MICRO FINANCE IN KRISHNAGIRI DISTRICT: A TOOL FOR POVERTY ALLEVIATION

Mrs.A.SARASWATHY, LECTURER (S.S), Mrs.S.PORKODI Miss.M.BHUVANESWARI LECTURERS, GOVT. ARTS AND SCIENCE COLLEGE FOR WOMEN, BARGUR, TAMILNADU.

MICRO FINANCE IN KRISHNAGIRI DISTRICT:

A TOOL FOR POVERTY ALLEVIATION
Globally, Micro Finance (MF) has been recognized as a powerful instrument to address poverty. Beyond the direct link with poverty reduction, the indirect link to addressing the issues of health, education, gender & Govt. has demonstrated in many contexts around the world. Provision of thrift, credit & other financial services & products of very small amounts to the poor in rural semi urban or urban areas for enabling them to raise their income levels & improving living standards The task force would like to emphasis in its definition that MF will cover not only consumption & production loans, but also include other credit needs such as housing & shelter improvement, while other financial services like savings and insurance are also included under it. It may be left to the MFIs (Micro Finance Institutions) to identify the poor. Thus, MFI is an organization that provides financial services to the poor. MF may cover programmes implemented by Govt. either directly or through various agencies, as also programmes implemented by banks, NGOs, Co-operatives etc., provided that the components of MF as explained above are adhered to. Broadly, MFIs provide all or some of the following financial services in different combination: 1. Savings or thrift components either compulsory and/or optional savings. 2. Credit for consumption, production, trade services, housing or other needs. 3. Insurance or risk fund services. To their efforts to provide financial services to the poor MFIs, offer both savings & credit related services. The task force has not been able to come across any example of an MFI providing insurance services to the poor. However, some of them have promoted risk funds to cover their credit operations. INCORPORATION & REGISTRATION OF THE MFIs: There are three forms of registration available in India for incorporating a nonprofit organization: 1. Societies under the Societies Registration Act 1860 or Analogous State Acts; 2. Public Trusts registered under the Indian Trust Act, 1882; 3. Non-profit Companies registered under section 25 of the Companies Act, 1956. The Task force has examined the need for involvement of MFI association with the registration procedure & feels that before applying for registration, an MFI would be registered to take membership of any one association of MFI. WOMEN & MF When women move forward the facility moves words of Jawaharlal Nehru about the status of women is closely associated with their economic position, which in turn depends upon their access to productive resources of the country & the opportunities for participation in economic activities. Womens participation in workforce in India is only 25.68% of female population. So many problems of women are due to lack of earning capacity. 2

Both the Governmental & non-governmental institution in India began to play an important role in mobilising women both in rural & urban areas to become economically strong by providing income-generating programmes, training and employment. The vision of a woman plans for herself, for her children, about her home, the meals; rather a man wants to enjoy himself. Thus, availability of finance to women ensures that recourses & profits generated are ploughed back into the development of the immediate household & family. Protection of family values of health & safety of household members of a more even distribution of income can be seen as a result. PRESENT SCENARIO Funding is no longer a problem primarily, because banks now see MF as a profitable opportunity to deploy their funds or at least a cost efficient way of meeting their priority sector targets. The larger of the two main models SHG - Bank linkage programme (SBLP) covered about 143 million poor household in March 2006 & provided indirect access to the banking system to another 14 million. The other MFI model, served 7.3 million household of which 3.2 million were poor. (Source: Business world, Jan 2007). Thus, it is registering 24% growth over 2005-2006. Another trend is greater formalization. Several former NGO-MFIs are seeking to transfer themselves into Non-Banking Finance Companies (NBFCs). A number of startups too are seeking to enter the sector as NBFCs. Yet another development has been setting up of urban MFIs. One existing & at least 4 new MFIs are also increasingly acting as agents of insurance companies & offering Micro insurance. Life insurance is now quite common among MFI members & some of them even insurance their loan-financed assets. A growing number of MFIs are also offering health insurance in collaboration with charitable hospitals. During 2006-2007, 87,699 new SHGs were credit linked to banks in the State involving bank loans to the tune of Rs. 726.29 Crore. As on 31.03.07, the cumulative number of SHGs credit linked in the State stood at 4, 02,976 & the cumulative bank loans aggregated to Rs. 3845.72 crore. (source:NABARD Annual Report) The RBI has observed MF system faced certain challenges such as regional imbalance, quality of the SHGs, high cost of delivers, emergency of SHG federation etc. It also noted that MFI model was comparatively costlier in delivery of financial services because of low volume & size of the loan.

