'D:\CUSTOMERS\Mate\SaDhan22\SaDh' by Anil

Sa-Dhan Newsletter Volume 4 Issue 2

Community Based Organisations

200 SHGs and 10-15 clusters that represent a

facilitation. But in either of the cases, SHGs can continue to

culmination in the development of multi-tier community

rotate their own savings in a limited financial intermediation

institutions, designed to function independently of the

role and where loaning is to or through SHGs, the NGO does

NGO after its phase out are able to get finance from

not have access to the group's savings for its operations,

wholesalers. Example- the federations promoted by

since these are managed by the SHG itself. One important

DHAN Foundation have accessed loans from apex

things about Ngo-MFIs is that due to ambiguities in the

lending organisations such as SIDBI, RMK, HDFC and

regulatory framework, it is still possible, though not

HUDCO having fulfilled the criteria of creditworthiness.

recommended practice, for NGOs which registered as non-

profit societies, trusts or companies to provide savings

Mutually-Aided Cooperative Societies (MACS). This is

services to their "members".

a cooperative society fully own and controls by its

members. MACS of Andhra Pradesh are an example of

According to Ajay Tankha, there is four type of SHG/

this kind of institution where it generates funds from

Federations link to various types of MFIs. They are as

members' savings. However, it can get resource from

follows:

other source as well.

SHGs/SHG Clusters/Secondary Federations Linked to

In his view NGOs play a very important role in establishing

NGO-MFIs

networks. Experience showed that even after NGO facilitation,

SHGs/SHG Clusters/Federations Linked to Not-for-Profit

the SHGs are generally not equipped to engage directly with

Companies and NBFCs

banks and other agencies. The study further reveals that

graduation of Self-Help Groups' members to larger individual

SHG Federations Linked to MF Wholesalers

loans was not evident. The availability of funds from the local

Mutually-Aided Cooperative Societies (MACS)

banks was often determined by the degree of interest shown

by the bank manager. Financial intermediation along with

Under SHGs/SHG Clusters/Secondary Federations Linked

non-financial activity was important for successful functioning

to NGO-MFIs, he said, " The argument in favour of the

of clusters.

primary federations or cluster level associations (CLAs)

is that the SHG is too small a unit to carry out a wide

Rakesh Pandey took the workshop through the experience of

range of financial and non-financial intermediation.

Shramik Bharti in SHG networking. His presentation titled

Example of this types are those of Cluster Level

'Role transformation of promoting institutions' was interactive.

Association (CLAs) (of 10-15 SHGs) promoted by

There was considerable argument over the role of NGOs and

Outrech. Here, the CLAs undertake bulk purchase of

government officials. The consensus reached was that the two

inputs, store grain, manage group enterprises, run a

need to work in tandem. Also financial intermediation was

crop insurance scheme through a risk fund, act as

crucial to provide continuity and sustainability to the

agents for insurance companies, directly market outputs

intervention.

of member SHGs, promote new SHGs and provide

training, apart from on-lending funds from the NGO to

C.S. Reddy set the ball rolling with a recap of the first day

the SHGs. In this type, the unit of interface with the

in which various issues related to federation were pointed

local bank shifts from SHG to CLA and the bank's

out. Some of these relate to-

transaction costs too are much reduced. There are

chances of CLAs further federated at block level

Social sustainability;

federations.

Solidarity and homogeneity;

Under the SHGs/SHG Clusters/Federations Linked to

Advantages and disadvantages of the various models;

Not-for-Profit Companies and NBFCs, most of the

Which model would work better and is worth adopting;

borrowings are from Non-Banking Financial Institutions

(NBFCs) though the interest rate is quite high. For

The degree of concentration on the financial aspects of

MYRADA, it has promoted a not for profit companies

cluster formation;

while ASSEFA promoted community owned NBFCs.

Need based to be the basis for the formation of

Sanghamitra is a not- for- profit companies and

federation and the importance of financial activities at

Sarvodaya Nano Finance Limited a community owned

the federation/cluster level;

NBFC.

The need for defining roles of the different intermediaries

Under the SHG Federations Linked to MF wholesalers,

at different levels (such as DPM, BDO, NGO);

only big and mature federation is able to access finance

formation of clusters should not be made mandatory as

from apex financial institutions even though the line

part of the project; and

dividing between cluster/ federation funded by Ngo-

MFIs and apex/ whole sale financial institutions is

The need for making the project guidelines flexible.

weak. However, block-level federations, of about 150-