5

Theme - Issues and Challenges in Governance of microFinance Institutions (mFIs): Indian Experience

make all payments, including under

procedures to monitor the counseling

various schemes electronically. I

work. The project began with market

understand that in Andhra Pradesh, the

research to assess the needs and

State Government has taken initiative to

demand among SEWA clients for

make payments thorough e-seva. Other

financial education, followed by a

states have also launched such initiatives.

`training of trainers' course. SEWA is now

Governments should now explore the

providing financial counseling to its

possibility of direct credit to bank

clients through a weekly course. The initial

accounts. Eventually, part of the funds

experience suggests that participants

received by the beneficiary under

grasp the concepts presented and

various government schemes and

welcome new perspectives stemming

deposited with the banks can form part

from such training.

of the seed capital for forming Self Help

...Extending the Scope

Groups (SHGs) for such beneficiaries.

While

talking about financial

While some banks have on their own

education, it is important that

taken steps to provide such education,

the focus also extends to the

any large scale delivery of financial

urban populace, including the

education needs to leverage on the

literate masses, which may not

experience and expertise of other

be  having  the  financial

agencies, such as private entities, non-

acumen, technology suaveness

governmental organizations, civil society

and may not be `financially

organizations, outlets of the corporate

literate'. It is not that the urban

sector etc., apart from Government

masses are well versed in the

initiatives, wherever available.

Internet Banking and other

newer methods of banking;

The use of information technology offers

there continues to remain a

a lot of promise in providing financial

segment, which either avoids

literacy and education and experience

using the services due to lack of

in several parts of the country through the

confidence or remains unaware

use of rural information kiosks, mobile

of  the  options  available.

vans, etc. which have shown to what

Financial education to such

extent IT can be leveraged to provide

target group would be mutually

information on various products and

The kiosks need

beneficial.

services. Information kiosks can be run by

the Business Correspondents or installed

not even have

There

is also need for greater

in PCOs, etc. to disseminate information

any connectivity

awareness of various products

about not only banking products, but also

and the service

and services offered by banks.

other useful information like input/output

personnel can

A specific case that comes to

prices, insurance products, health

perform most of

mind pertains to the housing

services, weather information, etc. Such

the updating

finance sector. RBI had also

variety of knowledge would help in better

through electronic

raised the issue of transparency

risk mitigation, lesser documentation

media like CDs.

and fairness in housing loans in

hassles while sanctioning loans, etc. The

the recent mid-term review of

kiosks need not even have any

monetary policy. It has been

connectivity and the service personnel

reported that some banks, while

can perform most of the updating

lending for housing, are not fully

through electronic media like CDs. Banks

transparent in indicating the

can provide funds for setting-up such

factors

governing

the

kiosks and meeting the running costs or

benchmark  in  respect  of

the cost can be shared among banks,

floating rates as well as in regard

and the other organizations involved in

to reset clauses. As part of

the process.

consumer awareness, many

initiatives have been taken to

Some non-banking initiatives are also

increase the disclosure levels on

being experimented in various parts of

part

of

lenders,

but

the country. In this context, the project

effectiveness of all this would be

on financial counseling service for poor

predicated on the financial

self-employed women in India started by

understanding of the person

SEWA is well known. Project Tomorrow, as

taking the loan. The short point

it is called, was started in 2001 with a

is  -  Does  the  consumer

purpose to develop and test a financial

understand the underlying

counseling

curriculum

to

help

principle of a floating rate or

participants

manage

money

can he even ensure that the

productively, plan ways to increase

bank  has  been  fair  and

assets, address life cycle events, manage

transparent in its dealing with

risks. Through this project, SEWA has set

him? Clearly, there is need for

up a training unit and training delivery

financial education to prevent

system and is developing tools and