/cr/cr-se-mf-gen-25050702-

public.pdf

Shares experiences of SHG federations performing multiple roles, including financial

intermediation, capacity development and agents for addressing various social issues

Objectives, Functions and Legal Entity of National Federation of SHGs, from A.

P. Fernandez, MYRADA, Bangalore (Discussion). Issued 4 May 2009. Download at: ftp://ftp.solutionexchange.net.in/public/mf/cr/cr-se-mf-27010901-public.pdf

Capture objectives, functions, legal entity and organizational structure of the proposed National Federation of SHGs

National federation of SHGs, from A P Fernandez, Mysore Rural Area Development Agency, Bangalore (Discussion). Issued 30 December 2008

Download at: ftp://ftp.solutionexchange.net.in/public/mf/cr/cr-se-mf-08100801-

public.pdf Seeks views on rationale and process for establishing NFSHGs, potential sources of

funding and experiences of different countries in establishment of National Federations /

Unions of SHGs

K. Ravichandran, Department of Cooperation, Gandhigram Rural Institute, Dindigul District, Tamil Nadu

I understand the difficulty and the need identified by experts for promoting separate legal system to regulate the functioning of SHGs and their Federations.

When you look back the history of cooperative movement in the country, the same thought was

there during 1904, when the British Government enacted separate law for cooperatives in the country i.e., the first Cooperative Credit Societies Act 1904.

The eminent scholar on this subject Mr. P. E. Weeraman justified the enactment of this Act and claimed that a separate Law for Cooperatives was necessary:

to lay down the fundamental conditions which must be observed by cooperatives if they

are to remain true to their character; to give such societies a corporate existence without resort to the elaborate provisions laid

down for companies;

to confer special privileges and facilities upon cooperatives in order to encourage their

formation and assist their operations;

to take precautions to prevent speculators and capitalists from availing themselves of

privileges which are not intended for them; to enable cooperative societies to function freely and fully; and

to enable the State to be promoter, guide, coordinator, arbitrator, watch-dog of the

movement, especially where the State has initiated action for the development of

Cooperation, as is the case in Asia.

The first Cooperative Credit Societies Act 1904 contained only 29 Sections; whereas now the Tamil Nadu Cooperative Societies Act 1983 contains 184 Sections. More or less the same trend

prevails in all other States and also with the Multi State Cooperative Societies Act 2002 and all

these Act have become volumes. I am not against the law But now the question is that how an ordinary farmer will be able to understand the provisions of these Acts and Rules and able to

manage the affairs of his cooperative. This has been one of the reasons for the growth of inactive member base in cooperatives. Though ours is the world’s largest cooperative movement,

a number of the cooperatives are weak and dormant.

Without the active participation of primary member users, we have constructed super structures

in cooperatives at all levels, wherein the super structures started to dictate terms and conditions to lower structures (Primaries are the owners of super structures). I fear that the same trend

may happen to SHGs and their super structures and thereafter SHPIs and Federations may enjoy everything at the cost of SHGs.

Hence, caution is needed in framing new legal system for SHGs.

Basically, following two things may be kept mind:

SHGs should be allowed to grow naturally and the members must be given opportunity

to manage their affairs by themselves Any external intervention either through law or administration must strictly be restricted

to the role of facilitator only.

Indu Chandra Nagar, Janhit Foundation, Lucknow

I would like to offer my views and suggestions as under:

Based on your experience and knowledge, what are key factors and issues

that validate the need of a National Level Act for supporting appropriate legal recognition and support to SHGs and SHG Federations?

Based on my experience of working for the promotion and linkage of SHGs, I am of the view

that any success of SHGs & SHGs Federations (achieved till date) in enhancing the outreach

to the poorest of our population and also in creating enabling environment for easy access to financial services, the most critical aspect has been the freedom of Community Based

Organisations (CBOs) from the clutches of legal bindings and tedious processes and procedures to comply with. In my views, there is no need of any legal framework. However, I

suggest that there is an urgent need to provide more resources for their capacity building

and skill up-gradation so as to enable them to go for second level of interventions of undertaking various income generating activities (IGAs) towards their socio-economic

betterment. This will also help in ensuring that through SHGs and Federations, poor are able to demand for easy access to various resources and entitlements required for their livelihood

security.

What are the principles and broader framework based suggestions that need

to be carefully considered in preparation of National Level Model Act on SHG and

SHG Federations?

If at all, we need any legal framework for these CBOs, I suggest that we must think of

creating some sort of self-regulatory body devoid of any legality whatsoever to ensure that these CBOs thrive on the principle of self-need assessment of their problems as well as issues

and exploring the possible means to address them in a sustainable way without jeopardizing their democratic functioning and freedom.

Girija Srinivasan, Consultant, Pune

A very pertinent query given the scale the livelihood missions are trying to achieve in promoting

SHGs and their institutions.

Key factors and issues that warrant national level Act

The act has to ensure orderly growth, development of the groups and federations to

ensure member comfort and protection.

There is no reliable data base on the number of the groups and its membership.

Multiplicity of membership and multiple borrowing is a cause of concern for banks in

many states.