MF & Krishnagiri District: At a glance:

Krishanagiri District was carved out of erstwhile Dharmapuri Dt as 30th dist. of TamilNadu on 09.02.04 consisting of 10 Blocks with its headquarters at Krishnagiri. There are 20 commercial banks with 95 branches & one Regional Rural Bank (Pallavan Grama Bank-PGB) with 14 branches in the bifurcated Krishnagiri district. In addition, there is Dharmapuri District Central Co-operative Bank having 20 branches in the district, 3 PLDBs (Hosur, Krishnagiri & Uthangarai), one Urban Co-operative Bank, TamilNadu Investment Corporation Ltd., in the district providing credit facilities for the development of the District. The credit agencies are actively involving themselves in the planning process initiated by NABARD. With a view to enrich women (7.58 lakhs i.e 48.6 % of total population), more actively in the development process, special efforts & programmes aimed towards woman enrichment & development have been undertaken in the district. The TamilNadu Corporation for Development of Women Ltd has extended TamilNadu Womens Development Project with State funds namely Mahalir Thittam to 3

erstwhile Dharmapuri Dist from 1999. The NGOs & Voluntary Agencies (VAs) have been entrusted with the responsibility of forming women groups providing the required training, helping the members to identify & promote income-generating activities etc. The corporation has since made partnership with 13 NGOs for promoting SHG functioning in the district. There were 70,038 members of which 10,134 were tribals. Until date, the savings effected from members amounted to Rs.39.39 Crore and average savings amounted to 1.038 lakh. Till date 6444 SHGs have been assisted with bank loan of Rs. 69.74 Crore (Source: NABARD annual Report) MAJOR PLAYERS OF MF IN KRISHNAGIRI DISTRICT A. Government of India: The Government of India promoted several programmes to improve the incomes of the disadvantaged sections of the society. Additionally programmes for rural housing, drinking water supply sanitation etc.were also taken. Notwithstanding the degree of success or failure of several programmes, they have contributed to the improvement in the socio-economic status of the poor. Table 1 data provides information about cumulative Economic assistance upto 31.03.07 and from March 2007 to October 2007, which reveals the maximum assistance has been disbursed in accordance with geographical area, and to the preference of activity. Milch animal activity, which is the livelihood of the disadvantaged poor people of the district, is given more importance in the GOI.

Cumulative Economic assistance (Purpose wise) TABLE I

TOTAL NUMBER NUMBER % OF OF SHGS % OF OF SHGS PURPOSE AVAILED PURPOSE Sl.No ACTIVITY AVAILED AS PART LOAN AS PART OF OF LOAN MAR UPTO 31 st TOTAL 2007 TO TOTAL MARCH PURPOSE OCT2007 PURPOSE 1 Milch Animal 366 52.97 41 46.59 2 Coconut Trading 49 7.09 4 4.55 3 Sheep Rearing 40 5.79 2 2.27 4 Floriculture 34 4.92 2 2.27 5 Cut piece and Readymades 27 3.91 3 3.41 6 Brick kiln 22 3.18 14 15.91 7 Tamarind 11 1.59 13 14.77 8 Agarpathi 5 0.72 1 1.14 9 Coir 6 0.87 2 2.27 10 Jaggery 11 1.59 2 2.27 11 Others 120 17.37 4 4.55 691 100 88 100 Source: Collectorate, Krishnagiri. 4

Table 2 shows the Economic Assistance given by the GOI for 10 Blocks of Krishnagiri Distrist. The Table also includes the data from the year 2000 to 2007 with percentage analysis, Maximum amount has been disbursed to Krishnagiri block in the initial year and thereafter it has been disbursed according to the requirement of the block. Thally block in the Dist. is the most backward area and hence more importance was granted.

