A
PROJECT REPORT
ON
Role of NABFINS in women empowerment through microfinance in
Dhule (Maharashtra)
UNDER THE SUPERVISION OF
Dr. S. K. Soam
HEAD
INFORMATION AND COMMUNICATION MANAGEMENT
ICAR-NAARM, Hyderabad
SUBMITTED BY
Kamlendra Kumar
PGDM-1510
Post Graduate Diploma in Management (Agriculture)
ICAR-NAARM, Hyderabad
Indian Council of Agricultural Research
National Academy of Agricultural Research Management
Rajendranagar, Hyderabad (500030)
Telangana State, India
I | P a g e
CERTIFICATE
This is to certify that Mr. Kamlendra Kumar is a bonafide student of Post
Graduate Diploma in Management (Agriculture), ICAR-NAARM, Hyderabad, has
successfully completed the project work as prescribed by the Academy in the
partial fulfillment of the requirement of Post Graduate Diploma in Management
(Agriculture) for the academic year 2015 – 2017.
He has successfully completed his final project which is titled as “Role of
NABFINS in women empowerment through micro finance in Dhule
(Maharashtra)”.
PROJECT GUIDE
Dr. S. K. Soam
(HEAD) INFORMATION AND
COMMUNICATION MANAGEMENT
II | P a g e
DECLARATION
I, Kamlendra Kumar, student of Post Graduate Diploma in Management
(Agriculture), Indian Council of Agricultural Research – National Academy of
Agricultural Research Management, Hyderabad, do hereby solemnly and
sincerely declare, to the best of my knowledge and belief that the project titled
as “Role of NABFINS in women empowerment through microfinance in Dhule
(Maharastra)” in partial fulfillment of the award of Post Graduate Diploma in
Management (Agriculture) under the guidance of Dr. S.K Soam, Head
Information and Communication Management, ICAR – NAARM, Hyderabad is
my original work and the conclusions drawn therein are based on the data
collected by myself and all the contents and facts prepared and presented are
authentic without any bias.
The report submitted is my own work and has not been duplicated from any
other source. I shall be responsible for any irrelevant moment/situation.
Place : _ _ _ _ _ _ _ _
Date : _ _ _ _ _ _ _ _
KAMLENDRA KUMAR
PGDMA-1510
ICAR-NAARM, Hyderabad
III | P a g e
AKNOWLEDGEMENT
The success of the project is dedicated to the encouragement and guidance of
many people. I take this immense privilege to express my gratitude to the people
who have been an important part of the successful completion of this project.
I am thankful for all the knowledge, guidance and support imparted by our
director Dr. (Mrs.) R. Kalpana Sastry to me who gave me invaluable knowledge
during the final project.
In addition, I wish to convey deep sense of gratitude towards Dr. Ranjeet Kumar
(Head of the Agribusiness Management Division) for his valuable suggestions
and guidance for getting the data from different sources.
I would like to extend my heartfelt gratitude to Dr. K. Kareemulla, Dr. B. Ganesh
Kumar, and Dr. (Mrs.) Manju Gerard for the intellectual stimulation, monitoring
and providing continuous feedback to continue the project in desired direction.
I would also like to take this opportunity to thank the faculty members of
NAARM who have toiled hard in paving a solid foundation in me which is indeed
of great importance in carrying out the research work. My sincere thanks to Dr.
S.K. Soam (project guide) and who supported me throughout my project.
I would like to thank my family, fellow friends and juniors who are always there
to support and encourage me. I also thank all the persons who have given their
valuable time, views and authentic information for this project.
Date:
Kamlendra Kumar
PGDMA-1516
4
Table of contents
S.no Chapter Name Page no
1 Introduction 5-8
2 Objectives of study 9
3 Microfinance & Empowerment of Women 10-11
4 NABARD Financial Services Limited 12-23
5 Materials and Methods 24
6 Result and Discussion 25-28
7 Conclusion and Recommendations 29-30
8 References 31
5
1. Introduction
Microfinance is defined as any activity that includes the provision of financial
services such as credit, savings, and insurance to low income individuals which fall
just above the nationally defined poverty line, and poor individuals which fall below
that poverty line, with the goal of creating social value. The creation of social value
includes poverty alleviation and the broader impact of improving livelihood
opportunities through the provision of capital for micro enterprise, and insurance and
savings for risk mitigation and consumption smoothing. A large variety of sectors
provide microfinance in India, using a range of microfinance delivery methods.