The capacity development of the groups have been very poor - estimates show that only

30% of the groups are of good quality; since poor members pool their hard earned

money and there is no deposit insurance available for these savings, the framework should provide for minimum capacity development inputs before a group is recognized

and is allowed to be operational.

Member protection is an issue that needs to be addressed; leadership capture, over

borrowing by a few, ghost loans, risk of loss of savings of the poorest members are

aspects that need to be tackled as the scale increases.

Member ownership in higher federations has to be defined. Legal status of these

federations is often not appropriate to mobilize shares/savings to make it community owned. Under NRLM, there is no stake of the community in the higher federations-

Government grants are managed by the federations. All guidelines are Government

formed. How these institutions can be community owned and be sustainable should be laid down.

Leaders and members undertake several activities especially of the government and

SHPIs as unpaid labour- fair honorarium should be defined and need to be paid.

Producer groups emerging out of the SHGs should also be part of the framework.

Model Act

Cooperatives and mutual cooperatives Act can be basic framework; it has to balance

between ease of operations and ensuring member protection.

International legal framework Laos has an enabling framework for operations of village banks which are community

owned and managed. It also provides for 4 to 5 different types of institutions depending

on the activities they undertake.

Hemantha Kumar Pamarthy, Independent Consultant and Adviser (Development

Sector, CSR, Microfinance and Marketing), Resource Person (Capacity Building - Mentoring / Motivating / Training)

Chennai, India

As SHGs and SHG Federations would be a part of the national financial system, I am all for a

Model Act on SHGs and SHG Federations in the country if not for anything else but at least to protect these institutions. However, I feel that the ACT should be simple and easily

understandable.

Here are some of my thoughts on the specific queries raised during this discussion.

Based on your experience and knowledge, what are key factors and issues that validate the need of a National Level Act for supporting appropriate legal recognition

and support to SHGs and SHG Federations?

SHG Federations are formed out of groups of SHGs federated for a better welfare and to pool in

any resources – basic or additional to work for the members’ welfare.

When it is said welfare, one needs to clearly mention in the by-laws of the Federation as to what the federation’s objectives are in achieving the specific goal of members’ welfare.

If the SHGs are forming a SHG Federation as a -

Non-financial welfare such as Capacity Building or Market Linkages etc., the Act could be

more in the guidance form Financial welfare such as investing into a NBFC or banks or other financial institutions as

permitted by the law of the land the Act should be not only in the guidance form but also

in a regulatory form Producer Company, the Act should be a combination of Guidance, Company and

Regulatory Act.

What are the principles and broader framework based suggestions that need to be carefully considered in preparation of National Level Model Act on SHG and SHG

Federations?

The need for a guidance and regulatory form of an Act is validated by the rationale that

when other resources for raising capital becomes difficult, NBFC-MFIs find it convenient to raise capital from the SHG Federations. Prima facie I do not see anything wrong in

this. However, whether the capital is being brought into the NBFC-MFIs in a manner

appropriate or whether the SHG Federations are only being used as a vehicle for this purpose, need to be assessed and monitored periodically. If the SHGs are pooling their

reserves into a SHG Federation for investment purpose, the member SHGs should also be given a dividend every year by the Federation concerned and the dividend should not be

lesser than at least the FD rates of any Nationalised Bank.

Such being the case, the Act should be prescribing methods of assessing, monitoring and

compliance.

Step – 1 – Categorise the type of federation and its objectives and make the appropriate

Act relevant to the category

Step – 2 – Prescribe methods of assessing a SHG Federation, monitoring and compliance

Step – 3 – Identify a suitable Arbitration authority or a Regulatory authority

unambiguously

Step – 4 – Make as simple an Act as possible, to enable even minimum literates

understand, abide and comply

Step – 5 – Incentivise participation by only SHG members in the governance of the SHG

Federations

Step – 6 – Clarity on ability to accept savings, prescribing safe-guards, limits if any,

interest / dividend payable on savings

Step – 7 – Clarity on ability to lend / or invest; guidance on safeguards / precautions to be

taken

Step – 8 – Ensure that the Act will indeed be a National Level Act and be uniform across

the country and not a different one in each state. Most importantly examine the possibility

of making this law supersede any other similar law in any of the states; else the whole exercise will be naught and self-defeating.

However, successful Acts and better practices from different states could be studied, debated and adapted to the extent suitable and empowering and not limiting the growth of the SHG Federations

Step – 9 – Transparency / Clarity on size / limitation of on pooled up resources / capital (if

any), Taxes / Tax – exemptions in relation to other similar institutions

Step – 10 – Prescribing the nature / characteristics / constitution of Governing Board,

qualifications, methods of electing the board, period of occupancy by the member

directors

The Act for a Producer company may include some sections from the Companies Act as appropriate and suitable.

What are the international examples of legislations, which can be used for reference to prepare the National Level Act?

