- Email: [email protected]
NGOs and local MFIs—how to increase poverty reduction through women’s small and micro-enterprise
Futures 35 (2003) 361–378 www.elsevier.com/locate/futures
NGOs and local MFIs—how to increase poverty reduction through women’s small and micro-enterprise S. Premchander ∗ Sampark, No. 50, Kathalipalya, 17th Main, 7th Cross, 6th Block, Koramangala, Bangalore 5600095, India
Abstract Most enterprises, from the smallest to the largest, need capital. Enterprise can play a crucial role in alleviating poverty. In developing economies, women’s role in alleviating poverty through enterprise has long been recognised, and they have been received as a client group. However, poor women lack the capital required for enterprise start-ups and although lending mechanisms exist in their economy, mainstream financial institutions are not oriented towards providing them with the funding they require. Microfinance generally refers to the provision of financial services (e.g.: savings, credit, insurance) to the poor, those who normally do not have access to formal financial institutions. Non-Governmental Organisations (NGOs) in India have promoted micro-finance through women’s self-help groups. However, the different institutional forms are not value-neutral and vested interests are involved. The interests of people and those of micro-financing institutions (MFIs) sometimes compete and conflict. If NGOs change their direction and become MFIs, there could be serious repercussions on development work at the field level. When funding support underlines financial viability, then the MFIs have to be competitive; poverty reduction and empowerment will suffer unless the institutions are also owned and managed by the poor. In this case, more investment in building their capacity is required. In the present phase of evolution of an entrepreneurial culture in India, financial support for NGOs to become MFIs is cheaper than policing a market economy and the real issue of the poor being left out by the market economy is ignored. NGOs can provide the leadership for greater structural reforms and do what they are best at: be facilitators,
Tel.: +91-80-552-1268; fax: +91-80-553-0196. E-mail addresses: [email protected] (S. Premchander); http://www.sampark.s5.com (S. Premchander). ∗
0016-3287/03/$ - see front matter 2003 Published by Elsevier Science Ltd. doi:10.1016/S0016-3287(02)00086-1
362
S. Premchander / Futures 35 (2003) 361–378
and create people’s institutions for micro-finance. In this way, the holistic development of people that should precede their involvement in small and micro-enterprise is more likely to occur. 2003 Published by Elsevier Science Ltd.
1. Small enterprise, women, and poverty alleviation 1.1. Women as entrepreneurs It can be said that women are at the core of developmental activities. The role of small enterprise in poverty alleviation has long been recognised as vital, and promotion of small and micro-enterprises for women has been recognised as the key to augmenting family welfare. The link between women’s enterprise and poverty alleviation is well recognised. The recognition of the productive role of women led to support income generation and enterprise by women. The work by Boserup [1] was among the first to highlight the contribution of women to productive work. In the early 1980s, the trickle down theory at the household level, which assumes that higher incomes for men translate into higher incomes for the family, was questioned. Devaki Jain (quoted in Karl [2]) pointed out as early as 1980 that it is women’s income that goes towards family food and basic needs, the man’s income goes for assets, relative luxuries and liquor. This realisation led to the development—world’s initial strategy of promoting income generating activities (IGAs) for women on a large scale. The strategy did not fully succeed, however, as poor women are faced with fewer and poorer opportunities to work. Bhatt et al. [3] suggest that they face under-employment and a casual nature of work; lack of skills and education; lesser mobility, heavy responsibilities; a systematic social practice of under-rating women’s work, and lack of access to better technologies, tools and productive assets. As there are not enough employment opportunities for women, support for self-employment and women’s enterprise came to be recognised as being required for releasing women’s economic potential [4]. Many NGOs have subsequently taken on the task of women’s empowerment through micro-enterprise in recognition of the impact it can have on women, their families, and poverty alleviation. In doing so, however, these NGOs and the women they support often find themselves confronting a reality where attitudinal biases, lack of collateral security with women and women’s lack of awareness and reluctance to approach banks for facilities create lack of access to credit, raw material, and markets. 1.2. Micro-finance for women It is against this backdrop that micro-credit for women, routed through self-help groups (SHGs) of women, came to be recognised as a viable strategy; not only for
S. Premchander / Futures 35 (2003) 361–378
363
promotion of women’s enterprises, but as a strategy for poverty reduction and women’s empowerment in general. Women’s SHGs have become effective channels of credit for enterprise. Thus government, banks and wholesale financing organisations now work with NGOs who promote groups and/or provide finance to them. Micro-credit activities by their very nature involve women, and a typical medium through which micro-credit reaches poor families is through women’s groups. These women’s groups, which may have 10–20 members in the case of SHGs (or larger numbers, between 40 and 300 women in the case of co-operatives), help women to network and amass collective power. Women save money every week, fortnight, or month, and their accumulated savings are rotated as credit among the women members or kept in a savings account in a bank. Credit providers then link with the groups, and use the group savings as security against the loans. In India, banks have been one of the credit providers involved in disbursing microfinance through women’s groups, providing credit against the women’s savings in a ratio of 1:1 or more. This bank linkage model has proven successful through such projects as those of ‘MYRADA’ in Karnataka and Tamilnadu. An alternative model, one of credit and other financial services delivered through NGOs operating as micro-finance providers (henceforth termed as NGO-MFIs in this paper) was seen as a successful model in the mid-1990s and experienced substantial growth at the hands of government and international funding agencies. The MFI model was promoted by Friends of Women’s World Banking (FWWB) through over 150 NGOs and by Small Industries Development Bank of India (SIDBI) through over 150 NGOs in the period 1993–1999. In India, the government has adopted and upscaled both the bank linkage and MFI models for micro-finance on a massive scale. Cumulatively 114,775 (94,645 with National Bank refinance) SHGs were linked to banks and bank loans amounting to Rs.195 crore were disbursed as on March 2000 [5]. Thus, NGOs have taken up micro-credit activities on a very large scale in India, and the number of NGOs engaged in this activity continues to grow. It is therefore important to review some of the institutional issues that arise as a result. We will begin by reviewing the background for the movement in Section 2, analyse the advantages and disadvantages of the institutional forms arising from different microfinance models in Section 3, then discuss macro-impacts of the different models in Section 4.
2. Micro-finance in governmental and non-governmental sectors in India This section begins by outlining the extent of credit provision by mainstream institutions in India, the credit needs of the poor, and the context in which NGOs entered the micro-finance sector. Then it describes the development of group-based micro-finance activities as a collaborative effort involving government, the banking sector, and NGOs, and the institutional recognition it has subsequently received as a tool for poverty alleviation and economic growth.
364
S. Premchander / Futures 35 (2003) 361–378
2.1. Mainstream credit institutions in India In India existing mainstream provision for rural lending does not work. The policy environment and the institutional structure required to serve the needs of the rural people already exist. However, banking and co-operative institutions have not been able to recover costs on rural lending for a host of political and other reasons. Government loans for agriculture have existed in India since 1793, and short-term co-operative credit institutions have existed in India since 1904. After 1929, cooperative land mortgage banks were started to help farmers redeem lands mortgaged to private moneylenders, and from 1954, the All India Debt and Investment Surveys began documenting the extent and nature of debt and investment in farm and nonfarm sectors. The banking sector expanded substantially from 1955 with considerable input from the government. In 1969, 14 private sector banks were nationalised and Regional Rural Banks were formed from1975 onward. With this expansion, bank finance for rural households increased from 5% in 1951 to 62% in 1981. Presently, the multi-agency credit system in India involves a range of institutions (shown in Fig. 1). Together, they provide credit for the agricultural and industrial sectors, in both rural and urban areas and to individuals, co-operatives, and other institutions. The banking sector in India thus has over 13,000 semi-urban and over 43,000 rural branches. Co-operative credit to the rural sector is provided through some 100,000 branches of co-operative banks for short-term and long-term credit [6].
Fig. 1.
Institutional arrangements—agriculture and rural credit.
S. Premchander / Futures 35 (2003) 361–378
365
Unlike many other developing countries, in India, the policy environment as well as the institutional structure required to serve the needs of the rural people already exists and seems to offer favourable conditions for providing credit to the poor. 2.2. The poor still lack appropriate credit The poor, however, still lack access to credit, as systemic and infrastructural barriers undermine the effectiveness of mainstream credit provision. We turn briefly to examine the credit situation of the poor. As will be demonstrated, the poor still use high interest credit as they lack an appropriate credit system. They need small credit at frequent intervals, they cannot deal with the paper work that banks require and they do not have collateral. The spread of branches is uneven and poor transport facilities and infrastructure exist to reach the banks. The transaction costs of serving the poor are high and so banks have lost interest in the poor as clients. Rural banks and co-operatives have lost vitality and have become sick institutions. The total proportion of rural debt through private moneylenders has reduced from 80% of all rural debt in 1951 to 24% in 1981. Thus, though the total dependence on the private money lender has diminished, the poorest sector, with its typically short term and low volume transactions, still resorts to private money lenders for business and consumption credit. The interest rates can be exorbitant; 2–5% per month for long-term loans and up to 10% per day for working capital [7]. Although formal nationalised credit institutions have extended their reach to rural areas on a large scale, their motivation in serving the poor is low. Banks are wary of extending loans to the poor as, historically, the provision of low interest rural credit has led to problems. The reasons for these problems have been internal (inadequate loan policies and appraisal procedures, inadequate supervision and monitoring of loans, etc.) as well as external (natural calamities, absence of backward and forward linkages, lack of government support and legal framework for effecting recoveries, and political interference in banking as well as co-operative credit institutions). Therefore, from the standpoint of national credit institutions, provision of rural credit will lead to high costs, low recoveries, dependence on external concessional funding, loan rationing, and weakening of the institutions themselves. Similar problems have plagued and ultimately sickened the co-operative sector, which faced issues of low recoveries, non-viability, erosion of capital, unprofessional management, inadequately trained staff and insufficient loan funds, among other things [6]. The rural and urban poor thus find many barriers to loans from formal banking institutions and very often are forced to depend on private informal finance. 2.3. NGOs: the movement from welfare to economic development The NGO sector as a whole has moved from a top–down welfare system to a community-owned economic self-help approach, and has invested heavily in the micro-finance movement as a means to support the poor in reaching self-sufficient and sustainable livelihoods.
