Contents

INAFI Global Assembly -An Overview ---------------------------- 2

Abed speak in INAFIGlobal Assembly ---------------------- 4

Charting the future ofMicrofinance - INAFI Way -------- 7

Microfinance in India –Challenges ------------------------------15

Evolving self-regulation inINAFI-INDIA network ----------------19

Microfinance Scenario inLatin America -------------------------21

Profile of KMVS ------------------------23

Events and Activities ---------------24

Opening Notes

Issue 4, May 2002

The most important event in the INAFI Calendar – Global Assemblyhas been organised at Mombassa, Kenya on March 18-20, 2002. Themembers of the network across the globe – continents of Asia, Africa,Latin America and also from Eastern Europe have participated.Mr.F.H.Abed, the legend from BRAC and Chairperson INAFI articulateshis vision. The Global conference focused on the theme “Chartingthe Future of Microfinance” and came out with a road map for INAFIto travel into the future with well defined goals and strategies.

Whither microfinance? The world of microfinance is growing largerand larger in several parts of the world not to speak of mega marketslike India where poverty preponderate in millions. We take a look atthe experiences, concerns / challenges of microfinance sector in Indiain this issue. In the Indian context, microfinance interventions haveemerged as a strong complementary system of financial services tothe vast network of formal financial institutions comprising ofcommercial banks, RRBs, Cooperative banks. This issue seeks toprovoke and promote an envisioning dialogue from all the partnersand stakeholders of microfinance in a substantive and forward-lookingway.

We welcome our new member KMVS to INAFI network and feature itsprofile. And the self-regulation juggernaut rolls on in the INAFI-INDIAnetwork.

- M. Kalyanasundaram, Chief Executive, INAFI-INDIAInternational Network of Alternative Financial Institutions - India

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INAFI GLOBAL ASSEMBLY – AN OVERVIEW

Introduction

TT he most important event in the INAFIcalendar which brings together all the

members of network was organised atMombassa, Kenya on March 18-20, 2002. Theevent got up every two years was organised byRegional Secretariats of Asia, Africa and LatinAmerica in rotation. The last global assembly,incidentally, was hosted by DHAN Foundation,India as the host of Asia Secretariat in November1998. The Global Assembly which constitutes thegeneral body of the network elect the globaland regional governance structure which areindependent subscribing to the objectives andgoals of the INAFI-International - reducingpoverty with gender focus through microfinanceinterventions.

The network since its establishment in 1995 hasexpanded the membership to around 90 NGOs/microfinance practitioners operating in around30 countries in Asia, Africa and Latin Americaand Eastern Europe serving about 15 millionclients.

The Global Assembly, with a view to play apivotal role in the future of global microfinance,has redefined the Charters of INAFI and also itsprogrammes and activities which are outlinedbelow:

INAFI Charters

The assembly provided an excellent opportunityfor all the members of the network to deliberateupon the future of microfinance and the INAFI’srole in that future. The global conference helpedthe members to keep focussed on the purpose ofthe network – contributing to poverty reduction,to redefine / refine, set new charters for INAFI.1. Micro-finance will focus on large-scale

poverty, reaching the “Poorest of the Poor”2. Micro-finance will be demand-driven, no

longer supply –driven, and clients will beprime stakeholders who will create thedemand systems.

3. Micro-finance will strive and reach financialefficiency / sustainability with full costcoverage.

4. Diverse models of micro-finance will benurtured and promoted.

5. Micro-f inance wil l bui ld vibrant localeconomies

6. Micro-finance will tap all avenue of savingsof the poor in innovative ways and channel itback for their own development

7. New frontiers in micro-financing will beopened facilitated by research anddevelopment in such areas as:@ Social security in the form of micro-

insurance and pension products (life,health)

@ Debt swaps@ Managing crisis and calamities (such as

HIV/AIDs, fire, flood, others)8. Micro-finance practitioners will set and

operate by standards in the areas of :@ Development work@ Institutional@ Financial

9. Expanding the reach of credit for povertyeradication through ski l l and marketdevelopment and asset creation.

10. Micro-f inance institutions wil l nurturenetworks and alliances.

11. Active and purposeful development ofhuman resources will result in the creation ofa new stream of micro-finance professionals

