Sa-Dhan Newsletter Volume 5 Issue 2
Operational Costs of Delivering Microfinance : Banker's Perspectives
Occupational pattern: Though as high as 67% of the clients
Micro-credit products
own land, but all of them are not engaged in agriculture.
In other words, land holdings are so small that it cannot
Credit products include loans for meeting working capital
provide full employment to all family members. Thus, in
and investment requirements. Loan is given for any legitimate
order to supplement their income they undertake different
productive and consumption purpose as suitable to the
non-farm activities. Accordingly, the loans for different
group or to the individual member. Credit follows savings.
purposes. Occupation distribution of loans taken is shown
Satisfactory working of the groups for at least 3-4 months
in the pie diagram.
is ensured before loans are given. At the initial stage, loan
amounts are staggered in three lots of 2:2:1. Only two
members are given loans at the first stage. After watching
Occupational Pattern of Members
their performance and recovery record for four weeks, the
Agriculture
other two are allowed credit. The group leader is the last
Rural Trade
to get a loan. After the first cycle and subsequent
n Agri.
Artisa A&ima
Animal
satisfactory repayment, all members in a group can avail
Servic 22%
husbandry
ls
n
loans simultaneously. Repeat loans are allowed in all cases.
Ce ttle
a
Rural Artisan
7%
155%
6%
Each group is allowed a credit limit up to Rs.75,000/-. The
Trade &
loan per member does not exceed Rs.15,000/- at any time.
Services
But the idea is not to aim at higher amount of Rs. 15,000/
- per member immediately. The credit delivery, however,
Micro-finance products
starts with smaller loan doses and is gradually increased
commensurate with increase in credit absorption capacity
Savings products
of the members. For groups older than three years, the
maximum limit of loan is Rs. 25,000/-. Disbursement is
In the beginning, to inculcate the habit of savings, members
made in cash during group meetings. All group members
were provided with wooden piggy banks to put in them
ensure and monitor the end use of funds. All loans are
only coins coming in the house every day. Coins collected
collateral free. All the group members are liable, jointly and
were taken as member's savings. At this stage, there was
severally, for loan taken by anyone in the group. The interest
no minimum compulsory saving rate. When the system
rate is regulated by the Reserve Bank of India. All loans
stabilised, compulsory saving of Re 1 a day by each
under this category for amounts up to Rs 2,00,000 can
member became the rule. It is the rate of compulsory saving
be allowed not above primary lending rate (PLR) of the
until today. Each client deposits Rs 7 on each weekly
bank. The present PLR of the bank is 11% on daily reducing
meeting, although one is free to deposit a higher amount,
balance basis. Instalments are fixed on weekly intervals and
if so desired.
collected during each weekly meeting.
Another saving product is the term deposit. As soon as
Cummulative Advance (Rs in million)
the weekly savings of a client reaches Rs 1,000 it is
150
139
converted into a term deposit to give benefit of a higher
110
100
interest and motivate them to save more.
81
57
50
35
21
8
Dharam Deyi, middle-aged mother of four children,
5
2
0
was among first to oppose savings. She was in dire
straits - not enough to eat and not enough to wear.
The suggestion to save was obviously ridiculous to
her. On getting a piggy bank, she budged into saving
Delivery mechanism
whatever she could. Penny by penny, she started
saving. Today, she boasts of her fixed deposits of
Once a group is formed, one of its members is elected
Rs 10,000. Convinced of the advantages of savings,
she became a leader and inspired many poor
as a group leader, who is rotated periodically as decided
women of her village to form groups and pool
by the group. The group leader is responsible for maintaining
financial and functional discipline in the group. Eight to
savings as future security.
twelve (8-12) groups form a centre. All group leaders
6
