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	Micro Finance in India 2010-11

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Departments

Core Business

Policy Planning and monitoring of micro finance programme.

Support to SHPIs for promotion and credit linkage of SHGs.

Capacity building of stakeholders in microfinance.

Promotion of micro enterprises among members of SHGs

Rating/ Capital/Equity/ RFA support to MFIs

Special Initiatives in Resource Poor Regions

Our External associates are:

1. Gesellschaft für Internationale Zusammenarbeit (GIZ)

GIZ (German International Co-operation) is a federal enterprise based in Eschborn near Frankfurt am Main. It was founded in 1975 as a company under private law. The German Federal Ministry for Economic Cooperation and Development (BMZ) is its major client. The company also operates on behalf of other German ministries, the governments of other countries and international clients, such as the European Commission, the United Nations and the World Bank, as well as on behalf of private enterprises.

The core competency of GIZ is capacity development. Capacity is the ability of people, organisations and societies to shape development on a sustainable basis. This entails identifying problems and then developing and successfully implementing strategies to reach solutions. We support developing and emerging countries in building their capacities and managing the learning and change processes involved.

GIZ works with NABARD at the macro level and achieves impacts at the micro level. Besides working on technical issues such as management information systems (MIS), credit risk management, design of demand-oriented financial products and viability analysis, GIZ cooperates with its partner in a process-oriented manner and supports strategy development of microfinance in India.

Projects of such organisation:

Collaboration under Rural Finance Institutions Programme.

2. KfW (Kreditanstalt für Wiederaufbau)

KfW is a German government-owned development bank, based in Frankfurt. Its name originally comes from Kreditanstalt für Wiederaufbau, meaning Reconstruction Credit Institute.

Projects of such organisation:

NABARD is at present associated with KfW in the project implemented in Ahmedabad by SEWA Bank.

3. International Fund for Agricultural Development (IFAD)

The International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations, was established as an international financial institution in 1977 as one of the major outcomes of the 1974 World Food Conference. IFAD's mission is to enable poor rural people to overcome poverty. IFAD is dedicated to eradicating rural poverty in developing countries. Seventy-five per cent of the world's poorest people - 1.05 billion women, children and men - live in rural areas and depend on agriculture and related activities for their livelihoods. Working with rural poor people, governments, donors, non-governmental organizations and many other partners, IFAD focuses on country-specific solutions, which can involve increasing rural poor peoples' access to financial services, markets, technology, land and other natural resources.

Projects of such organisation:

A Programme for “Rural Women Empowerment and Livelihood in Mid Gangetic Plains” called as “Priyadarshini” has been launched in select districts of Uttar Pradesh and Bihar. The Eight year Programme envisaging project outlay of US $ 32.73 million is being funded by IFAD with financial assistance of US $ 30.00 million from International Fund for Agriculture Development (IFAD). The balance contribution of US $ 2.73 will be made by the Government of India.

Micro Credit Innovations

Micro Finance in India - An Overview

In the post nationalisation era, the banking sector witnessed flow of substantial amount of resources while the banking network underwent an expansion phase without comparables in the world. Credit came to be recognized as a remedy for many of the ills of poverty. Credit packages and programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experience gained.

NABARD, during the early eighties, conducted a series of research studies in association with MYRADA (a leading NGO from South India) and also independently which showed that despite having a wide network of rural bank branches that implemented specific poverty alleviation programmes and self-employment opportunities through bank credit for almost two decades, a very large number of the poor continued to remain outside the fold of the formal banking system. These studies also showed that the existing banking policies, systems and procedures, and deposit and loan products were perhaps not well suited to meet the most immediate needs of the poor. It also appeared that what the poor really needed was a better access to these services and products, rather than cheap subsidised credit. Against this background, a need was felt for alternative policies, systems and procedures, savings and loan products, other complementary services, and new delivery mechanisms, which would fulfil the requirements of the poorest, especially of the women members of such households.

The launching of its Pilot phase of the SHG (Self Help Group) Bank Linkage programme in February 1992 could be considered as a landmark development in banking with the poor. The SHG-informal thrift and credit groups of poor came to be recognised as bank clients under the Pilot phase.

The strategy involved is simple viz. forming small, cohesive and participative groups of the poor, encouraging them to pool their thrift regularly and using the pooled thrift to make small interest bearing loans to members, and in the process learning the nuances of financial discipline.

Subsequently, bank credit also becomes available to the Group, to augment its resources for lending to its members. It needs to be emphasised that NABARD sees the promotion and bank linking of SHGs not as a credit programme but as part of an overall arrangement for providing financial services to the poor in a sustainable manner and also an empowerment process for the members of these SHGs. NABARD, however, also took a conscious decision to experiment with other successful strategies such as replicating Grameen, wholesaling funds through NGO-MFIs.

Micro Finance

MF in India - An Overview

The post nationalisation period in the banking sector witnessed substantial amount of resources being earmarked towards meeting the credit needs of the poor. The banking network underwent an expansion phase without comparables in the world. The branch expansion was synergised with massive manpower recruitment drive for manning such branches. Credit came to be recognized as a remedy for many of the ills of the poverty. Credit packages and programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experiences gained. Besides the programmes initiated by the Central Government, a large number of credit-based programmes were introduced by the state governments with large resource allocations.

NABARD’s Vision and Mission

Vision

To facilitate sustained access to financial services for the unreached poor in rural areas through various microFinance innovations in a cost effective and sustainable manner.

Mission

By the end of year 2015, we have planned to link nearly 9.2 crore households which would ensure coverage of more than 50% women through SHG Bank linkage programme.

Contact us

Officer in-charge

(i)	Name	:	Dr. S L Kumbhare
(ii)	Designation	:	Chief General Manager
(a)	Contact Nos. Tel Fax	: :	(91) 022-2653 0084, (91) 022-26539272 (91) 022-26528141
(b)	E-mail ID	:	mcid@nabard.org

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	Proposal invited for support from NABARD SDC Rural Innovation Fund

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