Economic Assistance Provided by GOI to Krishnagiri District during 2000 to 2007. TABLE 2
Block Years
Kgiri K Patnam Bargur Mathur Ukarai VPalli K Mangala m Hosur Sgiri Thally

Tota

2003 Physical 4 Loan 16.00 % 9 2004 Physical 3 Loan 2.40 % 1 2005 Physical 8 Loan 22.00 % 6 2006 Physical 6 Loan 23.02 % 8

7 4.42 3 6 6.30 3 25 80.50 20 22 81.00 29

9 18.58 11 16 44.01 21 3 8.60 2 6 25.00 9

8 18.80 11 9 22.63 11 16 77.59 19 2 6.88 2

6 12.40 7 5 18.96 9 8 33.63 9 8 29.53 10

6 7.80 5 3 6.93 3 6 9.30 3 3 6.00 2

6 19.60 12 10 37.70 18 22 65.22 16 10 25.98 9

9 14.48 8 11 33.27 16 5 14.68 4 8 21.80 8

12 28.9 8 17 8 22.0 1 10 16 33.4 7 9 7 17.7 2 6

17

29.26
17 10 16.71 8 13 48.23 12 12 47.97 17 4 17.94 5

84 170.33 100 81 210.92 100 122 399.44 100 84 273.88 100 83 336.30 100

2007 Physical 5 1 11 9 19 0 14 15 5 Loan 18.39 2.00 62.00 43.50 45.32 0 60.74 15.4 71.00 % 0 5 1 19 13 13 0 18 21 5 Source: Collectorate, Krishnagiri. (Rs.in lakhs) K Giri = Krishnagiri; K Pattinam = Kaveripattinam U Karai = Uthangarai V Palli = Veppanapalli K Mangalam = Kelemangalam SGiri = Shoolagiri

B. NABARD NABARD has been playing a leading role in the MF programme for last one and half decades now. The pilot project, which started in 1997 with a modest target of linking just about 500 SHGs with few banks across the country, had crossed the milestone of one million SHGs by 31.03.04 and rose further to over 2.7 million by 31.03.07. Apart from forming the farmers clubs, various other support programmes from NABARD are Separate scheme for financing Joint Liability Groups of Tenant Farmers. Equity support to MFIs whose rating is above the cut-off point indicated. Refinance to banks for financing MFIs for onlending to SHGs. Grant assistance for rating of MFIs Refinance scheme for financing mature SHGs for farm production and investment activities. C. BANKS Banks were freedom to formulate their own lending norms keeping in view ground realities. The SHG Bank linkage programme in India, as it is now popularly known, has emerged as the largest MF outreach programme in the world.Tamil Nadu, is ranked second in the country, after AndhraPradesh in SHG-BLP. SHG-BLP: Progress as on 31.12.05 Cumulative No. of SHGs credit linked 18, 29,847 Cumulative bank loan disbursed Rs. 83,191million Cumulative refinance drawn by banks: Rs.37, 414million

SHG Linkage Programme for the years 2004-05 & 2005-06

2004-05 Amount of Loan No. of members TABLE 3 2005-06 Amount of Loan No. of members

Banks

% of Loan % of Loan Indian Bank 3040 2301.00 33.34 2869 5117.57 38.21 Pallavan Grama Bank 1676 2327.85 33.73 1869 3287.35 24.55 DCCB 15 10.09 0.15 0.00 Bank of India 711 1335.00 19.34 779 1739.30 12.99 Indian Overseas Bank 229 346.46 5.02 707 352.63 2.63 State Bank of India 329 346.07 5.03 886 2772.26 20.70 Central Bank of India 162 122.39 1.77 35 34.00 0.25 Lakshmi Vilas Bank 91 52.66 0.76 8 4.09 0.03 Bank of Baroda 40 28.20 0.41 0.00 Syndicate Bank 10 9.65 0.14 104 57.95 0.43 State Bank of Mysore 10 7.12 0.10 18 27.70 0.21 Karur Vysya Bank 5 14.52 0.21 0.00 6318 6901.01 100.00 7275 13392.85 100.00 Source: NABARD Annual Reports. (Rupees in lakhs) 6