366
S. Premchander / Futures 35 (2003) 361–378
Given the credit difficulties of the rural poor, many NGOs have identified a role for themselves in securing appropriately priced and channelled credit. This relatively recent movement towards micro-finance activities has its roots in a change in NGO methodologies and needs to be understood in that context. The NGO sector has addressed the various needs of the poor and the socially, politically and economically disadvantaged since the early 1920s. It is only recently, however, that there has been a convergence of approach, with NGOs seeking to combine project specific work with active organisation of the poor. Community organisation is now treated as an essential prerequisite to the successful introduction and implementation of development programmes. Further, NGOs realise that organisational work among the poor cannot be sustained without economic improvement. [8]. This has led to a large number of IGAs being promoted by NGOs. They promoted these activities first as welfare programmes that provided employment to the poor, and only in the mid-1990s, as businesses owned and managed by the poor. Micro-credit for businesses by poor women and SHGs began to be experimented with only towards the late 1980s. 2.4. The development of group-based credit through NGOs, government, and banks Group-based credit is important. It has met latent needs of both poor women and NGOs. NGOs first began to work with groups using the principles of the co-operative movement, experimenting with and learning from the co-operative sector. The availability of international donor funding made it possible for many NGOs to try out new initiatives. The first few innovations in group financing and indeed, much of the further refining of group-based credit methodologies have come from NGOs. In the first few years of working with groups, NGOs encouraged groups of women and men to save, however small those amounts may be. As incentives, and to meet the credit needs of the poor, matching grants were provided against these savings. The grants were usually divided equally among the members, and used for agricultural and other seasonal credit needs. Most such groups were men’s groups, as only men were recognised as farmers, even by development agencies. Men’s groups also routed large development grants from international donor agencies and/or the government under the aegis of projects implemented by NGOs. The top–down approach of development was still prevalent and visible in the implementation of these early micro-credit activities. Women’s savings groups were started in the mid-1980s by many NGOs. At about the same time, some government funding became available to promote women’s individual and collective enterprises (through a scheme called Development of Women and Children in Rural Areas, DWACRA). In the mid-1980s, there were several experiments in various parts of India, by different NGOs, government, banks and international donor agencies, which involved provision of credit to women’s groups. As these became successful, there was an improved understanding of the demand and supply factors that caused the rapid growth of the micro-credit movement in India.
S. Premchander / Futures 35 (2003) 361–378
367
On the demand side, micro-credit grew because: 앫 money is a binding force, and provides a constant link for women to come together; 앫 small scale economic needs of women can be met with their own savings; 앫 NGOs are closer to women than other institutions are and can provide credit at the time required, for the purposes women need it, and at the place of demand, at a reasonably low cost; 앫 as mainstream savings and credit facilities are not easily accessible to the poor, NGOs enjoy a good response for these services. On the supply side, it was good for NGOs to provide micro-credit to women’s groups because: 앫 women’s own savings become a source of credit for meeting their immediate consumption and other needs; 앫 over a period of time, as bank linkages are established, groups can access mainstream credit, and also subsidies given by the government; 앫 NGOs can themselves provide credit to these groups, and the savings provide a backup against the risk taken in lending; 앫 by charging a spread over the cost of funds and interest charged to groups, NGOs can earn some money towards the costs of their services; 앫 as grants are more and more difficult to raise, facilitating NGOs tends to be attracted towards options that ease pressure on cash flows and on earnings; 앫 development support agencies have recognised that NGOs are closer to the people and understand the needs of the clientele better, and have encouraged micro-credit activities as part of the projects they implement through NGOs. Further, there was recognition that NGO support for group-based women’s microfinance encouraged collective action, helped women to break out of gender and economic barriers, and expanded their horizons for their own development as individuals and members of a family, group and community. In this way, NGO experiments in group-based finance have led to their adoption of micro-finance as the most prominent way to organise the community and work towards economic benefit through women’s enterprises. 2.5. Institutional recognition of micro-finance as a development tool The group-based micro-finance model has earned a place in institutional efforts at poverty alleviation on a national and international scale. In India, there has been recognition of the potential of micro-credit and provision of other financial savings to the poor in many ways. In the initial years when initiatives in group funding were being tested, NABARD, the Indian National Bank for Agriculture and Rural Development, provided bulk financing to NGOs for lending to groups. Bulk funding to NGOs has also been
368
S. Premchander / Futures 35 (2003) 361–378
available through FWWB, an affiliate of Women’s World Banking based in Ahmedabad. As positive experiences were realised from these initiatives, SIDBI began to provide bulk lending to NGOs as well. Towards 1996-1997, SIDBI expanded and formalised its Micro-Finance Scheme. By 1999, SIDBI had become the implementer of a large project supported by the UK Department for International Development (DFID), providing capacity building grants for NGOs who partnered SIDBI in microfinance programmes. The SIDBI Foundation for Micro-Credit was established in 1999–2000 to implement their micro-finance and capacity building programmes. Micro-finance activities have gained the support of national policy. The Reserve Bank of India has recognised SHGs of the poor as clients who can receive bank credit. NABARD accordingly has recognised and issued circulars to all banks and co-operative credit institutions, acknowledging that money loaned to SHGs will be eligible for refinancing and will be treated as priority sector funding under the norms of the Government of India. International funding agencies have also extended bilateral co-operation for microcredit provision through the government. The International Fund for Agricultural Development and the World Bank have supported schemes for credit to women’s SHGs through the Department of Women and Child Development. The Ministry of Rural Development has recently introduced changes that will bring its schemes in line with the learnings from SHG promotion. From 1 April 1999, the self-employment programmes of the Integrated Rural Development Programmes (IRDP) of the Ministry of Rural Development, Government of India were merged into one programme. These programmes included: Training of Rural Youth for SelfEmployment (TRYSEM), DWACRA, Ganga Kalyan Yojana (GKY) and the Million Wells Scheme (MWS). They became part of a single self-employment programme called the Swarnajayanthi Gram Swarozgar Yojana (SGSY). According to the Ministry of Rural Development in 1999, the new scheme seeks to focus on the formation of SHGs. SGSY seeks to cover 30% of all rural poor families in the next 5 years. Thus, the success of SHG financing has led to the biggest poverty alleviation programme in India becoming group-based [9].
3. An NGO or an MFI: the divide between institutional objectives A large number of NGOs are taking to micro-credit activities given that the financial environment favours women’s enterprise. They have to choose between being facilitators of credit or being Micro-Finance Institutions (MFIs). As facilitators, they would need to form and train groups, provide bank linkages, etc. As MFIs, they would have to become direct credit and financial service providers to the group. This choice of whether to be facilitators or implementers has several implications in the Indian context, and warrants careful consideration. Some of these implications, namely registration, collection of savings, provision of credit, viability and sources of funds and training and orientation of staff and systems, are discussed below.
S. Premchander / Futures 35 (2003) 361–378
369
3.1. Registration The process of registration with the government itself is different for NGOs and MFIs. Usually NGOs are registered as Trusts or Charitable Societies under the Trust Act or the Societies Registration Act. These registrations are done at state level, and NGOs who provide micro-credit usually have a provision in their memorandum where objectives and activities of the organisation are detailed. The philosophy of these organisations is based in the realm of people development. Those engaged in the activity often lack professional and managerial ability to deal with the task at hand [10]. Organisational forms of MFIs include non-banking financing companies (NBFCs), co-operatives and co-operative banks. The latter two institutional forms are memberowned organisations. Some applications have also been made for Local Area Banks which allow credit operations spread over five districts, but none are operational as yet. 3.2. Collection of savings Facilitator NGOs cannot collect savings of women as long as they are registered as charity organisations. Instead, they make women aware of the different choices open to them. MFIs collect the savings of women, maintain their records for them, and route their money back to them as credit. In order to do this, MFIs need to be registered as NBFCs and be authorised by the Reserve Bank of India to collect the savings of women. This requires professional micro-financing abilities in the organisation that many NGO-turned-MFIs do not have. On the other hand, if women’s savings are retained in hand or as a bank account, the facilitator NGOs help them to build up capital and draw money in their times of need. Rules are not rigid and timely credit is available. Thus, the expensive external funding can be reduced or even eliminated. This is not possible if the MFI collects the savings, and routes it back to women as credit. Often, organisations that are not legitimate NBFCs collect women’s savings. Indian and international donor agencies provide financial support to them, although capitalisation of women’s SHG funds and empowerment are not their goals. In these cases there is a conflict of interests. 3.3. Provision of credit Facilitator NGOs help to make links for their women clients with banks and international donor agencies. The credit is given according to some pre-determined scheme or philosophy; there is no guarantee that the requirement will be met if it does not satisfy the required stipulations. The procedures also take time and considerable travel may be involved. MFIs, with bulk funding from SIDBI, or international donor agencies, are more likely to provide credit in quantities and conditions that meet the needs of the poor.