Presently, in the two countries (Brazil and Laos PDR) I had worked in reasonably intensively, they

are all in the formation of groups and federations and have not yet reached the level of

promulgating any National Level Act specifically in relationship to the subject on hand and hence I regret my inability in sharing any such references. For whatever it is worth, a link to a decree

issued by the Laos Government in 2009 on Associations is given here. http://www.iccsl.org/pubs/lao_pdr_decree_law_on_associations.pdf

I wish to conclude that more than the Model Act, there indeed is an immediate need for building

the Capacity of the SHG members to take upon the smooth management of Federations. During

my work in the sector for over a decade now, I came across many spirited women SHG members, in almost every state of the country, who can and shall take the management of the

Federations if only they can get some initial guidance and periodic support and monitoring. Till Federations are ‘Managed’ by ‘Outsiders’ the true spirit of SHG Federations may not be achieved.

K S Gopal, Centre for Environment Concerns, Hyderabad

In 1983, a group of women wanted me to safe keep their saved money. They said that they will

collect and deposit the money every week during “good” income periods. We in DDS said that

the collected money be used to lend to the needy and use the interest to increase the kitty. They had no choice. In one month we were flooded with requests from hundreds of women for such

assistance, mostly Dalit. Why still remains an enigma while all the SHGs no longer are functional. Al Fernandez of MYRADA and a pioneer of women collectives laments on much how bank linkage

led to lose their say and eclipse their issues and needs.

In 1993, the World Bank stepped in through SERP in AP, bringing a completely new dimension.

Now it was all about money, hierarchy and harnessing government resources and schemes. It coined the word “poorest of the poor”. NGO facilitated SHGs became outcaste. In the last decade

AP SHGs received bank loan and SERP credit/support of over 70000 crore rupees. Yet poverty in AP has not much come down, in fact has worsened in certain categories while there is some

empowerment of women, especially among their leaders.

Global money was flush and desperately seeking investment outlets. Make profits by alleviating

poverty and to empower women. Micro-finance with group lending as collateral and greed as the driver (take more and more money and prompt repayment is guaranteed by other women who

will get money from it) is an excellent business penetration model. Despite high interest rates, they succeeded as they gave loans promptly, low transaction cost for the borrower and increased

borrower ambition.

AP Govt. and SERP outsmarted the micro-finance business – first by not regulating them and

later strangulating their loan recovery model. The baby was thrown with the bathwater.

Nationwide savings are dropping sharply while borrowing is rising rapidly. Savings was “their”

way of managing risk and autonomy. High savings rate stabilizes household and assist the national economy with investment capital. Spending is precondition for unbridled high growth.

The time has come for an institutional framework for SHG super imposed with SHG federations.

The structure decides the strategy and the institutional mission. So what is the idea of a government recognized single structure when what is needed is multiple institutional models with

the form left to the women and their collective.

Businesses are organized in many institutional forms, and so are civil society institutions, so why

one single institutional model is pursued and thrust on women SHGs.

Our task is that women as collectives and in all forms must be enabled, encouraged and made

autonomous. They must organize and build their institutions, as defined by their collective ambition. The BJP ideologue Mr. Gurumurthy article in The Hindu of Sunday 6th August points out

on who really drives and services the Indian economy and employment. He says the budget has crucial input to trigger this community. The SHG has a crucial role in this transformation.

Krishnagopal seeks single recognized SHG institutional format, a new bureaucracy. Institutional format has little to do with access to finance capital, basis for lending, forms of securitization etc.

In realty he wants a statutory regulatory function with government centrality. I believe he must have an institutional framework on how “patronage” monopoly is furthered while killing or

treating the rest as untouchables.

Arshad Ajmal, Sahulat Microfinance Society, New Delhi

I refer to Mr. Yugandhar' quotes mentioned

in page14, http://www.enableindia.net/Report%20of%20the%20best%20practices%20workshop%20v1.pdf. He wonders - whether federations evolved or imposed? Some one answered – they

were induced. He was surprised at some MACS do not recognize SHGs as members of

federations. He said that if SHGs were not recognized as members, then the federations, practically, become MFIs.

Please find the problem with Liberal State Cooperative Act not recognizing SHGs as members.

Matix showing various Act and clauses related to membership is available at: ftp://ftp.solutionexchange.net.in/public/mf/resource/res25071401.pdf. Similar to Sampark'

initiative Sahulat is putting efforts in forming SHGs {nomenclature is SBCGs (Sahulat business cooperation groups) in Sahulat due to groups of small business persons} , conversions of SBCGs

to credit cooperative society & thereby argue for acts recognizing SHGs as members.

In page 13 Ms. Girija Srinivasan’s presentation indicates Financial federations are more viable

than non-financial federations which are mostly cross-subsidized when talking about member-

owned and member driven financial federations & noted the key learning as Member centred

processes leads to financial sustainability. So in the same line I endorse Legal & regulation –

Critical factors (In page 25, Institutional Sustainability of SHG Federations) to be emphasized in

formulating National Level Model Act on SHGs and SHG-Federations

particularly recognizing SHGs as members in Cooperative Acts. The report of the workshop on

best practices on SHG federations is available at:

ftp://ftp.solutionexchange.net.in/public/mf/resource/res25071402.pdf.