The bulk of the supply of credit to the poor came from the 12 banks, which disbursed about Rs. 13,392.85 lakhs during 2005-06 (based on compiled figures given in Table No.3) under various schemes including the Govt., sponsored poverty alleviation programmes. Compared with the year 2004-05 there is an increase of Rs.6491.84 lakhs i.e., 94.07 %. Among the12 banks, Indian Bank, Pallavan Grama Bank and State Bank of India are playing major role in the SHG-BLP in Krishnagiri District. D. NGO (Non-Governmental Organization)/MFI (Micro Financial Institution) The task force did not have complete data about the total number of NGOs engaged in financial intermediation. However, from the information of institutions like NABARD, SIDBI & RMK it may be reasonably estimated that over 500 NGO-MFIs are engaged in different parts of the country. Among 16 recognized NGOs by Mahalir Thittam & 200 unrecognized in Krishnagiri district, the experienced & reputed NGOs in the district promotes good quality of groups compared with groups promoted by the small & upcoming NGOS. A combined data of 9 NGOs in Krishnagiri are in the Table 4 and reveals that two major contributors are IVDP & MYRADA started in1970s. 1. MYRADA (MYSORE RESETTLEMENT AND DEVELOPMENT AGENCY) MYRADA started working in Dharmapuri in 1984, with a small project in Thally Block supported by HOPE-Canada. In 1989, it entered into partnership with PLAN International on a child-focused community development programme. Around the same time, it also started to partner the Tamilnadu State Womens Development Corporation on a rural womens credit and empowerment programme, taken up with part funding from IFAD. Today, Myrada-PLAN Dharmapuri Project is working in 357 Panchayat Unions covering 1323 villages of 10 Blocks within Dharmapuri and Krishnagiri districts. Number of families covered is 41116 nos. It has 2258 groups and 41116 members. ACTIVITIES OF MYRADA Community Managed Primary Health Care Focusing Reproductive and Child Health program. Capacity Building of Community Health Workers. Organising awareness sessions, Health camps, Health plans to address women issues. Capacity building on Life skills and Personal hygiene among Adolescent Girls. Awareness on HIV/AIDS among schoolchildren, adolescents, youth and communities. Education Quality in Education and Community Participation. Nurturing PTAs to enhance community participation. Residential schools for Tribal children. Vocational Skills Training Vocational training to 150 rural youth (boys &girls) every year at NFTTC, Thally. 6 months Training courses offered in welding, eletricals, electronics, bakery, tailoring, and two-wheeler mechanism. 7

 Training in tailoring is given in CMRCs So far, 1086 candidates trained and more than 90% are employed. Natural Resource Management Watershed management, Rainwater (rooftop) harvesting Agriculture Extension and Training, Fodder development and Tank Rehabilitation. Household toilets and drinking water project. PROJECTS Titan Industries- MEADOW pvt. Ltd., working independently with strength of 252 rural women. It is involved in sub contractual works of watch assembly, Tanishq jewellery making, precision of engineering parts. Pointech Pens Company- Pen assembly contract works through SHGs. 2. IVDP (INTEGRATED VILLAGE DEVELOPMENT PROJECT) In 1979, IVDP was started with a clear vision of Transforming the lives of poor into blissful one by drastically reducing their sufferings through watershed, Health and SHG activities. It operates in the Krishnagiri and Dharmapuri Districts. It operates in 7 blocks in Krishnagiri District and 2 blocks in Dharmapuri District. Total no.of groups upto 31.03.07 is 5165 and 97653 SHG members. The SHG Bank linkage is with Indian Bank, Pallavan Grama Bank, Bank of India and State Bank of India. ACTIVITIES OF IVDP Water Shed Program IVDP started watershed programmes in the forest areas of Anchetty and Thally in Denkanikottai Block of Krishnagiri District. Watershed Programme covers 5 panchayats, 40000 populations. 92 major check dams constructed and 239 minor check dams constructed. Life Security Fund To provide security to the member a life security fund has been created. Under the scheme, a member has to pay Rs.100/- as premium to the federation, and in the subsequent years the premium amount will be lesser than Rs. 100/ Rs.10000 will be payable to a member from the fund for permanent disability due to accident and Rs.20000 in case of death. During 2006-07, Rs.37, 30,000 was given as compensation and so far Rs. 1 crore and 21 lakhs was paid as a solace to the members. CFVP-Child Friendly Village Planning project CFVP is being implemented in the Blocks of Krishnagiri, Bargur, Kaveripattinam, Veppanpalli & Six panchayats in Thally blocks, which works on Health, Education, Nutrition, Water and Sanitation and the results from these areas are amazing. Last year alone as many as 660 toilets were constructed by people and nearly 90% achievements made with regard to families consuming iodized salt and using safe drinking water. Scheme to get the Birth Certificate of children. For prevention of HIV in infants and young children, PPTCT (prevention of parent to child transmission of HIV) programs conducted. Educational scholarships To promote IVDP members-girl childrens education, Rs.95,000/- was given as educational scholarship to the toppers in 10th and +2 examination. During 2006-07, 10 students got cash awards of Rs.95000/8