Governments also have piloted national programs, NGOs have undertaken the
activity of raising donor funds for on-lending, and some banks have partnered with
public organizations or made small inroads themselves in providing such services.
This has resulted in a rather broad definition of microfinance as any activity that
targets poor and low-income individuals for the provision of financial services. The
range of activities undertaken in microfinance include group lending, individual
lending, the provision of savings and insurance, capacity building, and agricultural
business development services. Whatever the form of activity however, the
overarching goal that unifies all actors in the provision of microfinance is the creation
of social value.
1.1 Microfinance Definition
According to International Labor Organization (ILO), “Microfinance is an economic
development approach that involves providing financial services through institutions
to low income clients”.
6
In India, Microfinance has been defined by “The National Microfinance Taskforce,
1999” as “provision of thrift, credit and other financial services and products of very
small amounts to the poor in rural, semi-urban or urban areas for enabling them to
raise their income levels and improve living standards”.
The dictionary meaning of ‘finance’ is management of money. The management of
money denotes acquiring & using money. Micro Finance is buzzing word, used when
financing for micro entrepreneurs. Concept of micro finance is emerged in need of
meeting special goal to empower under-privileged class of society, women, and poor,
downtrodden by natural reasons or men made; caste, creed, religion or otherwise.
The principles of Micro Finance are founded on the philosophy of cooperation and
its central values of equality, equity and mutual self-help. At the heart of these
principles are the concept of human development and the brotherhood of man
expressed through people working together to achieve a better life for themselves
and their children.
Traditionally micro finance was focused on providing a very standardized credit
product. The poor, just like anyone else, (in fact need like thirst) need a diverse range
of financial instruments to be able to build assets, stabilize consumption and protect
themselves against risks. Thus, we see a broadening of the concept of micro finance
our current challenge is to find efficient and reliable ways of providing a richer menu
of micro finance products. Micro Finance is not merely extending credit, but
extending credit to those who require most for their and family’s survival. It cannot
be measured in term of quantity, but due weightage to quality measurement. How
credit availed is used to survive and grow with limited means.
7
1.2 Concept and Features of Micro-finance:
1. It is a tool for empowerment of the poorest.
2. Delivery is normally through Self Help Groups (SHGs).
3. It is essentially for promoting self-employment, generally used for:
(a) Direct income generation
(b) Rearrangement of assets and liabilities for the household to participate
in future opportunities and
(c) Consumption smoothing.
4. It is not just a financing system, but a tool for social change, specially for
women.
5. Because micro credit is aimed at the poorest, micro-finance lending
technology needs to mimic the informal lenders rather than the formal sector
lending. It has to:
(a) Provide for seasonality
(b) Allow repayment flexibility
(c) Fix a ceiling on loan sizes.
Microfinance approach is based on certain proven truths which are not always
recognized. These are:
1. That the poor are bankable; successful initiatives in micro finance
demonstrate that there need not be a tradeoff between reaching the poor and
profitability - micro finance constitutes a statement that the borrowers are not
‘weaker sections’ in need of charity, but can be treated as responsible people
on business terms for mutual profit .
2. That almost all poor households need to save, have the inherent capacity to
save small amounts regularly and are willing to save provided they are
motivated and facilitated to do so.
8
3. That easy access to credit is more important than cheap subsidized credit
which involves lengthy bureaucratic procedures - (some institutions in India
are already lending to groups or SHGs at higher rates - this may prevent the
groups from enjoying a sufficient margin and rapidly accumulating their own
funds, but members continue to borrow at these high rates, even those who
can borrow individually from banks).
4. 'Peer pressure' in groups helps in improving recoveries.
9
2. Objectives of study
The Dhule district previously comprised tracts of land predominantly inhabited by tribal population. The Dhule district was then bifurcated on 1 July 1998 into two separate districts now known as Dhule and Nandurbar, the latter comprising the tribal region. Agriculture remains the basic profession of the population in this district. Most parts of the district are not under irrigation and thus cultivation heavily depends on regular Monsoon or rain water. Apart from wheat, bajra, jowar or jwari, onion the most favored commercial crop is cotton.
Dhule district is famous for the production of milk. Milk cattle used to be fed with cotton pend (cattle feed made by using cotton extract)
Due to mostly tribal areas women are not activity oriented and devoid of financial support.