Resham Singh ,Param Self Help Foundation , Mohali, Punjab

I am confident that the National Act on SHGs and SHF federations will play a unique role to protect the rights of the SHGs. I suggest as under:

Self-help Groups should be facilitated in all possible ways to get loans and other financial

support from banks and other financial institutions

The rate of interest be charged as per the repayment capacity of the groups. The groups

which are making repayments regularly must be given some incentives. The incentive

system will motivate SHGs and their members to repay on time. The documentation required for linkage needs to be reduced to minimum

As regards recovery of loan from the groups, a separate wing in the financial institutions

can be created to study the reasons of default and to take remedial measures as done by Prof M. Yunus, founder of Bangladesh Gramin Bank

The assignment to deal with the SHGs should purely be given to an Independent

financial institute dealing with the SHG concept. This institution may provide various financial products and also support marketing of products and job training by linking

with relevant institutions and service providers.

Bibhu Prasad Mohanty, Independent Development Consultant, Coach and Trainer, Bhubaneshwar, Odisha

While going through this important discussion, I am finding there is a need to add some points for better understanding on SHGs.

SHG led operation have some basic strengths and weaknesses. SHGs cannot handle big projects

where big money return is guaranteed because of so many reasons which we all are aware of. Therefore federating SHGs is one of the ways which was supposed to make some solutions.

Secondly addressing social evils against women cannot be achieved without involvement of enlightened and economically empowered women. Therefore Federation of SHGs was a

necessity. Now financial transaction for economic empowerment of women required to get into a

different arena of management and empowerment. It was a need and till date we could not achieve our goal too. Everybody will agree with this. It is good that we have been into the

brainstorming for last two years to enrich the process with innovative ideas and taking advantage of the existing financial rules and regulations of the country.

Looking into stiffness and rigidity in several financial and organisational financial and legal systems, we now got involved to draw something special and new in favour of women

empowerment through SHGs and their federations. We have a hope to make things easy, flexible and easy for women and poor people. The very administrative rigidity those exist will be

addressed through new law. Adequate measures have been taken while drafting the Act. But my concern is the monitoring and implementation portion and role of the stakeholders in the

process. Intention may be very nice and applaud across the globe, but the practical problems

must be addressed through a massive capacity building program by the state with and without this law. The technicality involve in financial management, financial procedures are still major

concern for banks. Government allocations from Government to bank and SHGs and SHGs Federations do not reach in stipulated time. These procedural delays and loopholes in process

management need more attention with clear process maps for each steps of implementing

projects, sanctioning advances at different stages and so on.

Anuj Jain , COADY International Institute, Antigonish, Canada

Following are some of my views on each of the three questions raised in the query:

Based on your experience and knowledge, what are key factors and issues that validate the need of a National Level Act for supporting appropriate legal

recognition and support to SHGs and SHG Federations?

There is perhaps no need for brand new legislation, existing coop laws can be tweaked and made

appropriate for Federation to have SHGs as member (with individual member names underneath the SHG name) as in model Coop law, all we need is to let the members make the decision to

make laws democratically to govern such a cooperative; with very stringent rules for justification for any external interference by State, if at all. Since SHGs will be members rather than

individuals, the elections for the Directors at Federation level need to be done through

representatives of the SHGs as opposed to members of the SHGs. The official representative of the SHG authorised to vote may have to hold opinion poll or elections at the SHG level, to

determine, which way the representative will vote for the Directors at Federation level. But this provision can be experimented first, so see how practical it is, or does that create avoidable

conflict within the SHG.

What are the principles and broader framework based suggestions that need

to be carefully considered in preparation of National Level Model Act on SHG

and SHG Federations?

If tweaking cooperative Act to accommodate federation registration has more road blocks, only

then it will make sense to have a separate Act for just the federation. But that can be modelled using progressive coop act as a template. If the Federation chooses to become a financial

intermediary, then governance, reporting, audit, rating, etc. need to be much more stringent requirement.

What are the international examples of legislations, which can be used for

reference to prepare the National Level Act?

Mali, Laos, Indonesia (Bali) come to mind but will need some more work to provide specific

references. One thing that may help is to think of federation as a village based and owned bank – something similar to credit unions in some European countries, allowing economy of scale and

uniformity. One of the key reasons why village based Credit Unions have successes as that they

then further network for sharing support services such as IT, HR, product development, quality assurance, training etc. In almost all the successful cases, the legislation and financial

management guidelines are quite strict and reporting requirements stringent – giving confidence to the members to use them as alternatives to Banks. If Federations are to be organized on the

lines of Village Bank, and experimented at a reasonable scale, where several federations (village

banks) share services and products (and perhaps branding), then legislation could be modelled on those lines. In this model, commercial Banks need not be seen as institutions providing higher

ends of products always. The links between community based and owned institutions and commercial banks can then be a factor of how local bank views such a system as a worthy and

attractive client (and not a RBI / NABARD guided compulsion). This is a bit different level of idea. SEWA Bank and Mann Deshi bank provide some similarities to this idea; but not quite the same.

Ireland, Germany, Canada would be good examples to look at. These are exploratory ideas for

initiating discussion among stakeholders; final design may emerge as a result at the end.