 A total of Rs.1 lakh was awarded educational promotion activities for 20 poor girl students i.e Rs.5000/- each studying in Auxillium College, Katpadi, Vellore District. Tamil Nadu. Community Level Federations(CLF) 88 CLFs were formed with 5083 groups for their prolonged development. Capacity Building Accounts and Book keeping Training, Personality Development Trainings, Animators & Representative Trainings, Entrepreneurship Skill Trainings, SHG members Training. Hygiene and Sanitation To maintain menstrual hygiene for women and protect from uterus cancer, sanitary napkins were provided to 1lakh SHG members at 25% discount rate. In order to ensure toilet I all the houses of members loan for the construction is being given by IVDP financed by Banks by way of Bulk Lending. 3. SWASAM (SOCIETY FOR WOMEN DEVELOPMENT AND SANITATION AWARENESS MOVEMENT) SWASAM was started in 2002 and registered in 2003 for the development of community. It has 24 men groups and 163 female groups. The total SHG members are 3366 in number. It has SHG Bank linkage with Indian Bank, Bank of Baroda, Bank of India and State Bank of India. ACTIVITIES OF SWASAM For prevention of Environment Salvage management program Tree plantation Awareness Rally on Solid Waste Management Training Tailoring, Mushroom cultivation, mat weaving, napkin preparation, vermicompose, sericulture, tamarind process trainings given. Skill training to Animators and Representatives. Development of society Rehabilitation of liquor brewing workers.

PROFILE OF MAJOR NGOs IN KRISHNAGIRI DISTRICT

Abbreviations used in the Table 4 are expanded below.

MYRADA-Mysore Resettlement And Development Agency,Hosur. IVDP-Integrated Village Development Project,Krishnagiri. SWASAM-Society for Women Development and Sanitation Awareness Movement, Krishnagiri. PCDP-Poor Community Development Project, Kaveripatnam. SWEET- Society for Women Educatonal and Economical Development Trust, Bargur. HELP TRUST- Health and Education for Labour People Trust, Bargur. SWCD Society For Women And Child Development,Chinna Bargur KOPSA- Karimangalam Onriya Pengal Semippu Amaippu Limited. IB- Indian Bank BOI- Bank of India PGB-Pallavan Grama Bank BOB-Bank of Baroda IOB- Indian Overseas Bank SBI- State Bank of India 9

PROFILE OF MAJOR NGOs IN KRISHNAGIRI DISTRICT Table 4

NGO YEAR (starte d) NO.OF GROUP S NO. OF SHG MEMB ERS 41116 TOTAL SAVING S Rs. In crores 29.80 TOTAL TOTAL NO. OF LOAN LOANS AMOUNT Rs. In crores 2,18,349 85.80 BANK LINKAGE AMOUNT Rs. In crores 44.90 SHGs LINKED WITH

MYRADA 1978 (UPTO 30.06.07) IVDP (31.03.07) NEW LIFE (31.10.07) 1979 1997

2258

IB,PGB, SBI

5165 233

97653 4016

79.43 0.14

6,72,445 3236

696.78 14.63

311.58 12.18

SWASAM (31.10.07) PCDP (31.10.07) SWEET (31.10.07) HELP TRUST (31.10.07) SWCD (31.10.07) KOPSA, (Barugur block ) TOTAL