Objectives of study include:
To study the Scenario of Microfinance Industry
To study the Standard Operational Procedure (SOP) followed by NABFINS
To study the District level Financial Inclusion in Dhule (Maharastra) in study period
10
3. Micro Finance and Empowerment of Women
Self Help Groups (SHGs) have become the vehicle of change in the rural areas,
transforming the lives of the marginalized. Realizing that problems cannot be solved
alone, or by a single agency, small voluntary groups get together to pool their
resources, skills and talent to better their lives. SHGs organize the poor and the
marginalized to join hands to solve their problems and the method has been very
successfully used by the government and the Non-Government Organizations in
achieving several goals. As a form or enterprise, SHG performs the role of collective
banks and enterprises and ensure better access to loans with a lower rate of interest
to start or micro unit enterprises.
Empowerment is a social action process that promotes participation of people,
organization and communities in gaining control over their lives in their community.
There is urgent need of empowering women especially in rural areas. The formation
of Self Help Group and Micro Financing will enhance their socio- economic position
in the society.
Small loans can make good business sense among the women. It has been noticed
that women in particular stand to gain a lot from micro-finance because it gives them
an independent means of generating wealth and becoming self-reliant in a society
that does not offer them much scope for entrepreneurship. And since it is women
who run the household, a higher standard of living for women ensures better
governance and a healthier and more prosperous future for the children and a better
future for the nation. The success of micro credit initiatives has often been attributed
to their particular focus on empowering women and encouraging their self-reliance
through developing their own means of income. Various case studies show that there
is a positive correlation between credit availability and women's empowerment. It is
observed that majority of rural women who are associated with self-help group
activity positively succeeded to gain themselves empowered.
Women in rural India lived in virtual isolation, unable to access even the most basic
of services. But, with the formation of Women's Self-Help Groups, these women are
now achieving social and physical mobility. It is recognized that while the
empowerment of women is a process that will not happen automatically, SHG is a
suitable means for the empowerment of women. The impacts of SHGs on socio-
economic status of women were found significant.
11
Microfinance programs are currently being promoted as a key strategy for
simultaneously addressing both poverty alleviation and women's empowerment.
Where financial service provision leads to the setting up or expansion of micro-
enterprises there are a range of potential impacts including:
Increasing women's income levels and control over income leading to greater levels
of economic independence.
Access to networks and markets giving wider experience of the world outside the
home, access to information and possibilities for development of other social and
political roles.
Enhancing perceptions of women's contribution to household income and family
welfare, increasing women's participation in household decisions about expenditure
and other issues and leading to greater expenditure on women's welfare.
More general improvements in attitudes to women's role in the household and
community.
Why women SHGs
More than 60,000 women spread in 4 Blocks of Dhule District belong to the ‘Below
poverty line’ category ( their annual income is less than Rs. 24000. These women
are from different caste groups such as Scheduled Caste (SC), Scheduled Tribes (ST),
most backward Caste (MBC) backward caste (BC) and minority groups (Muslims).
Most of them are illiterates/semi-literates. Only 15 percent of this population own
economic assets, such as weaving looms, cows and goats, or a petty shop business.
If they need money, they cannot go to a bank to get a loan, so often their only choice
is to get a loan from a local money-lender, who usually charges outrages interest
rates (sometimes more than 100%!). Often such debts cannot be paid off in time, and
the individual or the family gets in deeper poverty, and sometimes leads to suicide.
The situation is especially poor for women, because they have often little or no
economic status, and especially when their husband is working elsewhere, they have
to face severe financial hardship.
12
4 NABARD Financial Services Limited
NABARD Financial Services Limited (NABFINS) is a subsidiary of National Bank
for Agriculture and Rural Development (NABARD) with equity participation from
NABARD(67%), Government of Karnataka(13%), Canara Bank(11%), and Union
Bank of India(5.7%), Bank of Baroda(3%), Dhanalakshmi Bank(3%) and Federal
Bank0.3). It is a non-deposit taking NBFC-MFI registered with Reserve Bank of
India and operate throughout India.
Fig: 3.1 Shareholders in NABFINS
The main objective of NABFINS is to provide financial services to unserved and
underserved activities. NABFINS envisages to evolve itself into a Model Micro
finance institution to set standards of governance among MFIS, operate with
exemplary levels of transparency, Operate at reasonable/moderate rate of interest and
provide financial Services at doorstep/near doorsteps of the clients.
The main focus of NABFINS is to Support livelihood activities of members of Self
Help Groups (SHGs), support institutions which serve disadvantaged sections of
populations like weavers, rural, artisans, urban poor, Small retail traders, small
producers, Small and marginal farmers, allied activities to agriculture etc.