The main issue with SHG and federation banking is that banks have really not designed new and value added financial products or those new products are few and far in between such as larger

asset loans, different savings products that are closely linked with formal banking system, access

to other loan products such as housing upgrading, education, etc. development of federation is perhaps equally dependent upon the value-added products it can help access as much as the

legislation appropriateness. Even line of credit product is hardly being practiced widely.

Neeta Dubey, Independent Development Consultant - MGNREGA/ Non- Formal Education, New Delhi

Firstly, I would say that it is good to have a National Act for SHGs and their Federations. Secondly, I want to say that should we not take into consideration the “Self Reliant

Cooperative Act” in different States? Uttarakhand is one State that has formed block level primary cooperatives and federated them at the district level. Thirdly, I am taking MGNREG Act and its

guidelines as model, wherein the best practices emerging from the States have been incorporated to amend the act and subsequently guidelines are revised.

Hence, the “challenges and the “processes” why some of the SHGs or these primary cooperatives and federations are able to self-sustain, should be studied to formulate the Act. Likewise, some

international studies/ countries should be visited, such as Canada, to understand how they have progressed in this direction.

However, bare minimum and non-negotiable elements could be as under:

Some kind of “time” based compliances for the SHGs to become members of federations,

through the primary cooperatives Federations to be formed after a certain period of time of formation of primary

cooperatives and their progression chain

Areas like “Social Audit” to be incorporated

Open disclosure of information through various methods to be incorporated. This is

beyond the Annual General Meetings etc.

Some of the challenges that block the road for primary cooperatives and federations in taking up

business include:

Lack of democratic values

Recognition by the States and slow processes of acceptance

Training and capacity building of the representatives

Percolation of information/ education of SHG members on the ethos of cooperatives and

federations

Registration as a business entity

Obtaining permits to carry out businesses (particularly for NTFP)

Branding & advertising

Smita Premchander, Faculty, Microfinance Management, IIM, Ahmedabad, and Secretary Sampark and M. Chidambaranathan, Sampark, Bangalore

A discussion on cooperatives is very pertinent, in a policy environment which is increasingly

snuffing them out, while claiming in fact to revive them. Let us first refer to Sampark’s

experience, mentioned by Arshad Ajmal of Sahulat Microfinance Society in New Delhi, and then

answer the questions raised.

Sampark’s cooperatives

Sampark has federated its SHGs as registered cooperatives under the Souharda Act, which is the

self-reliant cooperatives Act in Karnataka. The membership of 4 cooperatives is 10,000 women, their collective savings are over Rs. 2.5 crores, external loans (mostly from NABFINs and some

bridge fund Sampark operates) Rs. 2.5 crores. The repayments range from 98% to 100%, and operational sustainability has been achieved. They are creditworthy enough for NABFINS to

sanction them cash/credit facilities of Rs. 2 crores per cooperative.

Sampark has offered comprehensive training programmes for the leaders and members, on

cooperative management, financial literacy, enterprise training, and social issues. Systems have been set up for auditing of SHGs and cooperatives, computerised MIS and transparent and

accountable financial management. This has taken intensive capacity building, on different issues in the past five years.

The Enabling Environment

Souharda cooperatives should have been welcomed: they do not ask for grant support or share contribution from the government. They collect own capital. They are self-reliant as they have

no official grants. If self-reliance is important, as it is in the neo-liberal age when the poor must

pull themselves out of poverty on the basis of own entrepreneurship, then these cooperatives should be the first candidates for loans, for government partnerships. Sadly, not so.

The District Credit Cooperative Bank (DCCB) whose mandate it is to extend loans to cooperatives,

has to seek special permission to do so to a self-reliant cooperative. SRCs are step-children within the cooperative department.

For the past four years, the one agency that has extended loans to the cooperatives is NABFINS.

They have examined once, and then given repeat loans. They have extended credit in the ratio

of 1:12, 12 times of the share capital of the women. Sampark has worked hard with the women

to raise the share capital contribution. Without NABFINS, Sampark cooperatives would have been still born children.

The District Level Credit Committees do not report data on SRCs. As banks do not extend loans

to cooperatives, their information does not enter district and state level bankers’ committees

reports. Within the microfinance sector, SRCs therefore remain unrecognised and unreported.

The Karnataka State Rural Livelihoods Mission is no different. They partner with cooperatives register under the traditional cooperative Act. Not under the Souharda Act. Why not? We have

no answers forthcoming.

Now let us respond to the questions asked:

The need for a model Act and federations

SHGs are semi-formal institutions, informal to the extent that they don’t need registration to conduct savings and inter-loaning transactions; formal by virtue of their being recognised as

customers of banks in India. Do they need a law for SHGs to be recognised further? I am not sure this is needed.

The story of federations is quite different. They are second level aggregators of SHG activities. Financial federations can be registered as cooperatives under the old cooperatives Act, on, in 7

States, under the new Self Reliant Cooperatives Act, listed in the matrix shared by Arshad Ajmal. This level of aggregation is not planned well, with little attention to aggregation of credit

demand, without which the banking system will not consider federations a serious actor in

financial inclusion. For this reason, we need an Act on SHG federations.