12. Micro-f inance wil l move into socialdevelopment after establishing its povertyalleviation agenda.

13. Linkages with formal market, government,social institutions will be promoted

INAFI’s Core Activities

1. Needs based capacity building or humanresource development and careerdevelopment (recruitment and successionplan)

2. Setting standards by practice@ Develop benchmarks for self-regulation@ Rating of MF players

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3. Documentation and dissemination@ building data base and management

of the data base@ documenting and disseminating best

practice among its members (utilisingexchange visits)

@ Presentation of abstracts of different MFrelated studies

4. Research and development for new micro-finance technologies including policyresearch studies

@ Sustainability and growth issues: pricing@ Market research / Client research@ Expansion of MF services to rural areas@ Access to capital funds@ Technology development, Credit

Savings, Insurance, Micro housing,Health financing, Business to businesslinkages

5. Lobbying and policy advocacy at thenational, regional and international levels.

Road map for the futureThe Global Assembly has drawn the following Road map for moving forward

Areas Present Future

Market share Minimum threshold Large scale quality coveragelevel

Competition Unclear Map out the competition andSeen as a threat from strategize for actiongovernment and banks

Commercialisation Imperfect (mixed) Complimentarity with bank andfinancial institutions

Donor dependency donor driven Member drivenResources Savings Internally generated Resources with

Soft loans commercial loansProducts Single product(credit) Full fledged savings, credit and

Weekly savings insurance productsLittle insurance

Sustainability Subsidized Self sufficientHard core poor Marginally covered Special strategy to cover allLinkage with social sector Mixed and weak Stronger links with health, education,

community servicesCapacity building Very limited Concrete process for comprehensive

HRD and need based supportRegulation Mostly left open Self regulation / prudential regulation

by governmentStandards “In the process” MIS, FIS, Audit A/C, ratio analysisNetworking National, Regional, More effective inter-linked networking

InternationalInterest rate Varied (flat rate, etc.,) Context specific standardsGovernance & ownership Weak ownership Stakeholders ownership and

managementGlobalization Externally driven Local management with international

linkages

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ABED SPEAKin INAFI GLOBAL ASSEMBLYF.H. Abed, Founder and Executive Director, BRAC, Bangladesh & Chairperson INAFI

II am honoured to have been asked to present the keynote addressto the 4th INAFI International General Assembly. What I intend to do

in this brief presentation is to raise a few big picture questions whichmay be useful to help us concretise our thinking and actions towardscharting the future of microfinance -the main theme of this assembly.

Let me start with a general overview of the microfinance in recent timesto locate my questions. During the last decade microfinance hascaptured prominence as, “the tool to eradicate poverty throughoutthe world”. It has proven itself as a cost-effective tool to fight againstmany dimensions of the poverty challenge. Microfinance institutionshave proved that it is possible to develop sustainable institutionalarrangements to serve a large number of poor clients despite difficultmarket conditions. The successful implementation of group basedcredit delivery model encouraged many other NGOs to introducesimilar programs.

The first ever micro-credit summit held in Washington D.C. in February1997 accelerated the growth of micro credit, throughout the world.Many NGOs and other institutions that did not have sufficient previousexperiences in managing Micro Finance have come forward. At thesame time, NGOs who were involved in small-scale micro creditprogram have scaled up their programs both in terms of increasingnumber of clients and portfolio size. A total of an estimated 15 millionpeople are served through Micro Finance Institutions around the worldand out of this 12 million is in Asia, 1.5 million in Latin America, 1 million inAfrica and .5 million in Eastern Europe. Still there is a huge market formicro-finance. It is estimated that there is a potential market for 100million Micro Finance clients in the world.

We witnessed an unparalleled growth of financial service providers aswell as an exponential growth in the number of clients they reached. Arange of support groups spawned, from specialized donor andinvestment organizations to evaluating, assessment, rating and co-ordination agencies and academic research institutions -all non-practitioners that are increasingly influencing the agenda and practiceof microfinance worldwide. There is now the recognition that suchwidening and deepening of Micro Financial services have both a socialand commercial implications. The struggle for increased portfolio andoutreach, while maintaining a poverty focus is a challenging one. Morespecifically, the challenge can be broken down into three:

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w How to reach more poor people through the micro-financeparticularly, the hard core poor

w How to deliver micro-finance services in a sustainable waywhile serving the poor

w How to balance the social objectives with the financialobjectives of micro-finance.