67%
13%
11%
5.7%3%
0.3%
NABARD
Govt. of Karnataka
Canara Bank
Union Bank of India
Bank of Baroda
Federal Bank
13
Thus, NABFINS endeavors to establish and run a NBFC-MFI model which would
promote and sustain:
i) Good governance leading to transparency in accounting, remuneration and
disclosure,
ii) Reasonable rates of interest and low transaction Costs which earn a profit but do
not profiteer at the expense of the clients,
iii) Investment in activities that generate income in the short, medium and long
term and increase Capital assets with the poor families;
iv) Customized loans and repayment Schedules in order to respond to the diversity
of livelihood situations and
v) Fair practices which ensure that there is no over/ multiple lending or coercion in
Collection.
Keeping in mind these guiding norms, NABFINS intends to promote a culture,
organizational and business models which would -- "Balance business with inclusion
in growth". Inclusion focuses on the poor and marginalized.
NABFINS has currently its operations in- Madhya Pradesh, Maharashtra, Karnataka,
Andhra Pradesh, Tilangana, Tamilnadu, Chhattisgarh, Jharkhand, Bihar, Kerala,
Manipur and Mizoram which covers 92 districts
Fig:3.2 Financial Highlights of NABFINS
The total income of company for the year under review is ₹144.51crore which is
16.71% higher than the total income of ₹ 123.82 crore for previous year. The profit
before tax is ₹ 24.63 crore for the year ended March 31, 2016 as against ₹ 31.18
crore for the corresponding previous year.
144.51
123.82
24.6331.18
0
20
40
60
80
100
120
140
160
FY 2015-16 FY 2014-15
Rs
Cro
re
Total Income PBT
14
Fig: 3.3 Total SHG Network of NABFINS from 2012-2016
NABFINS client outreach is growing at a CAGR of 36.71% and has reached up to
5.54 lakh in 2016 from 1.16 lakh in 2012.
Fig: 3.4 NABFINS Loan Purpose Distribution
Most of the loan disbursed by the NABFINS is utilized in agriculture, agriculture
allied and Non-farm business which include poultry, dairy, handicraft, and other
small business like provision store etc..
1.16
2.36
3.8
5.095.54
0
1
2
3
4
5
6
2012 2013 2014 2015 2016
Clie
nt
(Lak
h)
Year
20%
27%
27%
6%
7%
7%
5% 1%
Agri
Agri Allied
Non Farm
Debt Swap
Houshold
Business
Housing
Health
15
Fig: 3.5 NGO linkages of NABFINS from 2012-2016
The number of B&DC are continuously increasing and reached up to 275 in the year
2016
Fig: 3.6 Amount disbursed by NABFINS from 2011-2016
Amount disbursed is the amount which has already been provided to SHGs as a loan,
It is Rs 808 crore in year 2016
NABFINS contributes only 1.5 % of the total MFI loan disbursement in 2015-16.
211
411
631
764808
0
100
200
300
400
500
600
700
800
900
2011-12 2012-13 2013-14 2014-15 2015-16
Rs
cro
re
67
103
161
268 275
0
50
100
150
200
250
300
2012 2013 2014 2015 2016
Nu
mb
er o
f B
&D
C
16
Fig: 3.7 Average loan size
Average loan size of year 2016 is 3.9 lakh which has come down as compare to 2015
which is 4.87 lakh due to less requirement of loan due to better monsoon and
company internal changes for risk mitigation
3.8 BUSINESS MODELS OF NABFINS:
NABFINs provides loans to individuals, groups such as Self Help Groups (SHGs),
Joint Liability Groups (JLGs), Institutions of the poor, etc.
At present NABFINS has distinct business models for financing the following
Customer segments
1. Self Help Groups (SHGs)/Joint Liability Groups (JIGs) under Business &
Development Correspondents/Facilitators model
2. Joint Liability Groups (JLGs) including special projects like Post Tsunami
Sustainable Livelihood Project (PTSLP) in Tamilnadu
3. Second Level Institutions (SLIs)
3.13.48
3.79
4.87
3.9
0
1
2
3
4
5
6
2012 2013 2014 2015 2016
Loan
Siz
e (R
s. L
akh
)
Year
17
In addition to the above three business models, NABFINS has also a direct linkage
model, wherein, SHGs are financed directly, wherever, the existing B & DC cease
to exist or failed and in areas where there is scarcity of good NGOs.
