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SHG Federations as Financial Intermediaries

SHG Federations As Financial Intermediaries OTS PROJECT For Mahila Abhivruddhi Society (A P) By Subba Reddy GV IRMA 24071

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SHG Federations as Financial Intermediaries

Contents Over View Objective Scope Methodology Limitations Cases Comparisons Suggestions

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SHG Federations as Financial Intermediaries

Overview SHG federations Financial Intermediation Structure of federation

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SHG Federations as Financial Intermediaries

Relevance Is there a need to federate ? Is it really a good exit strategy?

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SHG Federations as Financial Intermediaries

Objective To understand the evolution of Federations and its structures To understand the role of facilitators and stake holders in the process of Financial Intermediation. To understand the effect of structures of Federation on the process of financial intermediation To study the tasks done by these federations To suggest a suitable structure and task sharing at various tiers for the sustainability of SHG’s. 5

SHG Federations as Financial Intermediaries

Scope Area of the study Sample size Sample

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SHG Federations as Financial Intermediaries

Methodology Meetings with the Board of Directors/Executive council Interview with promoters, facilitators and Bank officials

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SHG Federations as Financial Intermediaries

Limitations 1. Generalization limited to few parameters 2. Perspective of Key actors not included due to absence at the time of visit 3. Biasness in selecting VO’s and Groups

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SHG Federations as Financial Intermediaries

Profile of Federations District

Promoter Type

Structure Grants

Sneha

RR

DRDA

2 Tier

Yes

DB

RR

ASP

Govt of AP NGO

2 Tier

No

Gangava ram Gandlapenta Kunikina -padu

Chittoor DPIP

Project

3 Tier

Yes

Anantha UNDP pur Vijaywa Sanghada Mitra

Project

3 Tier

Yes

NGO

2 Tier

No

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SHG Federations as Financial Intermediaries

Maheswaram Sneha MACS Problems due to structure -inefficiency in monitoring -Cost of Credit Problems in systems -Merger turns detrimental ( Velugu and DRDA ) -Nexus between Staff and few BOD -Dominant coalitions in BOD

Other Activities - Apna Bazaar ( Stake holders not defined ) 10

SHG Federations as Financial Intermediaries

DB MACS Yacharam Strengths -Homogeneity across social and economic class -Committed Staff

Issues -Non Compliance to By-Laws (BOD Selection) -Expenditure borne to access credit -No income to groups on external loans -Banker willing to give linkage, unaware of legal compliances -ASP unwilling to help the federation in getting bank linkage

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SHG Federations as Financial Intermediaries

Ganga Varam MS Issues -Why Mandal Samakya ? -Not a Registered body -No Financial Intermediation -No Focus on activities -Rural Provisional Stores

Contd…

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SHG Federations as Financial Intermediaries

VO’s in Gangavaram Issues in Financial Intermediation - CIF the only source of funds - hurdles in CIF repayment - External loans and their internal lending - groups unaware about the concept of internal lending Other Issues -Activities not defined - Dependency on Facilitators - Economic sustainability seems implausible 13

SHG Federations as Financial Intermediaries

Gandla-Penta MS Structure - from 2 tier to 3 tier Financial Intermediation Good Repayment rate(Is it So?) VO’s Financial intermediation inefficient Conflicts between groups 14

SHG Federations as Financial Intermediaries

Kunikinapaadu “Maa” Society Structure - Evolved over a period of time - Financial intermediation efficient - Committed Promoters - Learning by Experience - BOD acting as administrative Staff - Committees to resolve issues Contd…

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SHG Federations as Financial Intermediaries

Kunikinapaadu “Maa” Society Exploring Opportunities -Supply of commodities on credit -Problems due to the scheme (Velugu’s view) -Insurance Scheme(Making life easy)

Velugu ( Threat to sustainability) -confused members -Member savings at the MACS receding 16

SHG Federations as Financial Intermediaries

Comparable Parameters

Legal compliance

Maheswaram

DB Macs

Gangavaram

Gandlapenta

Kunkinapa du

Yes/No

Yes

No

Yes

Yes

Dependenc( Very Promoters) high

Very High Very High Average

Low

Dependence Very on staff High

High

Very Low

Very High Average

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SHG Federations as Financial Intermediaries

Maheswaram

Contd..

DBMACS

Gangavaram

Gandlapenta

Kunikinap adu

Bank links No

No

No

No

No

Multi tasking

Yes

Yes

No

Yes

Savings in No MS

No

No

No

Yes

IGA

Yes

No

Yes

No

Yes

Profits

-ve

+ve

-ve

+ve

+ve

Yes

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SHG Federations as Financial Intermediaries

Conceptual clarity

Common Issues

•Its all about Savings and Credit •Educated benefiting the most

Facilitators •Ambiguity in roles -CC’s , MBK’s, Animators et al.. -BOD/EC -TINA factor that’s increasing the retention capacity of field staff Promoters - Promoters push Fed’s to diversify -Imposing rather than evolving (Structures) 19

SHG Federations as Financial Intermediaries

Suggestions •Conceptual clarity •No grants please •Structure •Task sharing

–Village Organizations - Financial Intermediation & Bank Linkages - Cost cuttings of staff - Effective link between members and MS - Emphasize to educate groups - Train students to write books Cost of Book Keepers Contd…

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SHG Federations as Financial Intermediaries

•Mandal Samakya -Using the advantage of Economies of Scale -Marketing of commodities -Backward-Forward Integration -Value added Services -Facilitate in Social intermediation -Training and facilitation of Financial Intermediation

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SHG Federations as Financial Intermediaries

Open 2 Discussion…..

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