Indeed, these challenges have been raised before. We had answersand ideas but the demands and the agenda of other players in theindustry distracted us. There was pressure from our suppliers of fundsthat our balance sheet must be positive, that we must be efficient to besuccessful. We certainly believe in those goals of profitability andefficiency but not at the expense of compromising our larger goals. Ourcommitment to the mission of INAFI -to contribute to the eradication ofthe root causes of poverty and to empower the disadvantaged in thesocieties where we work -is unflinching is what we will communicateclearly to our social investors and other industry support groups.

We believe that sustainability of Micro Finance Institutions and theclients are complement to each other. Therefore, building up thecapacities of the micro finance institutions and their primarystakeholders are pre conditions to the delivery of flexible, clientresponsive and innovative micro finance services to the poor and for itssuccess. Creation of such an environment will enable the poor to takecontrol of their lives leading to sustainability of both the Micro financeinstitutions and their clients without compromising social developmentobjectives.

There is an urgency to ask the core questions in micro finance set withina broad developmental canvass. This is because of the sheer scale ofhuman lives having to live under chronic hopelessness and un-freedom.This is because the goal set by the Millennium Summit in September2000 to halve, by the year 2015, the proportion of the world’s poor is animportant and bold target that wil l not be attained withoutmicrofinance and also with microfinance alone. Especially bymicrofinance that sets its parameters and visions just within gooddelivery of financial services. We need to imagine our role andinterconnectedness within the bigger developmental challenge. Whythis current poverty of imagination surrounding microfinancepossibilities? What are the constraints in the current structures of themicrofinance discourse that breeds such lack of imagination? Whatimplications do such narrow canvass thinking has on charting the futureof microfinance? We need to explore and ask these difficult questionsto ourselves.

The knowledge on designing supply side structures has been aniterative one and codifying that process within a set of strictures of best

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practices should not be unquestioned. There is certainly a core set oflessons that we need to mirror in our practice but we also need todevelop a critical understanding of these strictures and increasingly sofor two reasons. First, the balance of power that underlies thedevelopment of these codes is increasingly becoming asymmetricaland removed from the real world where we practitioners dream andact. And second, because of this, there is a danger that we get caughtin a trap of providing uncritical legitimacy to the power centres thatclaim to voice, influence and shape the discourse on our behalf. Whatare we doing to redraw the balance of power to ensure that we shapethe contours of the microfinance discourses?

Innovations are clearly important. That has been at the heart of themicrofinance revolution. It is important however to avoid limiting ourimaginations within a very narrow f inancial product-centr icunderstanding of innovations. We need also to imagine innovations ofsocial intermediation, of strategic linkages and new deals centred onthe overall livelihood pulse of the poor. Without this broader canvass toimagine innovations, mere financial product reengineering may not beenough to include those being missed and left out or even add realvalue to those currently being served. Are we being bold enough topush the frontier of innovation to capture these ideas?

Standards that claim to be able to separate the wheat from the chaffeneed to be critically examined. These are not only standards of intentbut often end up having far reaching influences on the ways in whichmicro finance is to be supported and who is deemed worthy of support.These shape discourses, thinking and action in complex ways. Moreoften than not, they end up trapping our imaginations. What are wedoing to keep alive the probing of the grand narratives, its myths andsmoke-screens? Are we constantly ensuring that we relate the grandnarrative rulings to our contextual reality, praxis and our vision? The corebehind the success of microfinance is the faith in the agency of thepoor, their resilience and sheer determination to struggle for a bettertomorrow-for them and their children. It is this capital that the supplystructures of all development initiatives need to give shape andexpression to and strive ceaselessly to leverage-to create ever-expanding circles of enabling spaces. This, I feel is the core question:How focussed is the current microfinance discourse in delivering on thischallenge?

Hope that we will challenge ourselves to face up to these questionsduring this 4th INAFI Global Assembly, because, if we fail, we fail in themission and imagination that drew us to microfinance in the first place.With this it is my great pleasure to declare the 4th INAFI GLOBALASSEMBLY open.

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CHARTING THE FUTURE OF MICROFINANCE - INAFI WAY*

1. Introduction

BBeing a practitioner led network, the International Network of AlternativeFinancial Institutions – INDIA (INAFI-INDIA), which held its fourth global

assembly in Mombassa, Kenya, sees the imperative of playing a greater roleglobally in charting out the future of microfinance. The global assembly hasprovided the opportunity to take stock of what has been done by thenetwork and in prospect what it needs to do in charting out the future formicrofinance.

