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NABARDNABARDCommitted to Rural ProsperityCommitted to Rural Prosperity

Dr.B.S.SuranGeneral Manager NABARD, Ahmedabad

NABARD

Bank network for rural creditBank network for rural credit

Reserve Bank of India Government of India

NABARDNABARD

Public SectorBanks (27) RRBs (196)

June 2002

PrivateBanks (31)

Rural

Foreign Banks (41)

TOTAL

““WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”WE MAKE BANKING POSSIBLE WITH THE LAST , THE LOST AND THE LEAST”

RuralSemi-urban

UrbanMetroTotal

19,27510,9038,7377,203

46,118

12,0602,037

35917

14,473

1,1381,7611,3221,1555,376

02

20 180 202

TOTAL32,47314,70310,4388,555

66,169

+ the cooperative banks , about 92,000 Primary agri. Credit Societies

NABARD

Banks

Rural population

The Dilemma of ….. The Inverted Pyramid


Large Banking infrastructure, enhanced outreach in rural areas , 70 million small loans, pro-poor policies, subventions, programmes and intentions like directing credit to the rural areas, large resource base of banks, good manpower and sound control systems…….

….BUT …the Debt and investment surveys revealed skewness in credit flow, declining household debt from non- institutional agencies still formed a sizable measure.

The search for reasons and the mismatches started….in the 1980sThe search for reasons and the mismatches started….in the 1980s

NABARD …… in the 1980s Savings and credit products did not suit the needs of the poor Procedures were complicated and cumbersome High transaction costs for the poor and the delivery system System did not provide for anything to fall back on Even special poverty alleviation programmes did not recognise importance of

savings Resources handled were often larger than the poor’s capacity to handle “Others” decided everything

Findings from Research studies …..


“Others” decided everything

the POOR just wanted….the POOR just wanted….•Mechanism to keep their limited

resources safely • Credit to meet emergencies

• Credit for mEs

Or just Hassle-free

financial services

So we were looking for…

Sustainable approachesProducts that match Needs & capacitiesReduce trans costs

NABARD

A homogeneous group of about 15 to 20 Every member to save a small amount regularly. Pooled savings

kept in a savings bank account in SHG’s nametransaction costs of both the poor and bank reduced !

SHG to use pooled thrift to give interest bearing loans to members – decisions taken in group meetings

The Self Help Group (SHG). . The Self Help Group (SHG). . What is it ?What is it ?


members – decisions taken in group meetingsEvery member learns prioritisation and financial discipline.

Their capacities to think and handle larger resources improves!

Depending on the SHG’s maturity, bank gives loan to the SHG as a multiple of the pooled savings. Bank loan added to the SHG kitty.Adequate & sustained access to financial services!

NABARD

Design featuresEnables exclusion of rich Enables exclusion of rich SelfSelf--selection selection Focus on women Focus on women Saving first and credit later Saving first and credit later Intra group appraisal systems and Intra group appraisal systems and

prioritization: prioritization:


prioritization: prioritization: Credit rationing Credit rationing Shorter repayment terms Shorter repayment terms Market rates of interest Market rates of interest Progressive lending Progressive lending MultiMulti--eyed operation eyed operation

NABARD

150000

200000

YEARWISE SHGs CREDIT LINKED

Banks as SHPIWorking

Group

News letterDistance Edn

New FundOther SHPIs

landmarks

1010 Tech..


0

50000

100000

YEARS1 2 3 4 5 6 7 8 9 10

Pilot

Separate Fund

Group

ReorientingTraining

Govt . Recg

Vision+ TF

Rating,Documentation,

Training

NABARD

150000

200000

YEARWISE SHGs CREDIT LINKED

Growth

& Expansion

Stages of SHG Bank Linkage Programme


0

50000

100000

YEARS1 2 3 4 5 6 7 8 9 10

Introduction and Validation

Mainstreaming

NABARD The Product converges…..The Product converges…..