3.8.1 B & DF/B & DC MODEL:
Under this Model, NABFINS provides need based finance to Self Help
Groups"/Joint Liability Groups" through the intermediaries or "partners' named as
Business and Development Facilitators (B&DFs) or Business & Development
Correspondents (B&DCs). These B& DFS or B&DCs are typically, NGOs, local
grass root level organizations, Community Managed Resource Centers, Producer
Collectives, etc., who act as intermediaries between rural poor and financing
institutions. While the intermediary function of B&DF and B& DC are identical in
nature, i.e., providing financial linkage for SHGs, the only differentiating function
between these two intermediaries is that While B&DC handles Cash
disbursement/recoveries, B&DF Sources loans but does not cannot handle Cash.
Self Help Group (SHG): Self-Help Group (SHG) is a small voluntary association
of 10-20 poor people, preferably from the Same Socio-economic background. They
come together for the purpose of solving their common problems through self-help
and mutual help. The SHG promotes Small savings among its members. The Savings
is used for providing inter-loan among its members for various emergent needs,
surpluses are kept with a bank. This Common fund is in the name of the SHG.
Usually, the number of members in one SHG does not exceed twenty.
Joint Liability Group (JLG): It is an informal group Comprising of 4-10
individuals having affinity and Common interest, preferably engaged in a similar
economic activity - farm Or non-farm, i.e., small/marginal farmers, share Croppers,
shepherds, goat rears, artisans, weavers, petty traders, fruit/vegetable/grain Vendors
etc. They meet regularly and the groups formed based on the principles of self-help
and Cohesion for mutual benefit. A members of the JLG are jointly and severally
liable for the loan availed by each member.
The broad functions of a B & DC are as follows:
-Promotion and nurturing SHGS/Joint Liability Groups/Activity
Groups/Common interest Groups etc.
-Identification of groups for financing and selection of activities
18
- Collection of application and verification of primary information/data
- Processing and submission of application to NABFINS
- Facilitating disbursement of credit sanctioned by NABFNS at doorstep of SHG
- Post-sanction monitoring and follow-up of recovery
-Collection of installments/interest/charges at doorsteps of SHGs and remitting
the same to NABF NS account
- Monitoring and handholding of SHG/JLG/other groups and carrying
developmental activities for upliftment of members of the group.
NABFINS also provides/arranges for grant/support to B&DCs to promote, nurture
and build institutional capacity of SHGS/JLGs/Other groups.
Benefits of B & DF/B & DC Model:
NABFINS as well as the ultimate clients get following benefits from B & DC
model:
- The Service (Disbursement of loan & recovery) can be arranged at the place
and time, which is convenient to the clients
- Credit and enterprise Counseling can be provided taking into consideration
the local opportunities and potentials through B & DCS
- The transaction cost at both at client level can be moderated and the benefit
of this can result in lower transaction cost, which can be passed to the clients
through lower interest rates and charges
-Close and field level monitoring of financial services/support and utilization
can be ensured
- Increased outreach to even areas with poor access by engaging local grass
root level NGOs as B & DF/B & DCS
-Potential to bring Convergence of various developmental activities facilitated
by NGOs and meeting of credit needs required for inclusion in growth.
-Potential to nurture collectives of small/marginal farmers, service providers
etc. enabling them to participate in markets/growth.
-Rural borrowers with low social capital will not have any inhibition in
dealing with agencies/NGO working in the local areas.
-Access to the services including non-financial development services can be
ensured through B&DCs.
19
3.8.2 POST TSUNAMISUSTAINABLE LIVELIHOOD PROGRAMME
(PTSLP) MODEL:
Loans under the programme are provided to Producer JLGs/individuals covered
under the programme in six coastal districts of Tamilnadu, i.e., Nagapattinam,
Kanyakumari, Cuddalore, Vilupuram, Kancheepuram and Thiruvallur, where
extensive damage was caused by Tsunami in the year 2004, for setting up micro
enterprises. This is a sponsored programme of Government of Tamilnadu and
International Fund for Agricultural Development (IFAD). FAD assisted PTSLP
provide credit and enterprise support to build sustainable livelihood systems for
communities affected by tsunami.
At present, NABFINS provide loans to SHG/JLGs identified under the programme
as a part of the project cost, balance being financed by way of soft loan out of PTSLP
funds and margin money to be brought in by the borrower/s. Loans are provided
directly to JLGs through the Support of Project Monitoring Unit (PMU) of PTSLP.