However, a pre requisite for a law is clarity on what is to be achieved, and policy that enables the achievement of such objectives. Today, we have disadvantages in the enabling environment

for community based microfinance organisations. First, the prevailing paradigms privilege corporate MFIs over member owned and managed organisations such as SHGs and

cooperatives. Second, legal constraints prevent equity investment in cooperatives, which act to

constrain the scale up of these.

Those who believe in CBMFIs argue that SHGs and their federations, and cooperatives, result in greater financial and social empowerment than the MFI format for financial services provision.

However, unlike NBFCs, where one organisation can grow to scale, CBMFIs peak at a few

thousand members, necessitating the need for many small organisations being built rather than one big corporate. Investment flows not to hundreds and thousands of potential credit

cooperatives, but to a few large scale NBFCs.

The low investment in the cooperative model, and little capacity development, little policy

support, results in the sector growing at a slower pace. This is a self-perpetuating cycle, of lower policy attention, fewer funds, lower capacities in cooperatives, lower scale of expansion and

therefore the sector continues to be less attractive to potential donors.

The reality is that donor funds are patient no more. Social investors in microfinance favour the fast growing NBFC MFIs, not CBMFIs. CBMFIs have no chance to grow to scale, so they have

little opportunity to prove their worth.

The Principles and Broader Framework

The biggest regulatory hurdle for cooperatives is that they cannot receive external grants or

equity investments. We need more donors, policy makers, NGOs who believe in facilitating and strengthening community based organisations, community based microfinance organisations

would then form a subset. If this investment is forthcoming, and sincere efforts are made, the cooperative sector is still more beneficial for the rural poor. In order to turn the cycle to a

positive one, a law on financial and social federations would help a great deal. This has to be

preceded by regional and national discussions clarifying policy and growth pathways.

The International Examples of Legislations

Chars Livelihoods Programme (CLP) in Bangladesh boasts Village Savings and Loan Groups,

which are like savings groups formed among the ultra-poor. I have seen them closely and believe

that their unregulated nature protects them from attentions. VSLGs have survived over 7 years and more, and are able to manage their own funds reasonably well, in recent years, with support

from a local resource person trained by CLP. They should not be federated, as this would pose risk to the women’s savings, and registering them as cooperatives would also open them to

siphoning off their savings by officials and other elite. Their small size and closed operations

currently protect them.

The case in Nepal is quite different. Financial cooperatives in Nepal work under the supervision of the Registrar of Cooperative Societies. In 2002, the central bank of Nepal issued a directive for

these cooperatives to apply for a limited banking transactions license, so that they can be supervised as financial institutions.

The approach in South Africa is to regulate all agencies providing microfinance, through a registration with the Microfinance Regulatory Council (MFRC), where the type of organisation is

an NGO, cooperative or a non-banking company. This approach needs refining, as regulation needs to be monitored at the level of the organisation, and not functions and departments of

different types of organisations.

The lesson from these seems to be that we do not need to have separate laws for federations.

We need clarity about how federations which conduct financial operations could operate, and whether cooperatives or NBFCs are the best institutional format for them. Once this is clear, and

if cooperatives are considered the most transparent, accountable and equitable institution, we

should turn our attention to creating a positive enabling environment for cooperatives, especially self-reliant cooperatives.

Manik Lal Bose, Economist and Social Scientist, Independent Consultant, Kolkata

I am sharing my thoughts, comments and suggestions on developing a Model Act and Legal

Framework of SHGs and SHGFs in India.

Conceptualising the issue: The Model Act and Legal Framework of SHGs and SHGFs

In my opinion, Self-Help Groups (SHGs) are typically ‘community based organisation (CBO)’ of a

kind of ‘Civil Society Organisation (CSO)’ formed locally by socially and economically poor people and those are remained vulnerable to access good infrastructures, financial institution and service

facilities. The members of SHGs are mostly illiterate, resource poor, women and have inadequate voice. Here SHGs as ‘community’, means all of them are underprivileged and set their target for

socio-economic development offering their small financial and non-financial capacities. There could be a debate on this issue why and how a small section of people come together and form a

group for their self-help development, and why some do better and some are not. There are

plenty of literatures underlined pros-n-cons of this argument and become a critical issue to help and organise millions of poor of the country. The political economic commitments of the leaders

are often mislead these people and are not guided by the national commitments and State administrative Act, Rules and Bylaws.

With regard to SHGs and SHGFs, any Act, Rules, Bylaws, etc. must be guided according to the capacity of socially and economically poor. How they will capitalize this Acts, Rules and Bylaws

while most of them are illiterate and incapable to give themselves good leadership for economic development without external help. In a diversified society and variations of State own policies,

perhaps it will require to consider their knowledge, attitude and practices in their local settings with effective leadership and guidelines which would be a serious challenge to develop Model Act

for them. Therefore it could be said that the Act should follow a step forward method from

flexible to hardbound situations to avoid legislative cultural shocks of the poor, possibly better to avoid hard core legal bindings at beginning but to formulate a mechanism of gradual shift. It

needs to consider value and values; social, economic and human rights; freedom of choice and voice; and degrees of adjustment from an individual to collective group. At the same time, it

would be good to accept SHGs as local institution but not homogeneous all over the country in

terms of their interests and capability. Theoretically, any Act, Rule and Bylaw should be formulated that would be accepted to the target group, easy to implement without shocks and

observable. Enforcement of any Act to make better condition of SHGs would require huge financial and human resources to prepare them of exercising rules and regulations.