370
S. Premchander / Futures 35 (2003) 361–378
However, this is likely to be at a cost similar to what private money lenders charge. On the other hand, even though mainstream credit agencies (linked to groups through facilitator NGOs) provide cheaper credit, they are not likely to meet the credit demands of the poor. 3.4. Viability and source of funds In obtaining grants for development costs, facilitator NGOs find it difficult to raise grants to facilitate bank linkages on a large scale. MFIs find it difficult to raise low cost funds for micro-credit, but, ironically, are the ones who can access grants for ‘capacity building’ of their clients. MFIs have access to large finance providers for loan funds. While the rate of interest is high in comparison with government funding, the advantage is that there are capacity building funds available to MFIs as grants which, when taken into account, can reduce effective interest rate to 8% or even lower. These large capacity building grants to MFIs provide a buffer for development activities during the phase when the MFI is still not fully viable. Additionally, those who have access to members’ savings or low cost capital from development agencies or banks are able to reach operational viability faster. As grant funding for development in general, and for building of people’s institutions in particular, has been shrinking, NGOs find it difficult to raise funds to play only facilitator roles. Ironically, it is the MFIs who provide credit on a commercial basis to the poor who are more easily able to raise large grant funding. Even development funding for capacity building is channelled through MFIs rather than facilitator NGOs. In a sense, the value of the pure facilitator role is shrinking in the current scenario. 3.5. Training and orientation of staff and systems The staff that work for NGOs and MFIs take their orientation from the work culture and goals of their organisations. NGO staff should be able to make linkages between banking institutions, understand financial transactions as well as train women. They are the liasing agency between the funding body and the women’s groups. The credit systems they put into place are dictated by the women’s choices and by the funders. Yet, they are able to influence repayment rates through their training, education, enterprise start-up support, and follow up activities. MFIs need staff who are credit officers and can give and recover money efficiently. They work to ensure good recovery rates. In doing so, international donor agencies favour them with big grants by virtue of the fact that they are likely to be financially sustainable and not require continuous grant support over a long period. 3.6. To be or not to be: an MFI There are many implications inherent in different models for credit provision, and many of the NGOs are yet to understand the ramifications of becoming finance pro-
S. Premchander / Futures 35 (2003) 361–378
371
viders. Most NGO-turned-MFIs lack adequately trained staff, information and the financial systems necessary; they need support with credit methodology and, indeed, strategic business planning. It is important to note that NGOs are in no way guaranteed to deliver micro-credit and succeed where the banking sector has failed. NGOs have become interested in micro-finance activity because risks and returns have both increased. Now it is not the lending organisations that take the risk but people standing by collective guarantees (as groups) for unsecured loans to individual members. The risks have not been reduced, they have only been passed down. The mainstream wisdom has not been contradicted yet [11]. Banks are bound by institutional constraints that make banking for the poor more costly and uneconomical. If women’s groups reduce the costs and risks of providing credit to the poor, they do so for the banks as well as for NGOs. This in itself is not sufficient ground for promoting NGOs as micro-credit institutions. Those NGOs who are unable to conduct their micro-credit operations viably, will run into similar problems as banks who passed through similar experiences not so long ago. This means that only those organisations with professionally managed micro-credit operations will be able to provide micro-credit on an economically viable basis. And again, we may ask whether this credit will go to the poor, as demands of viable credit service usually means having a clientele richer than the poorest of the poor. Yet micro-financing activities yield incomes, which can be useful for development work and can lead development organisations towards financial self-sustenance, along with providing a needed input to the poor. And certainly, given the large amount of support for MFI activities from external agencies, the incentive is there for more organisations to become MFIs. What is likely to happen in the future? Will more and more NGOs opt for becoming MFIs or will they continue with facilitation work? Then, what will the role of the government be? We examine these questions and the implications of the alternative trends on the target clientele: those who need and utilise micro-credit.
4. Macro-impact of alternate futures for micro-finance in India If micro-credit is to promote women’s micro-enterprise and empowerment, institutional forms and credit methodologies need to be effective and appropriate to the needs of clients and the area in which the clients are located. In this section, we describe some practical experiences with different institutional forms from the standpoint of the people and the extent to which the real credit and enterprise start-up needs of the people are being met. We also present illustrative stories to highlight conflicting interests between MFIs and the poor, to describe facilitator NGOs that are unable to provide support as they would like to and to show how the government’s intervention in micro-finance can usher in mainstream ills into this development experiment. The section projects what is likely to happen given alternate growth patterns of institutions that provide credit to the poor.
372
S. Premchander / Futures 35 (2003) 361–378
4.1. Understanding implications of institutional forms The micro-finance scenario in the country is difficult even for NGOs to comprehend and analyse to make informed choices. Clients cannot make informed choices. Clients rarely understand the practical implications of different forms of credit institutions and financial linkages. For the average rural women and women’s groups, the choices are made by NGOs, who offer the package, credit methodology, and financial products they select. The NGOs, governments or international donor agencies who make the choices regarding institutional forms and financial linkages rarely invest the cost, time and effort required to enable clients to make informed choices themselves. There is very little time available for NGOs to educate themselves, leave alone taking on educating clients and involving them in making the choice about microcredit methodologies. This is despite the claims made by NGOs that they are participatory in their way of working. NGOs, government, and international donor agencies must ensure that the final clients, i.e. poor women who are members of SHGs, understand both the positive and negative implications of dealing with banks as opposed to dealing with MFIs. Equally important is the need for NGOs as well as donor agencies to understand implications of alternate institutional forms because if they do not, then the danger is that means may be mistaken to be the end. The achievement of high money turnover, high repayment rates, coverage of costs and large number of low income clients does not necessarily imply that poverty reduction is achieved [12]. 4.2. When NGOs turn MFIs When NGOs turn MFIs the poorest of the poor may not be reached by MFIs and the savings of women may be taken by unscrupulous organisations. Even MFIs may prevent women from utilising their own savings fully before resorting to loans. If NGO-turned-MFIs fail then another ostensible development tool will be given up. If the trend of NGOs becoming MFIs takes on momentum, the total number of rural people reached will be much higher as credit will become available to a larger and larger number of people through a larger number of small and micro-institutions. However, as more NGOs become moneylenders, the development approach will take a back seat. As micro-credit favours either those who can save or those who can borrow and repay, it tends to leave out the poorest of the poor at any given time. Thus, the most needy will continue to be neglected. There is a danger that if more organisations collect group savings as they do now, there is a likelihood of unscrupulous elements setting themselves up as MFIs and mopping up rural savings for personal gains. Several cases of such happenings already exist in India and Bangladesh. Again, vested interests could operate and misuse the credit relationship. A case in point: An MFI serves 12,000 rural women in Bihar through bulk finance from an international donor agency. The women’s groups have significant savings, yet they
S. Premchander / Futures 35 (2003) 361–378
373
keep this money idle while they borrow large sums from the NGO. This benefits the NGO, as it rotates its bulk funds better and earns an interest while the women’s own money remain uninvested. The women do not realise the value of their own capital. MFIs can rationalise a situation like the above by believing that women’s savings need to be kept for consumption and emergency purposes while loans are to be used for productive investment. What most MFIs are not able to see is that this situation is an indication of the inherent conflict between the interests of the credit provider and those of the women. Another concern is that new MFIs must put efficient credit systems into place to recover money. If this does not happen and the poor default on payments they stand to be branded and lose access to the support from the government and banking system. This has happened with government subsidies, etc. in the past. Sometimes not much of the money reaches the poor, a case in point is the IRDP loans. If the systems for repayment fail, then micro-finance as an ostensible panacea for poverty alleviation will have to be written off as a failure. 4.3. If more NGOs choose to be facilitators If NGOs stay facilitators, there is no doubt that the scale of capital being projected now will not be reached. The mainstream financial institutions are not geared to rural lending, leave alone lending to the poor. With all the targets being set by the central government, NGOs need assistance in providing the necessary support and capacity building of the people. This cannot happen in the absence of grants, of which there is a dearth at present. Facilitator NGOs often cannot match other institutions in terms of financial or political power. They may not be able to influence situations where credit needs are not being properly met. As the case study of an NGO in north Karnataka shows: An NGO in north Karnataka helped form 60 groups. Bankers refused to open savings bank accounts for groups from villages that did not fall in their ‘service area’. Bank loans were given only to 12 groups, as this was the target for the district for the year. The amount of loan given was four times the saving of the group, and had no relation to the needs of the proposed enterprises. There is also often the need for facilitator NGOs to have a strategy to counter the limitations and dependence on the mainstream banking sector for credit: A women’s group approached the local bank for opening a savings bank account and was rejected. The bank manager told them that there were many defaulters (from earlier loans) in their village, hence they did not want to open an account of any group from there. Some of the women’s husbands had defaulted on government loans. The women tried to explain that they had never got the loans, only a proportion, and they did
374
S. Premchander / Futures 35 (2003) 361–378