3.8.3 SECOND LEVEL INSTITUTION (SLI) MODEL:
Second Level Institutions (SLI):
Though the Company has been predominantly involved into lending to SHGS, JLGs
using the B&DC model however, considering the importance and overall
requirement of the sector to promote and develop institutions of the poor, the
Company also has a separate vertical focusing only on financing SLIS.
Background:
As the rural production and service Systems are largely constituted of small and
marginal players, they are largely being disadvantaged and unorganized do not enjoy
the advantages of scale. This necessitates the need for Organizing these individuals
and small group of individuals into Common interest assembly.
There are three major areas of intervention that is required:
1. Organisation of the Small players through community organisation requiring
the intervention of agencies with social mobilization abilities.
2.Organisation of the common interest groups into efficient production/
processing Service providers into an institutional framework, providing end
to end Services requiring the intervention of agencies with higher
management abilities.
20
3. Arranging financial services requiring the intervention of agencies with high
risk appetite and an orientation to serve the under-privileged.
The first two components requires grant assistance and multi-institutional
collaboration. The financial services, more particularly credit could be supported by
the company.
Definition of second level Institutions
For the Purpose of providing financial assistance by NABFNS, an organization will
be called second level institution if
1. It is formed by a group of first level organizations like individuals, SHGs,
JLGs, Farmers' Or Artisans Groups/Societies and may include federations.
2 It is a registered body, and a legal entity.
3. Members of first level Organizations are the shareholders in the Organization
4. It deals with any business activity which could interiliac cover production,
processing, aggregation of primary produce or its value addition of primary
produce or marketing
5. It works for the benefit of the members of first level organization/members
6. Profit earned may be shared amongst the member or pooled to the share
capital or reserves of the SLI
Enabling Factors for a successful Second Level Institution
There are three enabling factors for a Successful Second Level Institution.
1. Apex Level: Co-ordination/Partnership/Tie-ups for aggregation, access to
market, finance, technology infusion, quality Control, etc.
2. Organization Level: Strong management, ability of Management to de-risk
the consumer and members.
3. Member Level: Enough motivation, incentives to members to remain
together, pool resources & capabilities to engage in market Centered
production.
21
Credit requirement in a Second Level Institution
Credit is one of the key requirements of a Second Level Institutions. Access to timely
and adequate Credit is difficult for the Second Level Institutions, partly deterred by
low profits made by SLI, weak balance Sheets, and in some cases, lack of ability
collateral being fledgling organisations of the poor with limited understanding of
finance. Even if credit support is extended to a Second Level Institution, it is usually
at high interest rates, which are unsustainable for SLls in the long run. Thus, the
difficulty experienced by SLS is not only for mere access to timely, adequate Credit
but also at reasonable and affordable terms.
Therefore, providing access to credit to such naive, pro-poor organisation is one of
the key interventions being pursued by the Company. The support to these
organisations could be in the form of working capital loans, term loans. While the
term loans could be used by these institutions for purchase of Capital assets,
equipment needed for processing, transport, infrastructure etc, however, the working
capital needs could be primarily used for purchase of inputs, consumables which
support primary production activities by the members. Many SLI like Souharda,
MACs also serve as credit facilitating or on-lending institutions, aggregating the
credit needs and also serving as credit providers at the grass roots for its own
members with other supportive and promotional role.
NABFNS engagement with Second Level Institutions.
The SLls with whom NABFINS work, falls into two categories;
a) Those which do not handle commodities/handicrafts etc. but federate
SHGS and CB05. These federations promote SHGs/CBOs, train them,
help to solve problems and build linkages, provide credit etc.
b) Those that manage commodities/handicrafts - do value addition,
processing, and Scale. This is an urgent requirement in the country where
these institutions have been neglected. However, the risk here is relatively
higher and this risk needs to be covered.
Appreciating the spirit of Collectivism and Cooperation NABFINS has initiated
extending financial support to second level institutions.
The line of activities of different SLs supported by NABFI NS include:
1) Dairy & Milk processing.
2) Procurement, Processing, value addition and marketing of different
commodities viz. Soya bean, Wheat, Bengal Gram, Red Gram, Paddy etc.
22
3) Silk (End to end from weaving to value addition and marketing).
4) Cotton (Procurement, Ginning, Processing and marketing).
5) SHG federations (for on lending to SHGS).
6) Seed Production and Marketing 7) Handloom weaving and readymade
garments.
8) Handicrafts (Bamboo crafts and other items).
9) Jaggery Production.
10) Terracotta Crafts.
NABFINS directly deals with SLIS and not through any intermediaries like B &
DCS.