Lesson learning issue

An in-depth review of literatures is necessary to examine the following issues critically in every step to put clause and sub-clause of underlying facts and words to articulate in the Model Act for

the development of SHGs and SHGFs in India.

Examine and assess dynamics of SHGs and standardisation of their various characteristics

State-wise Society and Cooperative Acts, Rules and Bylaws and its amendment year after

year

National level Acts that have possible and latent relation and conflicts with the State-level

Acts

International Acts that have possible and latent relation and conflicts with the National

and State-level Acts

Strength, weakness, opportunity and threat (SWOT) of the present Acts, Rules and

Bylaws practicing by SHGs and SHGFs and other non-government organisations (NGOs) in the country; and

Lesson learned of various financial organisations and institutions linked and involved with

the development of SHGs and SHGFs.

Few arguments on the issue

Various literatures argued that financial and non-financial functions of SHGs are required to be

improved with regards to their resource mobilization, resource utilization, education on financial management, dealing with banks, developing entrepreneurship, maintaining transparency and

provide efficient leadership, etc. Most of the financial organisations / institutions invariably

claimed that there are many SHGs are good to have credit but not efficiently function to return loan on due time, although there is an argument that bank linkage with SHGs are functioning

well in the country! If this is true, then why not develop a model of such successful cases and replicate in other areas? Again, if this is true, then why not develop a Model Act considering

procedures and functions of such successful cases and apply to others? While this has not

happened that gives a wrong signal to the policy makers and has doubts about such successes. I

believe I am wrong about it!

However, there is a need to debate on functions of SHGFs considering their role of managing and improving SHGs. Do they are financially and organisationally self-reliant with adequate capacity?

How far NABARD as a big organisation was able to play critical role to improve conditions of

SHGs and what could be possible to initiate an independent organisation for financial and organisational development of SHGs and SHGFs? Each SHG is very small in terms of their

membership but SHGs are very large community and difficult to manage equally.

Once, farm and non-farm cooperative movement in Bangladesh was greatly appreciated by the world community which was highly subsidised by the donors’ community (as it is happening in

Africa). The situation become vulnerable when self-sufficient agenda for institutional

sustainability was imposed and in some cases forced to maintain to operate cooperatives and NGOs to withdraw their external support. There are few exceptional examples that survived like

Grameen Bank (GB) and Bangladesh Rural Advancement Committee (BRAC) due to their multi-purpose activities in a large-scale and continuous support of donors. Most of the independent

rural cooperatives are malfunctioning due to the influence of such large-scale NGOs. In this

regard, SHGs and SHGFs in India are small in size with very weak financial and organisational capacity and it is impossible to compare with any large-scale organisation. In view of that the

Model Act should consider to form few regional organisations under a national authoritative institution in the context of social and geographic variability of India.

It is not only the question of Model Act to improve condition of SHGs and SHGFs, it also need

serious thought of managing and marketing products of SHGs for ensuring their financial capacity

and sustainability. It should be considered that how many members of SHGs will understand Act, Rules and Bylaws. Very few, isn’t it?

Consideration of National Level Model Act or Legal Framework

The National Level Model Act or Legal Framework of SHGs and SHGFs should critically look into the above mentioned learning issues and arguments. In simple language, I would like to mention

the following parameters to consider for making legislation in favour of SHGs and SHGFs.

Registration and identity of organisation

Selection criteria of membership

Effectiveness of members and discontinuation of membership

Active participation and adjustment in a group for greater interest

Long-term membership and commitment

Resource mobilisation and productive uses

Financial motivation and entrepreneurship attitude

Willingness, openness and transparent to accomplish work collectively

Minimize internal and external conflicts and conflict resolution

Ownership and share holding pattern of members in terms of financial and non-financial activities

National and State-level financial and organisational assistance

Minimise differences of rules and regulations across States in the country

Investment in productive activities and ensuring product marketing to reduce

vulnerability

Adequate access to hassle-free and affordable institutional support and facilities

Limitation and opportunity of low-cost financial and non-financial linkage of SHGs with

other organisations

Formal recognition of SHGs and SHGFs organisations across the country

Award and incentive mechanism of good work

Accountability of SHGFs to provide active and efficient support to SHGs in all respects

Clause to improve self-regulated body and avoid conflict with other civil/judiciary rules and regulations

Link government and corporate responsibility to improve condition of SHGs and SHGFs as

part of the national poverty alleviation program

Institutional support mechanism to provide financial and human resources (such support

could be provided by RBI, NABARD, Rural Development Authority, National Savings

Institute, etc.)

Legal issues of misconduct and illegal activities of members and restrictions of

organisational activities etc.

Balaji Ramakrishnan, CARE INDIA, Chennai

A lot of demand to develop a legal framework for SHGs and SHG Federations has been already felt across the sector. SHG Movement has already suffered a huge setback because of the

Andhra Pradesh Crisis and it is a high time to look at the options for setting up a defined and

inclusive framework for these CBOs.