not know that these were loans to be repaid and not grants. The facilitator NGO intervened but could not convince the bank manager. When the women approached the manager a second time, he threatened that if they put their savings in the account, he would appropriate these to pay back the earlier loans. This scared the women as they wanted a safe place for their savings, and they gave up the attempt. The NGO officer then went to the Regional Rural Bank in the district to influence the said bank to open a bank account as the NGO had arranged with an external credit provider to give loans to the above group. The account was necessary for receiving this money. She was told that it was well within the rights of the bank to refuse to service the women as they were not yet clients. An appeal to the Consumer Court could only be made if the account had been opened: no one could admonish a banker for not opening an account! When the NGO persisted and said they would bring the issue to the notice of the District Level Committee, they were told that the bankers would stand together in such an event, and none of the groups promoted by the NGO would then get any bank loans. The NGO considered this a serious threat. But since the number of groups that had been facilitated had more demand for credit than what the bankers would meet in any case, they decided to obtain external funding and operate this fund until the banking linkages became effective. They felt this was necessary in order to enable the women to start their enterprises at the size and time that was necessary. In the case above, the strategy of providing credit through alternate sources served the needs of women. However, such a strategy put a double burden on the NGO to be a facilitator as well as to monitor micro-credit operations. A lack of understanding and flexibility in the lending systems can have catastrophic results, as this example shows: A SHG in North Karnataka with 15 members from the Devadasi community was identified for priority loan coverage. They wanted to buy buffaloes with this but had no shelters, so the Panchayat sanctioned the construction of sheds. Over riding the local people’s wishes, a government-approved contractor was appointed to build the sheds. The bankers and government also insisted that the women buy the animals from an outside market rather than keep local buffaloes. This choice was wrong, as the local animals would have already been acclimatised and more sturdy. The women wanted to buy the buffaloes in September when there was an abundance of green fodder; here again, the officials delayed the process. When the purchase finally took place in December, there was no fodder
S. Premchander / Futures 35 (2003) 361–378
375
available. The women wanted to buy the animals based on their individual decisions and inclinations: they were compelled to purchase the lot as a group. When the animals finally arrived in December, they were found to yield lesser quantities of milk. Fodder had to be bought from outside and costs went up, not justifying the investment. The animals were sickly after re-location and the women had to give up their farm activities in order to care for the creatures. In effect, the women were not allowed to make any decisions at all. The cost of the shed ended up being more than the amount sanctioned by the government, and the balance of the money was taken from the loan amount that the women received from the bank. This transaction took place between the banker and the government, and the women only knew that an additional debit had been entered against their names. Under such circumstances, if women do not make net gains from the new assets and are not able to pay back, the bank and government officers are equally to blame, but only women and their village get listed as defaulters. Clearly, facilitating NGOs cannot ensure that all credit requirements of all groups will be met, as the extent to which credit needs of women are met will depend on the ability, standards, and attitudes of those providing the finance. In addition, timely credit cannot be guaranteed, as funding agencies may take their own time to appraise, sanction and disburse credit. The only hope is for more and more NGOs to be supported by private and international funding to play facilitator roles and create a demand for credit. This will bring pressure from below for public institutions, including banks, to respond to the needs of people. If this happens, the banking sector will become more accountable to the people; there is also a chance that NGOs can help people to demand a certain minimum expenditure in health, education and human resource development in the villages from the government. This process will also bring to the fore the need for reforming and revamping existing institutions, including government departments. It is only by bringing about activist forums of NGOs and people that there will be bottom–up pressure for change. 4.4. Women’s micro-finance in the hands of the government The way the government has adapted micro-finance is through a combination of loans and grants, where loans are accessed from the banking system and grants/subsidies from a government agency. There are targets set for provision of such grants/subsidies each year, and often there are leakages in the system which result in the non-poor getting these benefits. A specific incident from the field experience of a facilitator NGO is given below: A farmer with 60 acres of land sold a portion of it to the government. They granted a housing loan and developed a colony for labourers. Very soon, an NGO
376
S. Premchander / Futures 35 (2003) 361–378
formed a women’s group with the labourers’ wives and a DWACRA revolving loan was sanctioned on the occasion of the first and only meeting. The money, in fact, went to the landlord whose brother was a local politician. The women saw nothing of the money which was intended for their enterprise. The NGO, on the other hand, took a good name for being effective and was assigned the money for the target 10 groups for the following year. When a local banker was questioned about this, he explained: “We have to meet the targets for credit to the priority sector. We also have to pay heed to local politicians. And if an NGO has political links, it will definitely get government recognition, too.” Therefore, if the government continues to promote MF through its departments and schemes, and continues to link grants/subsidies with provision of bank finance, as explained in the earlier paragraph, there is every chance that there will be large scale defaults. Much more money is likely to be leaked to intermediaries, politician’s families, and self-seeking NGOs than is likely to go for poverty alleviation. The Indian government tends to follow the initiatives and experiments of NGOs after a time lag of a few years. When they make changes in policies and schemes on a large scale, without full information or understanding similar to the original experimenting agencies, the resulting schemes can be inappropriate or insufficient to address the real needs of the people. As they do not have sufficient feedback systems, or ways of mid-course corrections, the impact of their interventions can actually work contrary to the original objectives of the schemes designed. The government’s combination of grants with loans can undermine the micro-credit operations of MFIs, just the way it has done with banks over the past 50 years. Further, facilitating grants of the government are target-based rather than result oriented, and the facilitators that the government promotes rarely work to benefit and empower the poor. Therefore, the government’s adoption of micro-credit for poverty alleviation, and up-scaling it before the ground is ready for such expansion, may result in jeopardising the efforts of both MFIs and facilitator NGOs. 4.5. Creating people’s organisations Organisations that have the potential to give the best deal to the people are those owned and organised by people themselves. Co-operative is one such form of collective organisation but has as many cases of success as failure in India and cannot be advocated across the board. There is a need to experiment with more institutional forms of people’s organisations. Only NGOs who are facilitators are in a position to build capacities of people, and work with them for more informed choices and development of options. The critical issue in the above discussion is how to bring about poverty reduction and women’s empowerment through micro-credit aimed at women’s enterprise. Given the current lack of power that women face at the hands of bankers and govern-
S. Premchander / Futures 35 (2003) 361–378
377
ment schemes, it is important to imbue choice. This can only be through people’s institutions and capacity building. One such form of client-owned organisation is the co-operative. There are significant co-operative successes in India in the dairy sector and the SEWA Bank, a women’s co-operative bank in Ahmedabad, Gujarat. These experiences show that “‘weak sections’ are not by nature weak, but are only so because of their position in society. If these weak and vulnerable sections are better organised and at the same time have support from the government, they too can become strong.” [3:116]. However, co-operatives and co-operative banks have a chequered history in India, with either a few members taking benefits, or the government controlling these institutions. There is a need for significant legal reform before co-operatives can be adjudged the best institutional form. The ideal solution would be to create people’s organisations and build their capacity to own and manage their organisations in a fair, equitable, and economically sustainable manner. Real empowerment of people can only come through peopleowned institutions, as they have the greatest potential to meet the needs of the poor appropriately and effectively, by virtue of being people owned and managed. And finally, the only institution that offers choice and enables people-owned organisation is that of the facilitator NGO. Only facilitators are in a position to educate women and enable decision making, as opposed to presenting women with the fait accompli of pre-packaged credit solutions, and to develop relationships with communities with a sufficiently hands-off approach to enable leadership from within.
5. Conclusions I have been a die-hard optimist, yet it is evident that we are far away from any real development. This current spate of efforts to scale up micro-finance activity in India will come up against all the difficulties that have been laid out above in the paper. NGOs will make right or wrong choices, but the overall funding and grants atmosphere is still not right, with very little available from government and international funding agencies, for NGOs to make a significant difference. In the absence of significant investments in education, health, and human resources of the rural poor, the entire effort in the field of MF may turn out to be nothing but barking up a wrong tree. The structures to support poverty relief and develop enterprise are not well established. We do not need sectoral thinking and sectoral development projects in India, as we are at the stage where we still need integrated development, integrated thinking and holistic development. We do not need minimalist thinking, but holistic thinking and holistic development efforts. There is no doubt that women’s micro-enterprise can help reduce poverty, and that women’s micro-enterprise gets a boost from the availability of micro-credit and other financial services. However, decisions regarding institutional ownership and forms directly influence development outcomes. If the final goal is poverty reduction and empowerment of women, this can be
378
S. Premchander / Futures 35 (2003) 361–378
facilitated only by institutions who support rather than compete with the poor, and who build people’s institutions, without fear of their own security and survival. This paper demonstrates the difficult issues faced by the NGOs in their mission. Only a very strong alignment of real development forces, committed volunteers and leaders in this crusade of holistic and sustainable development, can lead us to a future with secure livelihoods devoid of poverty and illiteracy, for the millions of disadvantaged people in India.
References [1] Boserup E. Woman’s role in economic development. London: Earthscan Publications Ltd, 1989. [2] Karl M. Women and rural development. ISIS Women’s International Information and Communication Service. In: Women in development. A resource guide for organisation and action. Ahmedabad, India: Intermediate Technology Publications; 1997. [3] Bhatt ER, Desai A, Thamarajakshi R, Pande M, Arunachalam J, Kohli V. Shramashakti: a summary of the report of the national commission on self-employed women and women in the informal sector. Ahmedabad: Self Employed Women’s Association, 1988. [4] Kraus-Harper U. From despondency to ambitions: women’s changing perceptions of self employment: cases from India and other developing countries. Hants, England: Ashgate, 1998. [5] NABARD Micro-Finance Innovations. Downloaded from http://www.nabard.nic.in on 25.1.2001. [6] Karmakar KG. Rural credit and self help groups. Micro-finance needs and concepts in India. New Delhi: Sage Publications, 1999. [7] Harper M. Profit for the poor: cases in micro finance. New Delhi: Oxford and IBH Publishing Co., 1998. [8] Riddell RC, Robinson M. Non-governmental organisations and rural poverty alleviation. Overseas Development Institute. Oxford: Clarendon Press, 1995. [9] Premchander S. Impact of micro finance on women’s livelihoods. Paper submitted for thesis upgradation. UK: University of Durham; 2000. [10] Acharya B, Premchander S. Evaluation of training programme on strategic business planning: a review report. Ahmedabad: Friends of Women’s World Banking, 1999. [11] Premchander S. Micro enterprise development on the fast track. Micro enterprise development summit. Delhi: Asian Society for Entrepreneurship Education and Development, 1998. [12] Johnson S, Rogaly B. Micro finance and poverty reduction. Oxford: OXFAM and ACTIONAID, 1997.
