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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 1

SHG Federations as Financial Intermediaries

Contents         

Over View Objective Scope Methodology Limitations Abbreviations Comparisons across Parameters Common Issues Suggestions 2

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

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SHG Federations as Financial Intermediaries

Abbreviations MS : Mandal Samakya VO: Village organizations CIF : Community Investment Fund MBK : Master book keepers CC : Community coordinator BOD: Board of Directors Bank-Linkage 9

SHG Federations as Financial Intermediaries

Profile of Federations District

Promoter

Type

Structure Grants

Sneha

RR

DRDA

AP Govt

2 Tier

Yes

DB

RR

ASP

NGO

2 Tier

No

DPIP

Project

3 Tier

Yes

Project

3 Tier

Yes

NGO

2 Tier

No

Gangavar Chittoor am Gandlapenta

Ananthapur UNDP

Kunikina- Vijaywada Sanghapadu Mitra

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SHG Federations as Financial Intermediaries

Comparable Parameters Maheswaram

DB Macs

Gangavaram

Gandlapenta

Kunkinapa du

Structure

Imposed Partially imposing

Imposed

Imposed

Evolved

Legal compliance

Yes/No

No

No

Yes

Yes

Income on external loans

9% and 15%

Nil

Nil

Nil

Nil

High

Very High Average

Dependence Very on staff High

Very Low 11

SHG Federations as Financial Intermediaries

Contd.. Maheswaram

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

Common Issues Conceptual clarity •Its all about Savings and Credit •Educated benefiting the most

Facilitators • Power centers •Ambiguity in roles -CC’s , MBK’s, Animators et al.. -BOD/EC •TINA factor that’s increasing the retention capacity field staff

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SHG Federations as Financial Intermediaries

Contd… Promoters -Promoters push Fed’s to diversify -Imposing rather than evolving (Structures)

The story of Rural Provisional Stores Externalities - Political Influences and Repayments

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SHG Federations as Financial Intermediaries

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

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

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SHG Federations as Financial Intermediaries

Cost of Book Keepers Percentage of idle funds

10%

15%

20%

25%

Avg Group size Monthly savings per member Total group savings Per Annum Savings Idle funds

15 30 450 5400 540

15 30 450 5400 810

15 30 450 5400 1080

15 30 450 5400 1350

Net funds for lendings

4860

4590

4320

4050

Interest on internal lendings per annum 1166.4 Book keeper salary per annum 400 In percentage terms 34%

1101.6 400 36%

1036.8 400 39%

972 400 16 41%

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 Capacity building programmes for VO’s 17

SHG Federations as Financial Intermediaries

Open To Discussion…..

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