FORMAL and INFORMAL Systems

FINANCE Capital and SOCIAL Capital

Systems & procedures and FLEXIBILITY


FLEXIBILITY PROFESSIONALISM and Local

Knowledge

An Indianised Product An Indianised Product ––Researched, Tested, Researched, Tested, Piloted, Grown, Expanded, Piloted, Grown, Expanded, ……….. and Now ……….. and Now A A MOVEMENT……….MOVEMENT……….

NABARD SHG-Bank Linkage … Progress As at…… Mar 93 Mar 96 Mar 04 Mar 2009

• SHGs linked 255 4,757 10,79,000 42.24 lakh• % women’s groups 70 74 90 82• Families assisted 5,100 80,000 16.7 Million 59.10 Mil • Banks participating 14 95 560 570+


• Banks participating 14 95 560 570+• NGO Partners 32 127 3000 3400+• Districts covered 26 157 564 564• Aggregate bank loans 1.5 6.2 3901 22,679 (o/s)

handled (Rs Crore)• NABARD Refinance (Rs crore) 2124 4,200(app)

NABARD

SHPIsSHPIsSocially committedSocially committed

BanksBanksNGOsNGOs

Building social capital..Building social capital..


SHPIsSHPIs

Farmers’ clubsFarmers’ clubs

Socially committedSocially committedindividualsindividuals

GovernmentGovernmentfunctionariesfunctionaries

Mobilizing Communities …..Mobilizing Communities …..

NABARD

StakeholdersCadre of trainers

Training

Trg centre Partnership

Commitment building thru capacity building …Commitment building thru capacity building …


Training Approaches

Training consultation

Dissemination of materials

TNADesigning

Trg modules

IGNOU partnership

NABARD

BankersBankers6 different training and exposure programmes for CEOs, Directors on Boards, middle management, branch managers, field staff

NGOs NGOs 3 different training and exposure programmes for CEOs

Our manpower building approaches …Our manpower building approaches …


3 different training and exposure programmes for CEOs and field staff, Refresher programmes

Govt officialsGovt officials3 different training and exposure programmes for senior bureaucrats, middle level operational functionaries, and field staff

Trainers Trainers 3 different programmes to equip trainers from Banks, Government, and NGOs.

NABARD

Self-Help

Peace (Interfaith,

inter-caste tolerance

Social Evil Eradication(Alcohol abuse, spousal abuse,

Income Generation (Encouragement and advice) Leveraging Govt contracts-hatts/ quarrying/fish pond/ milestone/ health related

microFinance (Savings and credit)

Banker friendlymarket/recovery/image

Infrastructure building (physical, social & community assets

Emergency Prevention(recurring natural calamities)

What was the impact What was the impact ?…..contd…


Self-Help Initiatives

inter-caste toleranceand conflict resolution)

Education

(School for children,

adult literacy.

Peer education )

Civil Society (Women members

run for elected office)

spousal abuse, excessive dowry,

Undesirable social practices gender space,)

Watershed Management

(Water users groups,

infrastructure maintenance,

share practices)

NABARD

INFLUENCINGPOLICY

INVOLVINGINSTITUTIONS

ENCOURAGINGINNOVATIONS

MOTIVATINGPARTNERS

CREDIT SUPPORT

NABARD

NABARD and microFinance


TECHNICALSUPPORT

COORDINATION WITH PARTNERS

GROUPLINKAGETRAINING AND

CAPACITY BUILDING

GROUPFORMATION

NABARD

NABARD

Other initiatives

Grain banks and SHGs

Computer munshi

IT integration with processor cards


IT integration with processor cards

Rural Volunteers are book keepers

Project on e-grama

Social Security system for SHGs

Other Credit models – JLGs /Raithu Mitra Groups

NABARD

Our simple strategy . . . . . .

Continue to invest in development of Human Capital Strengthen outreach in infrastructurally weak areas

Intensify diverse training and sensitization approaches

Selectively meet costs of SHG promotion by different SHG promoting institutions


promoting institutions

Address post-finance management issues of banks

Integrate IT in mF systems – enhancing efficiency !!

Diffuse learnings and share good practices

Contain supply side anxieties

Thank youThank you

NABARDNABARDCommitted to Rural ProsperityCommitted to Rural Prosperity

For more details log on to

www.nabard.org