NGOs and local MFIs—how to increase poverty reduction through women’s small and micro-enterprise S. Premchander ∗ Sampark, No. 50, Kathalipalya, 17th Main, 7th Cross, 6th Block, Koramangala, Bangalore 5600095, India
Abstract Most enterprises, from the smallest to the largest, need capital. Enterprise can play a crucial role in alleviating poverty. In developing economies, women’s role in alleviating poverty through enterprise has long been recognised, and they have been received as a client group. However, poor women lack the capital required for enterprise start-ups and although lending mechanisms exist in their economy, mainstream financial institutions are not oriented towards providing them with the funding they require. Microfinance generally refers to the provision of financial services (e.g.: savings, credit, insurance) to the poor, those who normally do not have access to formal financial institutions. Non-Governmental Organisations (NGOs) in India have promoted micro-finance through women’s self-help groups. However, the different institutional forms are not value-neutral and vested interests are involved. The interests of people and those of micro-financing institutions (MFIs) sometimes compete and conflict. If NGOs change their direction and become MFIs, there could be serious repercussions on development work at the field level. When funding support underlines financial viability, then the MFIs have to be competitive; poverty reduction and empowerment will suffer unless the institutions are also owned and managed by the poor. In this case, more investment in building their capacity is required. In the present phase of evolution of an entrepreneurial culture in India, financial support for NGOs to become MFIs is cheaper than policing a market economy and the real issue of the poor being left out by the market economy is ignored. NGOs can provide the leadership for greater structural reforms and do what they are best at: be facilitators,
Tel.: +91-80-552-1268; fax: +91-80-553-0196. E-mail addresses: [email protected] (S. Premchander); http://www.sampark.s5.com (S. Premchander). ∗
0016-3287/03/$ - see front matter 2003 Published by Elsevier Science Ltd. doi:10.1016/S0016-3287(02)00086-1
362
S. Premchander / Futures 35 (2003) 361–378
and create people’s institutions for micro-finance. In this way, the holistic development of people that should precede their involvement in small and micro-enterprise is more likely to occur. 2003 Published by Elsevier Science Ltd.
1. Small enterprise, women, and poverty alleviation 1.1. Women as entrepreneurs It can be said that women are at the core of developmental activities. The role of small enterprise in poverty alleviation has long been recognised as vital, and promotion of small and micro-enterprises for women has been recognised as the key to augmenting family welfare. The link between women’s enterprise and poverty alleviation is well recognised. The recognition of the productive role of women led to support income generation and enterprise by women. The work by Boserup [1] was among the first to highlight the contribution of women to productive work. In the early 1980s, the trickle down theory at the household level, which assumes that higher incomes for men translate into higher incomes for the family, was questioned. Devaki Jain (quoted in Karl [2]) pointed out as early as 1980 that it is women’s income that goes towards family food and basic needs, the man’s income goes for assets, relative luxuries and liquor. This realisation led to the development—world’s initial strategy of promoting income generating activities (IGAs) for women on a large scale. The strategy did not fully succeed, however, as poor women are faced with fewer and poorer opportunities to work. Bhatt et al. [3] suggest that they face under-employment and a casual nature of work; lack of skills and education; lesser mobility, heavy responsibilities; a systematic social practice of under-rating women’s work, and lack of access to better technologies, tools and productive assets. As there are not enough employment opportunities for women, support for self-employment and women’s enterprise came to be recognised as being required for releasing women’s economic potential [4]. Many NGOs have subsequently taken on the task of women’s empowerment through micro-enterprise in recognition of the impact it can have on women, their families, and poverty alleviation. In doing so, however, these NGOs and the women they support often find themselves confronting a reality where attitudinal biases, lack of collateral security with women and women’s lack of awareness and reluctance to approach banks for facilities create lack of access to credit, raw material, and markets. 1.2. Micro-finance for women It is against this backdrop that micro-credit for women, routed through self-help groups (SHGs) of women, came to be recognised as a viable strategy; not only for
S. Premchander / Futures 35 (2003) 361–378
363
promotion of women’s enterprises, but as a strategy for poverty reduction and women’s empowerment in general. Women’s SHGs have become effective channels of credit for enterprise. Thus government, banks and wholesale financing organisations now work with NGOs who promote groups and/or provide finance to them. Micro-credit activities by their very nature involve women, and a typical medium through which micro-credit reaches poor families is through women’s groups. These women’s groups, which may have 10–20 members in the case of SHGs (or larger numbers, between 40 and 300 women in the case of co-operatives), help women to network and amass collective power. Women save money every week, fortnight, or month, and their accumulated savings are rotated as credit among the women members or kept in a savings account in a bank. Credit providers then link with the groups, and use the group savings as security against the loans. In India, banks have been one of the credit providers involved in disbursing microfinance through women’s groups, providing credit against the women’s savings in a ratio of 1:1 or more. This bank linkage model has proven successful through such projects as those of ‘MYRADA’ in Karnataka and Tamilnadu. An alternative model, one of credit and other financial services delivered through NGOs operating as micro-finance providers (henceforth termed as NGO-MFIs in this paper) was seen as a successful model in the mid-1990s and experienced substantial growth at the hands of government and international funding agencies. The MFI model was promoted by Friends of Women’s World Banking (FWWB) through over 150 NGOs and by Small Industries Development Bank of India (SIDBI) through over 150 NGOs in the period 1993–1999. In India, the government has adopted and upscaled both the bank linkage and MFI models for micro-finance on a massive scale. Cumulatively 114,775 (94,645 with National Bank refinance) SHGs were linked to banks and bank loans amounting to Rs.195 crore were disbursed as on March 2000 [5]. Thus, NGOs have taken up micro-credit activities on a very large scale in India, and the number of NGOs engaged in this activity continues to grow. It is therefore important to review some of the institutional issues that arise as a result. We will begin by reviewing the background for the movement in Section 2, analyse the advantages and disadvantages of the institutional forms arising from different microfinance models in Section 3, then discuss macro-impacts of the different models in Section 4.
2. Micro-finance in governmental and non-governmental sectors in India This section begins by outlining the extent of credit provision by mainstream institutions in India, the credit needs of the poor, and the context in which NGOs entered the micro-finance sector. Then it describes the development of group-based micro-finance activities as a collaborative effort involving government, the banking sector, and NGOs, and the institutional recognition it has subsequently received as a tool for poverty alleviation and economic growth.
364
S. Premchander / Futures 35 (2003) 361–378
2.1. Mainstream credit institutions in India In India existing mainstream provision for rural lending does not work. The policy environment and the institutional structure required to serve the needs of the rural people already exist. However, banking and co-operative institutions have not been able to recover costs on rural lending for a host of political and other reasons. Government loans for agriculture have existed in India since 1793, and short-term co-operative credit institutions have existed in India since 1904. After 1929, cooperative land mortgage banks were started to help farmers redeem lands mortgaged to private moneylenders, and from 1954, the All India Debt and Investment Surveys began documenting the extent and nature of debt and investment in farm and nonfarm sectors. The banking sector expanded substantially from 1955 with considerable input from the government. In 1969, 14 private sector banks were nationalised and Regional Rural Banks were formed from1975 onward. With this expansion, bank finance for rural households increased from 5% in 1951 to 62% in 1981. Presently, the multi-agency credit system in India involves a range of institutions (shown in Fig. 1). Together, they provide credit for the agricultural and industrial sectors, in both rural and urban areas and to individuals, co-operatives, and other institutions. The banking sector in India thus has over 13,000 semi-urban and over 43,000 rural branches. Co-operative credit to the rural sector is provided through some 100,000 branches of co-operative banks for short-term and long-term credit [6].
Fig. 1.
Institutional arrangements—agriculture and rural credit.
S. Premchander / Futures 35 (2003) 361–378
365
Unlike many other developing countries, in India, the policy environment as well as the institutional structure required to serve the needs of the rural people already exists and seems to offer favourable conditions for providing credit to the poor. 2.2. The poor still lack appropriate credit The poor, however, still lack access to credit, as systemic and infrastructural barriers undermine the effectiveness of mainstream credit provision. We turn briefly to examine the credit situation of the poor. As will be demonstrated, the poor still use high interest credit as they lack an appropriate credit system. They need small credit at frequent intervals, they cannot deal with the paper work that banks require and they do not have collateral. The spread of branches is uneven and poor transport facilities and infrastructure exist to reach the banks. The transaction costs of serving the poor are high and so banks have lost interest in the poor as clients. Rural banks and co-operatives have lost vitality and have become sick institutions. The total proportion of rural debt through private moneylenders has reduced from 80% of all rural debt in 1951 to 24% in 1981. Thus, though the total dependence on the private money lender has diminished, the poorest sector, with its typically short term and low volume transactions, still resorts to private money lenders for business and consumption credit. The interest rates can be exorbitant; 2–5% per month for long-term loans and up to 10% per day for working capital [7]. Although formal nationalised credit institutions have extended their reach to rural areas on a large scale, their motivation in serving the poor is low. Banks are wary of extending loans to the poor as, historically, the provision of low interest rural credit has led to problems. The reasons for these problems have been internal (inadequate loan policies and appraisal procedures, inadequate supervision and monitoring of loans, etc.) as well as external (natural calamities, absence of backward and forward linkages, lack of government support and legal framework for effecting recoveries, and political interference in banking as well as co-operative credit institutions). Therefore, from the standpoint of national credit institutions, provision of rural credit will lead to high costs, low recoveries, dependence on external concessional funding, loan rationing, and weakening of the institutions themselves. Similar problems have plagued and ultimately sickened the co-operative sector, which faced issues of low recoveries, non-viability, erosion of capital, unprofessional management, inadequately trained staff and insufficient loan funds, among other things [6]. The rural and urban poor thus find many barriers to loans from formal banking institutions and very often are forced to depend on private informal finance. 2.3. NGOs: the movement from welfare to economic development The NGO sector as a whole has moved from a top–down welfare system to a community-owned economic self-help approach, and has invested heavily in the micro-finance movement as a means to support the poor in reaching self-sufficient and sustainable livelihoods.