2002 2000

187 464

3366 8816

1.76 4.73

2965 9280

8.56 26.95

4.54 22.32

2000 2006

107 30

1587 500

0.45 0.19

7937 430

25.15 0.55

21.02 0.05

IB,PGB, SBI,BOI IB,SBI, BOB, CITY UNION BANK IB,BOI, SBI,BOB IOB,HDF C, SBI.IB IB IB

2003

132

2323

0.79

6710

20.17

1.62

2006

168

2077

0.34

1900

1.68

1.68

IB,PGB, CANAR A BANK IB,SBI

8744

161454

117.63

9,23,252

880.27

419.89

10

E. SHGs (SELF HELP GROUPS) SHG is a peoples scheme & is a significant step towards empowering women. A silent economic revolution has taken place slowly but steadily in rural areas of Tamil Nadu following empowerment of women with the formation of SHGs. SHGs are voluntary associations of women residing in a given area, formed democratically without any political affiliation. To form this organization, a minimum of 12 individuals are required under the guidance of the NGO. It gives preference to the widows, divorcees, deserted and physically challenged women & women belonging to SC & ST. All members should be below the poverty line & should have reached the age of 20. The seed for this economic revolution in TamilNadu was sown in the year 1989 in the blocks in the Dharmapuri district, TamilNadu through an IFAD assisted pilot project. It received its first growth thrust and was extended in 4 phases to other parts of Tamil Nadu. The progress revealed that many SHGs turned morbid; particularly the older groups as they did not avail credit from Banks after the initial few rounds.

Findings from questionnaires

To know how effectively loans have been ploughed back by SHGs, Questionnaires were distributed among 75 SHGs members from 66 Self Help Groups of 9 NGOs. To gather ideas about loan purposes, income levels, activity levels, savings habit, utilization of loan etc. 75 samples were distributed among different SHGs of different NGO. Even though all members of a SHG are below the poverty live, they are different by geographical, educational, standard of living etc to evaluate all these issues, a trial/ micro level study has been made in Krishnagiri district. The study does not reveal the position of SHGs in the district as a whole i.e., only 75 SHG members are taken as sample. * 88% of SHG members reveal that there is income generation after becoming members whereas 12% refused to give the details of their income. 100% i.e., all the members utilizes sangha loan, (loan from members savings circulated among members on rotation bases on 1:2 ratio); 92% are linked with bank loan (1:4r ratio to a maximum of Rs. 50000); 56% are in receipt of special loan (1:4 ratio to a maximum of Rs. 60000 per member which includes bank and sangha loan) 32% received NGO loan (purpose wise).

* Loan utilization for the purpose of business comes to 72% for education purpose 67%, 41% for toilet, 15% for water facilities and 33% utilized for various other reasons collectively. * Answering the question difficulty in repayment of loan, 88% reveals that there is no such difficulty, but still 12% members felt that there is less income generation, no profit margin and they also quoted that there is no marketing facilities for their business product. 11

* Regarding the programmes conducted by NGOs, all the members are satisfied with the performance based on the activity, 51% have had technical training, 65% for hygienic water facility, 47% for separate individual toilet programme, 44% for educational scholarship and 76% health awareness programme. * Savings habit and loan availing data shows that all the members save little amount on which loans are availed. 56%, of SHG members, reveals that they have bank saving, 8% home saving and 13% save through LIC etc. Two major NGOs play a prominent role in the district. The Table No.5 shows the purpose of sangha loan availed by the members of these two NGOs.

LOAN AVAILED BY MEMBERS PURPOSEWISE Table 5

MYRADA Sl.No ACTIVITY TOTAL LOANS FOR EACH PURPOSE % OF PURPOSE AS PART OF TOTAL PURPOSE 24.74 23.67 22.27 16.14 12.16 1.03 100.00 IVDP TOTAL LOANS FOR EACH PURPOSE 11243 10225 14516 14100 % OF PURPOSE AS PART OF TOTAL PURPOSE 11.77 10.71 15.20 14.77

Housing Related 5678 Animal Husbandry 2 related 5433 3 General 5112 4 Agriculture related 3704 Non-Farm 5 Activities 2791 6 New opportunities 236 7 Loan repayment 8 Education 9 Medical Total 22954 Source: Reports of MYRADA and IVDP

14329 11846 10370 8867 95,496

15.00 12.40 10.86 9.29 100.00

12

Members of Myrada availed the loan for house related and Animal husbandry related business and general business where as IVDP members availed for general and new opportunities, and for repayment of loan got in higher rate of interest. The preference depends upon the geographical area.

Case studies of SHG

Poverty alleviation through the formation of SHGs has proved from the following case studies of few SHGs of different NGOs.

