should get it.
To move approximately 300 million people in India, who are below the poverty line out of ‘poverty trap’ and serving the ‘poorest of poor’, it’s imperative for MFIs to move to next wave of growth in microfinance and not restrict themselves to microcredit lending only, and develop innovative financial products keeping in view the interest of the ‘poorest of poor’ so that the actual benefits can percolate to the people who really need them. While analyzing the findings of our survey, we are recommending few important suggestions:
Training SHG members (especially of those who borrowed from MFI) to enhance their financial literacy and earning power.
Changing the repayment schedule and made it more flexible.
The changes which are required to be made are explained through the following model.
We can forget for some time to provide credit facility and saving mobilization to the poor but it is injustice to provide credit without any training and input to the poor people. It is well accepted fact that a credit will not attain its objective, until and unless it will use in right way and it can be achieve only if the people will get a proper training. Generally the poor continues with their family occupation, many a times related with their cast to which they belong, particularly in northern India. Traditional knowledge and skills as gained through generations, certainly has importance, but not able to a good sustenance. Large scale mechanized production has let it down. In short, role of training for better occupational efficiency can hardly be overemphasized.
Additionally, following factors goes in favor for providing training: ‐
1. The model which is adopted by the MFIs is not including NGOs or any other social service group as intermediary and so to provide some sort training or better implements is grossly untouched, though it is found that most of the MFIs work as a consultant and lender both for the borrower but still the number of such MFI is very low. On the other side illiterate and poor people can neither explore other available avenues nor may have access to it. So there is ground for linking providing micro credit facilities & related occupational training.
2. Members of group (Linked to a MFI) feel the need of occupational training and better implements, whether they are with their traditional occupational or have ventured into some other area, while the member of group which are facilitated by an NGO feels the need for a personnel who can do the documentation work on behalf of them. For that a better way is to choose a person from a group itself who is enough educated to do the document of work for not only his own group but also for the other group as well.
Repayment schedule should start from the very next week of borrowing.
Repayment rules should remain same irrespective of the growth status of the SHG.
Better training should be given to ensure additional income. It will ensure timely return.
Repayment installments should remain of the same size throughout the outstanding of the loan amount and must not vary with time.
References
Tor Jansson, IADB, Micro-finance From village to wall street.
Bansal Hema (2003), “SHG – Bank Linkage Program in India: An Overview”, Journal of Microfinance, Vol. 5 No’s 1.
John Weiss, Heather Montgomery and Elvira Kurmanalieva: Micro Finance and Poverty Reduction in Asia: What is the Evidence? (ADB Institute Research Paper Series No. 53 December 2003).
Lucie Gadenne, Veena Vasudevan, Institute for Financial Management and Research Centre for Micro Finance, Working Paper Series No. 18, November 2007 (How Do Women in Mature SHGs Save and Invest Their Money?).
Dr. Kimberly Leonard (Impact of Micro-finance on poverty, Income inequality and entrepreneurship).
Priya Basu (World Bank) and Pradeep Srivastava (NCAER, India), (Scaling up Microfinance for India’s rural poor).
NABARD, Annual Report 2008-2009 (http://www.nabard.org/FileUpload/DataBank/AnnualReports/Annual_Report_2008-2009_ENGLISH_100809.pdf).
http://www.microfinanceinsight.com
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