366
S. Premchander / Futures 35 (2003) 361–378
Given the credit difficulties of the rural poor, many NGOs have identified a role for themselves in securing appropriately priced and channelled credit. This relatively recent movement towards micro-finance activities has its roots in a change in NGO methodologies and needs to be understood in that context. The NGO sector has addressed the various needs of the poor and the socially, politically and economically disadvantaged since the early 1920s. It is only recently, however, that there has been a convergence of approach, with NGOs seeking to combine project specific work with active organisation of the poor. Community organisation is now treated as an essential prerequisite to the successful introduction and implementation of development programmes. Further, NGOs realise that organisational work among the poor cannot be sustained without economic improvement. [8]. This has led to a large number of IGAs being promoted by NGOs. They promoted these activities first as welfare programmes that provided employment to the poor, and only in the mid-1990s, as businesses owned and managed by the poor. Micro-credit for businesses by poor women and SHGs began to be experimented with only towards the late 1980s. 2.4. The development of group-based credit through NGOs, government, and banks Group-based credit is important. It has met latent needs of both poor women and NGOs. NGOs first began to work with groups using the principles of the co-operative movement, experimenting with and learning from the co-operative sector. The availability of international donor funding made it possible for many NGOs to try out new initiatives. The first few innovations in group financing and indeed, much of the further refining of group-based credit methodologies have come from NGOs. In the first few years of working with groups, NGOs encouraged groups of women and men to save, however small those amounts may be. As incentives, and to meet the credit needs of the poor, matching grants were provided against these savings. The grants were usually divided equally among the members, and used for agricultural and other seasonal credit needs. Most such groups were men’s groups, as only men were recognised as farmers, even by development agencies. Men’s groups also routed large development grants from international donor agencies and/or the government under the aegis of projects implemented by NGOs. The top–down approach of development was still prevalent and visible in the implementation of these early micro-credit activities. Women’s savings groups were started in the mid-1980s by many NGOs. At about the same time, some government funding became available to promote women’s individual and collective enterprises (through a scheme called Development of Women and Children in Rural Areas, DWACRA). In the mid-1980s, there were several experiments in various parts of India, by different NGOs, government, banks and international donor agencies, which involved provision of credit to women’s groups. As these became successful, there was an improved understanding of the demand and supply factors that caused the rapid growth of the micro-credit movement in India.
S. Premchander / Futures 35 (2003) 361–378
367
On the demand side, micro-credit grew because: 앫 money is a binding force, and provides a constant link for women to come together; 앫 small scale economic needs of women can be met with their own savings; 앫 NGOs are closer to women than other institutions are and can provide credit at the time required, for the purposes women need it, and at the place of demand, at a reasonably low cost; 앫 as mainstream savings and credit facilities are not easily accessible to the poor, NGOs enjoy a good response for these services. On the supply side, it was good for NGOs to provide micro-credit to women’s groups because: 앫 women’s own savings become a source of credit for meeting their immediate consumption and other needs; 앫 over a period of time, as bank linkages are established, groups can access mainstream credit, and also subsidies given by the government; 앫 NGOs can themselves provide credit to these groups, and the savings provide a backup against the risk taken in lending; 앫 by charging a spread over the cost of funds and interest charged to groups, NGOs can earn some money towards the costs of their services; 앫 as grants are more and more difficult to raise, facilitating NGOs tends to be attracted towards options that ease pressure on cash flows and on earnings; 앫 development support agencies have recognised that NGOs are closer to the people and understand the needs of the clientele better, and have encouraged micro-credit activities as part of the projects they implement through NGOs. Further, there was recognition that NGO support for group-based women’s microfinance encouraged collective action, helped women to break out of gender and economic barriers, and expanded their horizons for their own development as individuals and members of a family, group and community. In this way, NGO experiments in group-based finance have led to their adoption of micro-finance as the most prominent way to organise the community and work towards economic benefit through women’s enterprises. 2.5. Institutional recognition of micro-finance as a development tool The group-based micro-finance model has earned a place in institutional efforts at poverty alleviation on a national and international scale. In India, there has been recognition of the potential of micro-credit and provision of other financial savings to the poor in many ways. In the initial years when initiatives in group funding were being tested, NABARD, the Indian National Bank for Agriculture and Rural Development, provided bulk financing to NGOs for lending to groups. Bulk funding to NGOs has also been
368
S. Premchander / Futures 35 (2003) 361–378
available through FWWB, an affiliate of Women’s World Banking based in Ahmedabad. As positive experiences were realised from these initiatives, SIDBI began to provide bulk lending to NGOs as well. Towards 1996-1997, SIDBI expanded and formalised its Micro-Finance Scheme. By 1999, SIDBI had become the implementer of a large project supported by the UK Department for International Development (DFID), providing capacity building grants for NGOs who partnered SIDBI in microfinance programmes. The SIDBI Foundation for Micro-Credit was established in 1999–2000 to implement their micro-finance and capacity building programmes. Micro-finance activities have gained the support of national policy. The Reserve Bank of India has recognised SHGs of the poor as clients who can receive bank credit. NABARD accordingly has recognised and issued circulars to all banks and co-operative credit institutions, acknowledging that money loaned to SHGs will be eligible for refinancing and will be treated as priority sector funding under the norms of the Government of India. International funding agencies have also extended bilateral co-operation for microcredit provision through the government. The International Fund for Agricultural Development and the World Bank have supported schemes for credit to women’s SHGs through the Department of Women and Child Development. The Ministry of Rural Development has recently introduced changes that will bring its schemes in line with the learnings from SHG promotion. From 1 April 1999, the self-employment programmes of the Integrated Rural Development Programmes (IRDP) of the Ministry of Rural Development, Government of India were merged into one programme. These programmes included: Training of Rural Youth for SelfEmployment (TRYSEM), DWACRA, Ganga Kalyan Yojana (GKY) and the Million Wells Scheme (MWS). They became part of a single self-employment programme called the Swarnajayanthi Gram Swarozgar Yojana (SGSY). According to the Ministry of Rural Development in 1999, the new scheme seeks to focus on the formation of SHGs. SGSY seeks to cover 30% of all rural poor families in the next 5 years. Thus, the success of SHG financing has led to the biggest poverty alleviation programme in India becoming group-based [9].
3. An NGO or an MFI: the divide between institutional objectives A large number of NGOs are taking to micro-credit activities given that the financial environment favours women’s enterprise. They have to choose between being facilitators of credit or being Micro-Finance Institutions (MFIs). As facilitators, they would need to form and train groups, provide bank linkages, etc. As MFIs, they would have to become direct credit and financial service providers to the group. This choice of whether to be facilitators or implementers has several implications in the Indian context, and warrants careful consideration. Some of these implications, namely registration, collection of savings, provision of credit, viability and sources of funds and training and orientation of staff and systems, are discussed below.
S. Premchander / Futures 35 (2003) 361–378
369
3.1. Registration The process of registration with the government itself is different for NGOs and MFIs. Usually NGOs are registered as Trusts or Charitable Societies under the Trust Act or the Societies Registration Act. These registrations are done at state level, and NGOs who provide micro-credit usually have a provision in their memorandum where objectives and activities of the organisation are detailed. The philosophy of these organisations is based in the realm of people development. Those engaged in the activity often lack professional and managerial ability to deal with the task at hand [10]. Organisational forms of MFIs include non-banking financing companies (NBFCs), co-operatives and co-operative banks. The latter two institutional forms are memberowned organisations. Some applications have also been made for Local Area Banks which allow credit operations spread over five districts, but none are operational as yet. 3.2. Collection of savings Facilitator NGOs cannot collect savings of women as long as they are registered as charity organisations. Instead, they make women aware of the different choices open to them. MFIs collect the savings of women, maintain their records for them, and route their money back to them as credit. In order to do this, MFIs need to be registered as NBFCs and be authorised by the Reserve Bank of India to collect the savings of women. This requires professional micro-financing abilities in the organisation that many NGO-turned-MFIs do not have. On the other hand, if women’s savings are retained in hand or as a bank account, the facilitator NGOs help them to build up capital and draw money in their times of need. Rules are not rigid and timely credit is available. Thus, the expensive external funding can be reduced or even eliminated. This is not possible if the MFI collects the savings, and routes it back to women as credit. Often, organisations that are not legitimate NBFCs collect women’s savings. Indian and international donor agencies provide financial support to them, although capitalisation of women’s SHG funds and empowerment are not their goals. In these cases there is a conflict of interests. 3.3. Provision of credit Facilitator NGOs help to make links for their women clients with banks and international donor agencies. The credit is given according to some pre-determined scheme or philosophy; there is no guarantee that the requirement will be met if it does not satisfy the required stipulations. The procedures also take time and considerable travel may be involved. MFIs, with bulk funding from SIDBI, or international donor agencies, are more likely to provide credit in quantities and conditions that meet the needs of the poor.