NGO: SWASAM (Society For Women Development And Sanitation Awareness Movement,Krishnagiri) Table 6.1
Sl.No Name of the Individual/ Group Banker (SHG linkage) Solid Waste Indian Bank Management Tamarind Indian Bank Processing Sericulture Bank of India Artificial Flower Bank of Hangings Baroda Napkin Making Indian Bank Indian Bank Indian Bank Activity taken No. of Years 2 5 4 1 3 2 2

1 2 3 4 5 6 7

SHG 7 Groups Federation Om Sakthi M/m., Kattinayanapalli

Sivasakthi M/m., Roja M/m., Om Sakthi M/m., Ombalakattu Geethanjali M/m., Jayam M/m., Kaviyanjali M/m., Sikkarimedu Kamadhenu M/m., Vinayagar Nagar, Krishnagiri Karugi M/m., Thuduganahalli Mushroom Cultivation Parvathi, Arivoli M/m, Mobile Canteen Krishnagiri

13

Table 6.2

14

NGO: IVDP (INTEGRATED VILLAGE DEVELOPMENT PROJECT)

Sl.No

Name of the Individual/ Group

Activity taken

Manimegalai, Yamuna II M/M, Oldpet, Krishnagiri. Rupa, MEGA M/M, Newpet, Krishnagiri.

Clay making

Banker No. of (SHG Years linkage) Toy Bank of 4 India

Toffee making Bank India

of 6

3 4

10

Bank of India Pallavan Grama Bank Tajmahal M/M, Veppanapalli Agarpathi Pallavan Grama Bank Karpagam M/M,Veppanapalli Mushroom Pallavan cultivation Grama Bank Noorjahan M/M,Egudathampalli Mat Pallavan preparation Grama Bank Surya M/M, Kaveripatnam Detergent Pallavan Soap & Soap Grama powder Bank Lakshmi, Pandaga Nachiamman Power Triller Pallavan M/M,Paiyur. Grama Bank Rani, Naga lakshmi M/M, Medical Shop Pallavan Kaveripatnam Grama Bank

Prabhavathy, Mega M/M,newpet, Peppermint Krishnagiri. preparation Mullai M/M, Veppanapalli Toy making

6 6

Table 6.3 NGO: NEW LIFE

Sl.No Name of the Individual/ Group Activity taken Banker (SHG linkage) State Bank of India Indian Bank Indian Bank No. of Years 5 4 3

1 2 3

Kavitha, Pasa Malar M/M, Dhandekuppam. Gangammal, Annai Veerammal M/M, Bainapalli Rajeswari, Natchatram M/M, Krishnagiri 15

Masala powder Pickli,Appalam Panja deepa oil Rexin Bag

Table 6.4 NGO: MYRADA (Mysore Resettlement And Development Agency,Hosur)

Sl.No Name of the Individual/ Group Activity taken Banker (SHG No. of linkage) Years Indian Bank 4

3 4 5 6 7 8 9 10

Suseela, Saraswathi M/m., Tamarind Aggondapalli Processing Gayathri M/m., M. Agragaram Tamarind Processing Venkatalakshmi, Om Sakthi M/m., Agarbathi H. Seittypalli Making Lakshmi, Nehru M/m., Agarbathi Bodichettipalli Making Malliga, Eswara M/m., Petty Shop Kelamangalam Chinnamuniamma, Om Sakthi Tamarind M/m., C. Thammandrapalli Processing Muni Elli, Sree Lakshmi M/m., Vegetable Denkanikottai Vendor Chinnapappa, Jayalakshmi M/m., Centering Thammandrapalli Materials Pushpa, Om Sakthi M/m., Flour Mill Aggondapalli Narayanamma, Dhanalakshmi Tamarind M/m., Bairamangalam Processing

State Bank of 2 India Indian Bank 3 Pallavan Grama Bank Pallavan Grama Bank Pallavan Grama Bank Pallavan Grama Bank Pallavan Grama Bank Pallavan Grama Bank Pallavan Grama Bank 2 2 4 4 4 5 4

Table 6.5 NGO: SWEET (Society for Women Educational and Economical Development, Bargur)
Sl.No 1 Name of the Individual/ Activity taken Group Saroja, Kamatchi M/M, Cut piece Bargur. Banker (SHG No. of Years linkage) Indian Bank 6

Encouraging issues Besides the financial advantages, other significant gains of SHG movement are the massive community mobilization and women empowerment in most parts of the country. The savings programmes in SHG help in developing a habit of thrift as a support for the future by instilling discipline in members, thereby enhancing self-confidence; covering normal business risks and meeting consumption requirements and weaning away the savers from indebtedness to local moneylenders. In good number of groups, members used the loan for setting up of a variety of economic activities. Table 6.1 6.5 of case studies of SHG proves this to some extent. 16