Certain factors that could be considered during the course of development of Legal framework are…

Strong compliance mechanism: SHGs across India have failed especially because of

money mismanagement happened at these institutions. Many SHGs got dismantled due to this reason and thus resulting in loss of investments made on the same. Also the

confidence level of these community members who have undergone the experience of being a member of dismantled SHGs has resulted in decreased confidence on such

institutions. Promotion of new SHGs and Federation seems to be a big challenge under these conditions. To bring back the confidence level of these dismantled SHGs and also

to strengthen the existing SHGs on the money management a strong compliance

mechanism is required. The compliance mechanism could of reporting on a quarterly basis to the regulating organisation and also it could mention on the internal

reporting/monitoring process.

Strong and uniform Accounting Procedure: SHG accounting methods varies across

different region and different states. The reason behind such variation is the different

understanding across the stakeholders. A common framework could be developed for such accounting practices and that could be ensured.

Step by step progress: The framework should allow step by step progress/graduation

of such CBOs in taking up liability services like collection of savings etc. There should be

stipulated benchmarks corresponding to its’ earlier and current performances in relation to different components.

Financial Literacy: Mostly the loan products and other services are generally dumped

to the community without any proper capacity building or awareness creation on the same. It would be better recommended that all the community members need to be

educated better on the need and importance of such products through a structured

financial literacy. The framework on insist on structured Financial Literacy.

Cost of Finance: In many cases, the SHG is charging at least 24% to the borrower as

Interest Rate and in some cases there are Pseudo borrowers who get @ 24% to 50% from the actual borrowers. The money lent from SHGs should be restricted to 18% and

below and there should be a substantial monitoring mechanism for the same.

Auditing: External Auditing should be made mandatory on a yearly basis for both SHGs

and Federation. Also there should be a mechanism to refer to different auditors on a

rotational basis.

State wise sector players need to be consulted on prevailing legal acts and the framed act

should try to inclusive of these acts. The framework should refer to a state level /region level and district level ombudsman and this has to be a part of the client education.

Anuj Jain ,COADY International Institute, Antigonish, Canada

Great to read very useful information and views shared by Dr. Smita Premchander and Mr. M.

Chidambaranathan in their response.

I would suggest for a quick comparison of what is different in Souharda Act from regular coop

Act. This may be useful for others who don’t know the difference between self-reliant Act and the regular Act.

If Federations were to become village based, community level banking institutions, then the

articulation of a new Act can be quite different than seeing them as a short-term vehicle for the

last-mile delivery and outreach by the commercial banks. As long as federations and SHGs remain subordinate to main-street banks in our thinking; their purpose and institutions will

remain ‘tentative’ in nature. On the other hand, a more permanent, long term purpose of the federations that can perhaps become and remain ‘independent institutions’, having the choice of

dealing with multiple banks and/ or other institutions. Seeing them as temporary instruments for

financial inclusion through commercial banking system is very different from seeing them as alternative, independent institutions and can result in very different institutional architecture

frame-work?

As mentioned by them in their response that Sampark has set up systems for auditing of SHGs

and cooperatives, computerised MIS and transparent and accountable financial management. That can be very useful to estimate the costs and knowing – what does it take for such a

cooperative enterprise (federation) to get to the point of self-management? In Indian context, where State is the largest and by far most important donor, the issue of providing grants and

equity investment to the self-reliant cooperatives is an important issue of a policy debate.

On the issue of NABFINS support to SAMPARK, it can also be useful to look at the leverage

against overall deposits, i.e. external debt against overall self-generated capital (and not just shares)? While it is useful to have the leverage expressed against share capital, that alone can

misrepresent leverage ratio. It will be helpful to know– what is recommended leverage levels and range for federations, where too low a leverage can stifle growth and too high can affect self-

governance and ownership.

Regarding banks not extending loans to SRCs and non-recognition of Self-reliant cooperatives by

the States and banks, this is an obvious error and must be corrected; but this perhaps also present an opportunity to all the federations in the State to aggregate and self- report the data,

though this effort will involve additional cost.

There are perhaps two different ways to look at community based and commercial financial

institutions. We can view them as competitive, or we can view them as part of co-exiting and inter-connected institutions offering different value propositions. The idea then would be to allow

CBMFIs to have unique set of products and services - personal banking, portfolio management, investors in local economy, affinity based incentives and disincentives, etc.; as opposed to banks

that are more systems and procedures driven and while may offer cheaper products, may never see poor as worthy clients for their mainstream operations. This has been line of thinking, in my

reading, in places like Germany, Holland, Ireland and Canada.

Many thanks to all who contributed to this query! If you have further information to share on this topic, please send it to Solution Exchange for the Microfinance Community in India at se-mf@solutionexchange-un.net.in with the subject heading “Re: [se-mf] Query: Status of Implementation and Strategies to Fast track National Rural Livelihood Mission – Experiences; Advice. Additional Reply.” Disclaimer: In posting messages or incorporating these messages into synthesized responses, the UN accepts no responsibility for their veracity or authenticity. Members intending to use or transmit the information contained in these messages should be aware that they are relying on their own judgment.

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