370
S. Premchander / Futures 35 (2003) 361–378
However, this is likely to be at a cost similar to what private money lenders charge. On the other hand, even though mainstream credit agencies (linked to groups through facilitator NGOs) provide cheaper credit, they are not likely to meet the credit demands of the poor. 3.4. Viability and source of funds In obtaining grants for development costs, facilitator NGOs find it difficult to raise grants to facilitate bank linkages on a large scale. MFIs find it difficult to raise low cost funds for micro-credit, but, ironically, are the ones who can access grants for ‘capacity building’ of their clients. MFIs have access to large finance providers for loan funds. While the rate of interest is high in comparison with government funding, the advantage is that there are capacity building funds available to MFIs as grants which, when taken into account, can reduce effective interest rate to 8% or even lower. These large capacity building grants to MFIs provide a buffer for development activities during the phase when the MFI is still not fully viable. Additionally, those who have access to members’ savings or low cost capital from development agencies or banks are able to reach operational viability faster. As grant funding for development in general, and for building of people’s institutions in particular, has been shrinking, NGOs find it difficult to raise funds to play only facilitator roles. Ironically, it is the MFIs who provide credit on a commercial basis to the poor who are more easily able to raise large grant funding. Even development funding for capacity building is channelled through MFIs rather than facilitator NGOs. In a sense, the value of the pure facilitator role is shrinking in the current scenario. 3.5. Training and orientation of staff and systems The staff that work for NGOs and MFIs take their orientation from the work culture and goals of their organisations. NGO staff should be able to make linkages between banking institutions, understand financial transactions as well as train women. They are the liasing agency between the funding body and the women’s groups. The credit systems they put into place are dictated by the women’s choices and by the funders. Yet, they are able to influence repayment rates through their training, education, enterprise start-up support, and follow up activities. MFIs need staff who are credit officers and can give and recover money efficiently. They work to ensure good recovery rates. In doing so, international donor agencies favour them with big grants by virtue of the fact that they are likely to be financially sustainable and not require continuous grant support over a long period. 3.6. To be or not to be: an MFI There are many implications inherent in different models for credit provision, and many of the NGOs are yet to understand the ramifications of becoming finance pro-
S. Premchander / Futures 35 (2003) 361–378
371
viders. Most NGO-turned-MFIs lack adequately trained staff, information and the financial systems necessary; they need support with credit methodology and, indeed, strategic business planning. It is important to note that NGOs are in no way guaranteed to deliver micro-credit and succeed where the banking sector has failed. NGOs have become interested in micro-finance activity because risks and returns have both increased. Now it is not the lending organisations that take the risk but people standing by collective guarantees (as groups) for unsecured loans to individual members. The risks have not been reduced, they have only been passed down. The mainstream wisdom has not been contradicted yet [11]. Banks are bound by institutional constraints that make banking for the poor more costly and uneconomical. If women’s groups reduce the costs and risks of providing credit to the poor, they do so for the banks as well as for NGOs. This in itself is not sufficient ground for promoting NGOs as micro-credit institutions. Those NGOs who are unable to conduct their micro-credit operations viably, will run into similar problems as banks who passed through similar experiences not so long ago. This means that only those organisations with professionally managed micro-credit operations will be able to provide micro-credit on an economically viable basis. And again, we may ask whether this credit will go to the poor, as demands of viable credit service usually means having a clientele richer than the poorest of the poor. Yet micro-financing activities yield incomes, which can be useful for development work and can lead development organisations towards financial self-sustenance, along with providing a needed input to the poor. And certainly, given the large amount of support for MFI activities from external agencies, the incentive is there for more organisations to become MFIs. What is likely to happen in the future? Will more and more NGOs opt for becoming MFIs or will they continue with facilitation work? Then, what will the role of the government be? We examine these questions and the implications of the alternative trends on the target clientele: those who need and utilise micro-credit.
4. Macro-impact of alternate futures for micro-finance in India If micro-credit is to promote women’s micro-enterprise and empowerment, institutional forms and credit methodologies need to be effective and appropriate to the needs of clients and the area in which the clients are located. In this section, we describe some practical experiences with different institutional forms from the standpoint of the people and the extent to which the real credit and enterprise start-up needs of the people are being met. We also present illustrative stories to highlight conflicting interests between MFIs and the poor, to describe facilitator NGOs that are unable to provide support as they would like to and to show how the government’s intervention in micro-finance can usher in mainstream ills into this development experiment. The section projects what is likely to happen given alternate growth patterns of institutions that provide credit to the poor.
372
S. Premchander / Futures 35 (2003) 361–378
4.1. Understanding implications of institutional forms The micro-finance scenario in the country is difficult even for NGOs to comprehend and analyse to make informed choices. Clients cannot make informed choices. Clients rarely understand the practical implications of different forms of credit institutions and financial linkages. For the average rural women and women’s groups, the choices are made by NGOs, who offer the package, credit methodology, and financial products they select. The NGOs, governments or international donor agencies who make the choices regarding institutional forms and financial linkages rarely invest the cost, time and effort required to enable clients to make informed choices themselves. There is very little time available for NGOs to educate themselves, leave alone taking on educating clients and involving them in making the choice about microcredit methodologies. This is despite the claims made by NGOs that they are participatory in their way of working. NGOs, government, and international donor agencies must ensure that the final clients, i.e. poor women who are members of SHGs, understand both the positive and negative implications of dealing with banks as opposed to dealing with MFIs. Equally important is the need for NGOs as well as donor agencies to understand implications of alternate institutional forms because if they do not, then the danger is that means may be mistaken to be the end. The achievement of high money turnover, high repayment rates, coverage of costs and large number of low income clients does not necessarily imply that poverty reduction is achieved [12]. 4.2. When NGOs turn MFIs When NGOs turn MFIs the poorest of the poor may not be reached by MFIs and the savings of women may be taken by unscrupulous organisations. Even MFIs may prevent women from utilising their own savings fully before resorting to loans. If NGO-turned-MFIs fail then another ostensible development tool will be given up. If the trend of NGOs becoming MFIs takes on momentum, the total number of rural people reached will be much higher as credit will become available to a larger and larger number of people through a larger number of small and micro-institutions. However, as more NGOs become moneylenders, the development approach will take a back seat. As micro-credit favours either those who can save or those who can borrow and repay, it tends to leave out the poorest of the poor at any given time. Thus, the most needy will continue to be neglected. There is a danger that if more organisations collect group savings as they do now, there is a likelihood of unscrupulous elements setting themselves up as MFIs and mopping up rural savings for personal gains. Several cases of such happenings already exist in India and Bangladesh. Again, vested interests could operate and misuse the credit relationship. A case in point: An MFI serves 12,000 rural women in Bihar through bulk finance from an international donor agency. The women’s groups have significant savings, yet they
S. Premchander / Futures 35 (2003) 361–378
373
keep this money idle while they borrow large sums from the NGO. This benefits the NGO, as it rotates its bulk funds better and earns an interest while the women’s own money remain uninvested. The women do not realise the value of their own capital. MFIs can rationalise a situation like the above by believing that women’s savings need to be kept for consumption and emergency purposes while loans are to be used for productive investment. What most MFIs are not able to see is that this situation is an indication of the inherent conflict between the interests of the credit provider and those of the women. Another concern is that new MFIs must put efficient credit systems into place to recover money. If this does not happen and the poor default on payments they stand to be branded and lose access to the support from the government and banking system. This has happened with government subsidies, etc. in the past. Sometimes not much of the money reaches the poor, a case in point is the IRDP loans. If the systems for repayment fail, then micro-finance as an ostensible panacea for poverty alleviation will have to be written off as a failure. 4.3. If more NGOs choose to be facilitators If NGOs stay facilitators, there is no doubt that the scale of capital being projected now will not be reached. The mainstream financial institutions are not geared to rural lending, leave alone lending to the poor. With all the targets being set by the central government, NGOs need assistance in providing the necessary support and capacity building of the people. This cannot happen in the absence of grants, of which there is a dearth at present. Facilitator NGOs often cannot match other institutions in terms of financial or political power. They may not be able to influence situations where credit needs are not being properly met. As the case study of an NGO in north Karnataka shows: An NGO in north Karnataka helped form 60 groups. Bankers refused to open savings bank accounts for groups from villages that did not fall in their ‘service area’. Bank loans were given only to 12 groups, as this was the target for the district for the year. The amount of loan given was four times the saving of the group, and had no relation to the needs of the proposed enterprises. There is also often the need for facilitator NGOs to have a strategy to counter the limitations and dependence on the mainstream banking sector for credit: A women’s group approached the local bank for opening a savings bank account and was rejected. The bank manager told them that there were many defaulters (from earlier loans) in their village, hence they did not want to open an account of any group from there. Some of the women’s husbands had defaulted on government loans. The women tried to explain that they had never got the loans, only a proportion, and they did
374
S. Premchander / Futures 35 (2003) 361–378