3.8.4 Standard operation procedures followed by NABFINS for loan
distribution
Standard operation procedure has two main phase:
1. Selection and empanelment of B&DC
2. Loan Process
Business and Development Correspondents (B&DC): Institution/Association
who currently interface between the rural poor and financial institution can be
leveraged to provide support services to NABFINS as Business and Development
Correspondents (B&DC), under well-defined terms and conditions by way of
contractual agreement.
3.8.4.(a) Process of selection and empanelment of B&DC:
• Identification of NGO by District office and Due Diligence by District Team
• Obtain the application with documents and forward the appraisal to HO
• Field visit by HO team and Report submission at B&DC office
• Pre Empanelment meeting with HO team
• In-principle empanelment letter to B&DC at HO
• Committee Meeting at HO with B&DC
• Agreement/Contract with B&DC
23
3.8.4.(b) Loan Process
• Sponsorship letter of groups offered by B&DC
• Loan Application
• Group Grading ; KYC, Records, Bank Account Details
• Application Data Entry and Loan Application Sanction Process(CBS)
• Pre Disbursement Visit
• LAR (Within 15 days of Pre disbursement visit)
• Loan Repayment Start (After 30-45days)
• Post Disbursement Visit (Every three month)
3.8.(c) Grading Indicators:
The whole grading process consist of two types of scores that is financial scores
and Non-financial scores total of 100 marks. A group eligible for loan must score 80
out of 100.
Non-Financial parameters (40 marks)
o Group Governance/Homogeneity
o Conduct of Meetings(during last 6 months)
o Attendance and Meeting
o Financial Transactions in the Group
o Awareness about Financial Transactions
o Maintenance of records
Financial parameters (60 marks)
o Regularity in savings
o Regularity in Internal loan repayment
o Velocity of Internal Lending
o Pattern of Lending
o Borrowers quality
o Maintenance of Records
Documents presented at the time of group grading
Resolution for borrowing from NABFINS
Household Survey
Loan Pass Book/Ledger
All book of accounts
Photos of all members
KYC
Statement of Bank/MFI loan closure/Outstanding
24
Groups are not eligible for loan from NABFINS
No Internal lending
More than 3 members default in saving continuously
More than 3 member default in internal loan repayment continuously
Not completed 6 month vintage with BC who has sponsored the group
Low average saving/ Low Growth in saving of the group since formation as
per frequency of saving
25
4 Materials & Methods
Methodology Used
Survey method:
Data collection was done from each and every SHG as a KYC, grading
form and application form from place of meeting during grading
procedure for loan purpose
Nature and Source of Data:
Secondary data was extracted as required from the KYC, grading form
and application for every SHG.
Loan purpose was collected twice first at the time of grading and again
at the time of pre disbarment visit.
Sampling Procedure:
Purposive sampling of the SHGs from list of sponsorship letter
provided by B&DC
Area of study: Dhule Maharashtra
Period of Study: 60 days (45 days)
Sample size: 67 SHG
Tools used for analysis
Microsoft Excel
26
5 Results and discussion
Financial inclusion: is the delivery of financial services at affordable costs to
sections of disadvantaged and low-income segments of society. Financial refers to
all types of financial services, including credit, savings, payments and credit, from
all types of formal financial institutions.
This study was conducted in Dhule Maharashtra to examine the role extent of
financial inclusion and how far is it able to empower rural women population.
Financial inclusion has become one of the most critical aspects in the context of
inclusive growth and development.
NABFINS started operations in Dhule in Year 2015 and till 2017, it has credit
linkage with more than 300 women SHG through their B&DC model.
Study period was 1 February 2017 to 25th march 2017. NABFINS credit link the
SHGs following their standard operation procedure mention in chapter 3.
Total SHG linked during study period were-67
Table: Number of villages covered
Taluka Number of
villages
Number of SHG Type women/men
Dhule 8 24 women
Sakri 10 13 women
Sindkheda 6 12 women
Shirpur 7 18 women
Total 31 67
Total amount disbursed to 67 SHGs was Rs 13.94 Lakhs
First linkage SHG: The SHGs which were credit linked with NABFINS first time
is known as first linkage
27
Second linkage SHG: The SHGs which were credit linked with NABFINS second
time or they may have credit link first time with some other bank of MFI are known
as second linkage
Fig: 5.1 Fist linkage financial Institutions
Above distribution shows the MFIs available in Dhule which has already provided
loan to several SHGs. Major Share hold by NABFINS.
