Ots 24 > 24071 > Execsumm

EXECUTIVE SUMMARY Student’s Name: Organization: Reporting Officer: Faculty Guide: Title:

Venkata Subba Reddy G Mahila Abhivruddhi Society (Andhra Pradesh) Mr. B. Anjaneyulu Prof. H S Shylendra SHG Federations as Financial Intermediaries.

Objective: The objectives of the study were to understand the evolution of SHG federations and its structures. The focus was mainly on the process of financial intermediation. The study also proposes a suitable structure and task sharing for these federations. Scope: The study was limited to Five Mandal Federations of both two and three-tier structures in the state of Andhra Pradesh. . Methodology: This included meeting with Board and Staff at Village and Mandal federations. Informal interviews with the promoters and Bank Managers were also held. Sources of Data: Primary data was collected from the governing bodies, members of Mandal Samakya (MS: It is a body of VO’s coming together), Village organizations (VO: It is a body of groups from one or more villages, the groups are members and not individuals), banks. Documents from the respective Federations and Banks were also taken. Secondary data from the APMAS resource center, Internet and other Research papers. Major Findings: Self Help Group federations are primarily promoted as an institution to strengthen the SHG movement. This being the premise some of the findings reveal that they are rarely serving the purpose. Four out of five federations reveal that the members had no say in the formation of these federations. Similar is with the case of lending loans. The promoters decide the criteria and process of lending’s and repayments. Moreover there is no focus on activities at each level. The activities are pushed by the promoters. As most of the members are illiterates, they rely heavily on facilitators. They have emerged as power centers in some parts and are easy pray to politics. The By-Law compliance in the election of Board is rarely taken care of by these federations. In terms of financial intermediation the data for twenty nine VO’s revealed that twenty one were unregistered and yet handling huge funds. There is sluggishness in the repayment rates of Community Investment Funds (CIF). The political rumors and other external factors impede the repayment process of these grant loans. The loans from CIF were given mostly to purchase cattle or sheep. The members find it difficult in making them a productive venture. Recommendations: The study reveals that there is a need to help facilitators gain conceptual clarity about these federations. Similar is the case with the members. The dependency of members on facilitators should be reduced. Secondly the size of the CIF loans can be restricted rather than doling out huge amounts which the members find it difficult to manage and thereby default in repaying these grants. Village Organization: The VO which is closer to the group can be effective in financial intermediation. The VO’s should be legally registered bodies, to obtain bank linkages, and thereby reduce the transaction costs to both members and Banks. The VO’s can educate members to take up the tasks of financial intermediation. Facilitators should be given clear job profiles. Mandal Samakya: The MS which is a group of VO’s coming together can function, utilizing the economies of scales in the region. The MS can facilitate to provide members inputs and find markets for their outputs. The MS can provide Value added services like insurance schemes which can make life simple for the members. It can also take up social intermediation activates like child labor, dowry issues, AIDS awareness etal. Finally it can facilitate the Village Organizations with capacity building programmes to help these institutions become truly member owned and member managed.

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Acknowledgements This study was conducted at the Mahila Abhivruddhi Society (Andhra Pradesh) as partial fulfillment of Organisation Traineeship Segment. The CEO of the organsiation Mr C S Reddy is duely acknowledged for having given me this opportunity. I also thank the Reporting Officer Mr B Anjaneyulu and the staff of APMAS for their cooperation through out the study. I am greatful to the organizations visited and professionals interviewed for their cooperation, and participants of the various fora. Finally, I thank the women who have paid heed to my request and spent time to provide information required for this study.

Subba Reddy G V (24071)

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List of Abbreviations APDPIP

Andhra Pradesh District Poverty Initiatives Project

CC

Community Coordinators

CIF

Community Investment Fund

DB MACS

Dalith Bahujana Mutually aided cooperative society

DRDA

District Rural development Agency

FSS

Financial Self Sufficiency

MACS

Mutually Aided Cooperative Society

MBK

Master Book Keepers

MFO

Microfinance Organization

MS

Mandala Samaikya

NABARD

National Bank for Agriculture and Rural Development

NGO

Non-government Organization

OSS

Operational Self Sufficiency

PAR

Portfolio at Risk

SERP

Society for Elimination of Rural Poverty

SHG

Self Help Group

UNDP

United Nations Development Program

VO

Village Organization

List of Tables and Annexures

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1. Cost of Credit (Maheshwaram )

1

2. CIF funds to VO’s

2

3. CIF funds to VO2 and VO3

3

4. Income and Expenditure of DB MACS

4.1

5. Balance sheet statement of DB MACS

4.2

6. Portfolio Analysis

4.3

5. Economic sustainability of VO(Maamadugu)

5

6. Economic sustainability of VO( Vennela)

6

7. Economic sustainability of VO(Gangavaram)

7

8. Income Statement Pragati MACS

8.1

9. Balance sheet statement Pragati MACS

8.2

8. Expenditure on Book Keepers

9

9. Economic viability of VO

10

REFERENCES

1. Nair Ajai, “Sustainability of Microfinance Self Help Groups in India: Would Federating Help?” working paper 2. Sa-dhan literature review of SHG Federations 3. APMAS Research Paper on SHG Federations 4. Harper Malcom, “10 statements on SHG federations” for APMAS. 5. www.apmas.org iv

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