not know that these were loans to be repaid and not grants. The facilitator NGO intervened but could not convince the bank manager. When the women approached the manager a second time, he threatened that if they put their savings in the account, he would appropriate these to pay back the earlier loans. This scared the women as they wanted a safe place for their savings, and they gave up the attempt. The NGO officer then went to the Regional Rural Bank in the district to influence the said bank to open a bank account as the NGO had arranged with an external credit provider to give loans to the above group. The account was necessary for receiving this money. She was told that it was well within the rights of the bank to refuse to service the women as they were not yet clients. An appeal to the Consumer Court could only be made if the account had been opened: no one could admonish a banker for not opening an account! When the NGO persisted and said they would bring the issue to the notice of the District Level Committee, they were told that the bankers would stand together in such an event, and none of the groups promoted by the NGO would then get any bank loans. The NGO considered this a serious threat. But since the number of groups that had been facilitated had more demand for credit than what the bankers would meet in any case, they decided to obtain external funding and operate this fund until the banking linkages became effective. They felt this was necessary in order to enable the women to start their enterprises at the size and time that was necessary. In the case above, the strategy of providing credit through alternate sources served the needs of women. However, such a strategy put a double burden on the NGO to be a facilitator as well as to monitor micro-credit operations. A lack of understanding and flexibility in the lending systems can have catastrophic results, as this example shows: A SHG in North Karnataka with 15 members from the Devadasi community was identified for priority loan coverage. They wanted to buy buffaloes with this but had no shelters, so the Panchayat sanctioned the construction of sheds. Over riding the local people’s wishes, a government-approved contractor was appointed to build the sheds. The bankers and government also insisted that the women buy the animals from an outside market rather than keep local buffaloes. This choice was wrong, as the local animals would have already been acclimatised and more sturdy. The women wanted to buy the buffaloes in September when there was an abundance of green fodder; here again, the officials delayed the process. When the purchase finally took place in December, there was no fodder
S. Premchander / Futures 35 (2003) 361–378
375
available. The women wanted to buy the animals based on their individual decisions and inclinations: they were compelled to purchase the lot as a group. When the animals finally arrived in December, they were found to yield lesser quantities of milk. Fodder had to be bought from outside and costs went up, not justifying the investment. The animals were sickly after re-location and the women had to give up their farm activities in order to care for the creatures. In effect, the women were not allowed to make any decisions at all. The cost of the shed ended up being more than the amount sanctioned by the government, and the balance of the money was taken from the loan amount that the women received from the bank. This transaction took place between the banker and the government, and the women only knew that an additional debit had been entered against their names. Under such circumstances, if women do not make net gains from the new assets and are not able to pay back, the bank and government officers are equally to blame, but only women and their village get listed as defaulters. Clearly, facilitating NGOs cannot ensure that all credit requirements of all groups will be met, as the extent to which credit needs of women are met will depend on the ability, standards, and attitudes of those providing the finance. In addition, timely credit cannot be guaranteed, as funding agencies may take their own time to appraise, sanction and disburse credit. The only hope is for more and more NGOs to be supported by private and international funding to play facilitator roles and create a demand for credit. This will bring pressure from below for public institutions, including banks, to respond to the needs of people. If this happens, the banking sector will become more accountable to the people; there is also a chance that NGOs can help people to demand a certain minimum expenditure in health, education and human resource development in the villages from the government. This process will also bring to the fore the need for reforming and revamping existing institutions, including government departments. It is only by bringing about activist forums of NGOs and people that there will be bottom–up pressure for change. 4.4. Women’s micro-finance in the hands of the government The way the government has adapted micro-finance is through a combination of loans and grants, where loans are accessed from the banking system and grants/subsidies from a government agency. There are targets set for provision of such grants/subsidies each year, and often there are leakages in the system which result in the non-poor getting these benefits. A specific incident from the field experience of a facilitator NGO is given below: A farmer with 60 acres of land sold a portion of it to the government. They granted a housing loan and developed a colony for labourers. Very soon, an NGO
376
S. Premchander / Futures 35 (2003) 361–378
formed a women’s group with the labourers’ wives and a DWACRA revolving loan was sanctioned on the occasion of the first and only meeting. The money, in fact, went to the landlord whose brother was a local politician. The women saw nothing of the money which was intended for their enterprise. The NGO, on the other hand, took a good name for being effective and was assigned the money for the target 10 groups for the following year. When a local banker was questioned about this, he explained: “We have to meet the targets for credit to the priority sector. We also have to pay heed to local politicians. And if an NGO has political links, it will definitely get government recognition, too.” Therefore, if the government continues to promote MF through its departments and schemes, and continues to link grants/subsidies with provision of bank finance, as explained in the earlier paragraph, there is every chance that there will be large scale defaults. Much more money is likely to be leaked to intermediaries, politician’s families, and self-seeking NGOs than is likely to go for poverty alleviation. The Indian government tends to follow the initiatives and experiments of NGOs after a time lag of a few years. When they make changes in policies and schemes on a large scale, without full information or understanding similar to the original experimenting agencies, the resulting schemes can be inappropriate or insufficient to address the real needs of the people. As they do not have sufficient feedback systems, or ways of mid-course corrections, the impact of their interventions can actually work contrary to the original objectives of the schemes designed. The government’s combination of grants with loans can undermine the micro-credit operations of MFIs, just the way it has done with banks over the past 50 years. Further, facilitating grants of the government are target-based rather than result oriented, and the facilitators that the government promotes rarely work to benefit and empower the poor. Therefore, the government’s adoption of micro-credit for poverty alleviation, and up-scaling it before the ground is ready for such expansion, may result in jeopardising the efforts of both MFIs and facilitator NGOs. 4.5. Creating people’s organisations Organisations that have the potential to give the best deal to the people are those owned and organised by people themselves. Co-operative is one such form of collective organisation but has as many cases of success as failure in India and cannot be advocated across the board. There is a need to experiment with more institutional forms of people’s organisations. Only NGOs who are facilitators are in a position to build capacities of people, and work with them for more informed choices and development of options. The critical issue in the above discussion is how to bring about poverty reduction and women’s empowerment through micro-credit aimed at women’s enterprise. Given the current lack of power that women face at the hands of bankers and govern-
S. Premchander / Futures 35 (2003) 361–378
377
ment schemes, it is important to imbue choice. This can only be through people’s institutions and capacity building. One such form of client-owned organisation is the co-operative. There are significant co-operative successes in India in the dairy sector and the SEWA Bank, a women’s co-operative bank in Ahmedabad, Gujarat. These experiences show that “‘weak sections’ are not by nature weak, but are only so because of their position in society. If these weak and vulnerable sections are better organised and at the same time have support from the government, they too can become strong.” [3:116]. However, co-operatives and co-operative banks have a chequered history in India, with either a few members taking benefits, or the government controlling these institutions. There is a need for significant legal reform before co-operatives can be adjudged the best institutional form. The ideal solution would be to create people’s organisations and build their capacity to own and manage their organisations in a fair, equitable, and economically sustainable manner. Real empowerment of people can only come through peopleowned institutions, as they have the greatest potential to meet the needs of the poor appropriately and effectively, by virtue of being people owned and managed. And finally, the only institution that offers choice and enables people-owned organisation is that of the facilitator NGO. Only facilitators are in a position to educate women and enable decision making, as opposed to presenting women with the fait accompli of pre-packaged credit solutions, and to develop relationships with communities with a sufficiently hands-off approach to enable leadership from within.
5. Conclusions I have been a die-hard optimist, yet it is evident that we are far away from any real development. This current spate of efforts to scale up micro-finance activity in India will come up against all the difficulties that have been laid out above in the paper. NGOs will make right or wrong choices, but the overall funding and grants atmosphere is still not right, with very little available from government and international funding agencies, for NGOs to make a significant difference. In the absence of significant investments in education, health, and human resources of the rural poor, the entire effort in the field of MF may turn out to be nothing but barking up a wrong tree. The structures to support poverty relief and develop enterprise are not well established. We do not need sectoral thinking and sectoral development projects in India, as we are at the stage where we still need integrated development, integrated thinking and holistic development. We do not need minimalist thinking, but holistic thinking and holistic development efforts. There is no doubt that women’s micro-enterprise can help reduce poverty, and that women’s micro-enterprise gets a boost from the availability of micro-credit and other financial services. However, decisions regarding institutional ownership and forms directly influence development outcomes. If the final goal is poverty reduction and empowerment of women, this can be
378
S. Premchander / Futures 35 (2003) 361–378
facilitated only by institutions who support rather than compete with the poor, and who build people’s institutions, without fear of their own security and survival. This paper demonstrates the difficult issues faced by the NGOs in their mission. Only a very strong alignment of real development forces, committed volunteers and leaders in this crusade of holistic and sustainable development, can lead us to a future with secure livelihoods devoid of poverty and illiteracy, for the millions of disadvantaged people in India.
References [1] Boserup E. Woman’s role in economic development. London: Earthscan Publications Ltd, 1989. [2] Karl M. Women and rural development. ISIS Women’s International Information and Communication Service. In: Women in development. A resource guide for organisation and action. Ahmedabad, India: Intermediate Technology Publications; 1997. [3] Bhatt ER, Desai A, Thamarajakshi R, Pande M, Arunachalam J, Kohli V. Shramashakti: a summary of the report of the national commission on self-employed women and women in the informal sector. Ahmedabad: Self Employed Women’s Association, 1988. [4] Kraus-Harper U. From despondency to ambitions: women’s changing perceptions of self employment: cases from India and other developing countries. Hants, England: Ashgate, 1998. [5] NABARD Micro-Finance Innovations. Downloaded from http://www.nabard.nic.in on 25.1.2001. [6] Karmakar KG. Rural credit and self help groups. Micro-finance needs and concepts in India. New Delhi: Sage Publications, 1999. [7] Harper M. Profit for the poor: cases in micro finance. New Delhi: Oxford and IBH Publishing Co., 1998. [8] Riddell RC, Robinson M. Non-governmental organisations and rural poverty alleviation. Overseas Development Institute. Oxford: Clarendon Press, 1995. [9] Premchander S. Impact of micro finance on women’s livelihoods. Paper submitted for thesis upgradation. UK: University of Durham; 2000. [10] Acharya B, Premchander S. Evaluation of training programme on strategic business planning: a review report. Ahmedabad: Friends of Women’s World Banking, 1999. [11] Premchander S. Micro enterprise development on the fast track. Micro enterprise development summit. Delhi: Asian Society for Entrepreneurship Education and Development, 1998. [12] Johnson S, Rogaly B. Micro finance and poverty reduction. Oxford: OXFAM and ACTIONAID, 1997.