No major default in repayment/NPA a/cs has been reported. Government has introduced a MF Bill in parliament with the aim of regularly non-profit MFI. Considering the need for sustainability of SGHs by enhancing income of the members of SHGs (mostly women), NABARD has since introduced grant assistance to NGO for imparting training on Micro enterprises known as Micro Enterprise Development Programme (MEDPs). During 2006-2007, 12 MEDP Programmes & an amount of the Rs. 16.10 lakhs was disbursed as bank loan to the woman in Krishnagiri Dist. Recently, GOI has announced that it would set up 2 funds of Rs.500 crore each to facilitate easy availability of credit to the poor so as to be a part of MF sector. These 2 funds Financial Inclusion Fund and Financial Inclusion Technology Fund- would be apart from the Rs.100 crore for MF development fund that has already been set up by the Govt. Faulty issues There are several issues still to be tackled in MF, which concentrated in the southern region accounts for more than half of the loans. Another is the hostility of the official rural development programme many of which have the same target groups the MFIs o Quality of groups depended on the continued attention paid by the NGOs. Wherever NGOs withdrew after promotion, there was slackness in maintenance of records, periodicity of meetings etc. o Lack of proper training was one of the poor qualities of SHGs. o Members other than leaders were not aware of banking procedures. o Political involvement in-group formation affected quality of groups in a few cases. o Internal loans (sangha loans) are used mainly for consumption purposes. o No proper maintenance of database about the non-mahalir thittam (TamilNadu Corporation for Development of women), NGOs & SHGS. o Uniform mandatory savings are also the most frequent reason cited by dropouts for leaving SHGs. o Inadequate marketing support for the products of micro enterprises. Hence, there should be marketing facilities arranged by NGOs Future Issues: The more critical challenge would be in inducing SHGs to graduate of more mature level of enterprise, livelihood diversification, and access to supply chain, linkages to capital market & appropriate production & processing technologies. In future, any NGO considering taking up MF activities will be required to register itself with the regional registration authorities before commencing such activities. The RBI has identified a large gap in the demand and supply of credit to the poor and suggest the urgent need to widen the scope, outreach and scale of financial services to cover the unreached populace. The microfinance bill, which the government is working on, may help pave the way for MFIs to access savings instead of being excessively leveraged. Also of help will be the Bills proposal to reduce the capital requirement for MF organization with the portfolio above Rs. 2 crores to Rs.25 lakhs to register as an NBFC as against 8 times this amount.MF lenders say that they would also be comfortable with NABARD as a regulator. But still it has some pitfalls to overcome in future. Some pitfalls are: 1. The bill limits permissible savings to what it calls thrift or small, compulsory savings of uniform size mad by members organized in groups.

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2. One of the major omissions in the bill is that it excludes MFI as registered as NBFCS & section 25 companies, which account for nearly all the large MFIs and the larger part of total micro credit in the country. . There is a need to develop strategies for increasing the range and volume of financial services and to provide Indian MF with an appropriate legal framework. Future strategy The broad strategy for expansion of micro credit in Krishnagiri should focus on the following: To credit link the remaining groups in SHG bank linkage. To focus sustainability of the programme by encouraging promotion of micro enterprises among matured SHGs. Special training programmes for Skill Development / Skill Upgradation for SHGs to equip them to set up micro enterprises. To explore various support services for marketing etc. To correct regional imbalance or uneven growth in various districts so as to ensure coverage of entire rural poor under SHG fold. To focus on the quality of groups through regular interactions and periodical training inputs. Strengthening existing schemes by NABARD/SIDBI and other banks Conclusion Apart from the scorching pace of growth, the rapid spread of MF has provided competition to rural moneylenders. In view of the grand success of the programme now, SHGs are at centrestage in almost every poverty alleviation programmes and developmental programmes aimed at poor. SHGs have become the development ambassadors of villages and they symbolize the growing face of rural India. The MF sector like the IT sector has grown rapidly and in many ways creatively. The experience of many MFI so far strongly suggests that it is possible for these institutions to reach the goal of serving people in extreme poverty without having to sacrifice their profitablility. MF is intended for the enlistment of poor farmers, shanty dwellers, jobless youths, women and the deprived strata of society.

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