Fig: 5.2 Total amount disbursed in first linkage and second linkage
Above graph shows the breakup of total loan disbursed in fist linkage and second
linkage in Dhule in study period which also shows the average loan amount in both
the linkages which is better than DCB and other MFI (Field observation)
67%6%
18%
3% 3% 2%
NABFINS
Annapurna
DCB
ICICI
dhan laxmi
HDFC
24.92
0.83
114.5
3.09
0
20
40
60
80
100
120
140
Total Loan Amount Average of LoanAmount
Total Loan Amount Average of LoanAmount
Rs.
Lak
h
First Linkage Second Linkage
28
Fig: 5.3 Loan disbursed in different sectors
5.4 Some of the strengths and weaknesses observed in Business Partner B&DC
are.
Strengths:
NGO LUPIN has strong hold on their SHGs.
NGO has Digitalized the records of their SHGs
Well qualified, Good number of Staff and work efficiently
Well aware of operational procedures of NABFINS and other RRBs
Has various schemes for skill development program
Has small enterprises which provide hand holding to heir SHG like small
dairy
Weaknesses:
They try to dominate SHG and NABFINS Staff
Less groups are activity oriented
Record are maintained by B&DC staff which may lead to record
adjustments
5.5 Some of the issues observed in SHGs are
Lack of activity oriented groups
Lack of awareness about record keeping, banking procedures
Purposes of the loan are undecided which may become a constraint for
upliftment of their social and economic status
Dominating group representatives over the members which leads to misuse of
funds, conflicts among the members
26%
16%
10%
22%
8%
10%
8%agriculture
Garments business
Poultry
pur.of milch animal
inv. In small business
provision store
House hold activity
handicraft
irrigation
Education
29
5.6 Other General observations:
Loan disbursement duration –within 10 days of grading
There are NO over dues and non-performing assets
Maximum tenure period demanded by the groups are 24 months
Lupin NGO hand holding is very strong with the SHGs due to regular training programs and small enterprises setup with the help of SHGs
30
6. Conclusion and Recommendations
NABFINS operation is going well in Dhule and playing a major role women
empowerment through financial inclusion. As observed during the study period most
of the SHGs want credit linkage from NABFINS and prefer over other DCB and MFI
due to easy availability of credit, less time taken by NABFINS in loan sanction
process and low interest rate than other MFIs. Most of the loan disbursed by
NABFINs is mostly used by SHGs in agriculture and agriculture allied sectors and
some part of it also goes to small business where women are involved majorly. The
major strength of finance provided by NABFINS is the second linkage loan which
varies from 150000 to 800000 depending upon saving, performance and type of
business the group is involved, this type of big amount loans can be used for income
generation/ activity purpose rather than consumption. Through financial inclusion
NABFINS has supported many women involved in agriculture and agriculture allied
activities which indicate the women empowerment through financial inclusion.
Women empowerment
-Making them self-dependent on taking the decisions of life
-Providing opportunity to involve in income generating activities
-Providing opportunity to start some new business and be an entrepreneur
-Provide opportunity to avail benefits from different government schemes and
projects
-Provide opportunity to participate in group activities as men and to hold equal
decision making rights
6.1 Recommendations:
• Client centric approach : Customized product portfolio according to the
need of clients
• Training Initiative : Training and development programs for the staff and
Regular meetings with B&DC management team
• Digitization : To avoid the risk and manipulation of record
31
• Marketing : Introduction/Awareness about the products and services
to the groups on a common platform by
organizing/celebrating/sponsoring the social cause day at a district
level/ Financial melas
• Reports and Quarterly result announcements : Aware about the
financials to the root level hierarchy to improve the efficient and
knowledge and learn them about the competencies
• CSR activity implementations : At a district level women
empowerment/ young entrepreneurship development programs
organization to uplift the entrepreneurship
32
7 References
Mayoux, L. 1998. Women's Empowerment and Micro-finance programs:
Approaches, Evidence and Ways Forward.
Ackerley, B. (1995). Testing the Tools of Development: Credit Programmes , Loan
Involvement and Women's Empowerment. World Development, 56-68.
Syed M. Hashemi (1996): Rural credit programs and women's empowerment in
Bangladesh
Nayak, Purusottam and Mahanta, Bidisha (2009): Women
Empowerment in India.
Neeta Rani (2009): Women Empowerment in India
Tiyas Biswas (2006): Women Empowerment through Micro Finance: A Boon for
Development
Annual report (2015-2016): Nabard financial services Ltd.