The meeting was characterised by a general awareness that themicrofinance sector has arrived at a crucial junction in its long history andthat INAFI, as the leading network of microfinance practitioners, had toreformulate its vision, mission, objectives and programmes in order to play thepivotal role its members want it to play in charting out the future of globalmicrofinance.

Prior to the conference, a document explaining the state of affairs inmicrofinance as viewed by us – practitioners was circulated which outlinesthe following:@ The industry tends to move away from client-responsiveness in favour ofinstitutional considerations such as reaching self-sufficiency, at all cost.@ The industry has become too heavily influenced by concerns of fundingagencie / other stakeholders other than practitioners.@ The industry is burdened by over-enthusiastic efforts towards streamliningmicrofinance at the expense of the appreciation of diversity and innovation.@ The industry is hampered by unfair competition and rivalry due to the largeinflow of unequally distributed grant monies.@ Major industry-wide threats and risk are insufficiently dealt with.

The conference reiterated that many of these concerns are not new, asthese have been raised before. Hence, we asked ourselves why the networkhas not been able to address these concerns and influence the internationalpolicy agenda and practice. We resolved that henceforth INAFI will play amore pro-active role in shaping the direction of the industry by taking up theissues and concerns head-on and initiate the changes needed. For sure,INAFI needs to embark on a road of professionalisation that will enable it tobecome the pro-active player we want it to be.

This new road for our network will be typified by some major changes. Themost important ones are:@ The network’s various secretariats will be staffed on a professionalrather than voluntary basis.

* Synthesis of Resolutions of the 4th INAFI Global Assembly, Mombassa, Kenya, March 2002

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@ INAFI will gradually become a strong coalition or alliance-basedorganisation to strengthen its handling capacity.@ It will start or facilitate its own programme to pioneer the new approaches,products and activities that are urgently needed.@ In doing so, we will invite all stakeholders to come aboard and to co-operate with us, but we will set our agenda and design our programmeourselves.

Our core consideration behind all these changes is that we insist thatmicrofinance be regarded not as a stand-alone intervention strategy but asa tool or instrument to help alleviate poverty, empower the poor and createequity in financial service delivery.

2. Changes INAFI want to achieve

A host of major changes in policy and practice that INAFI want to achieve islisted below.

a. Markets and penetration

It has been estimated that the microfinance industry is presently reaching 15million clients per annum on a global scale, the large majority of which areliving in Asia. The number looks encouraging but a closer scrutiny indicatesthat those having no access to financial services remain left out. Moreover,the most vulnerable clients, the poorest-of-the-poor only constitute arelatively insignificant percentage of these 15 million clients. In other words,though the industry is growing and reaching more clients, it has achievedlittle in terms of deep social penetration.

It is felt that the industry at large has not yet been able to generatemethodologies, facilities, capital and approaches to dramatically scale upand achieve deeper social penetration. INAFI member organisations areconvinced that their collective experience justifies the claim that this doublescaling up can be achieved. INAFI will facilitate this growth by embarking onthis collective experience.

b. Product development

Poor people have a right to access affordable and appropriate financialservices. In many countries they can only access credit products and havedifficulties in accessing savings possibilities, even though it is generallyrecognised that most poor people have a greater need to save than toborrow. Moreover, many (potential) clients need financial services otherthan savings and loans. There is growing demand for a variety of insuranceproducts: health, life, livestock, molest, calamity and other insuranceproducts are needed.

Some INAFI member organisations have pioneered the introduction ofmicro-insurance. That information will be shared among the membershipand INAFI would facilitate in scaling up the provision of insurance productsas well.

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In addition, the network would help design financial products to assist peopleliving with Aids/HIV. Many families face structural loss of income and incomegenerating capacity due to care and costs of medicine. Long-term softbridging loans may help these families cope with their financial situation.

c. Quality standards and performance verification

Members of INAFI Network are serious service providers and are committedto work effectively and efficiently as much as we are committed to prudentfinancial management. However, there is no single set of quality standardsthat can govern the industry at large. Microfinance programmes show agreat variety in terms of approaches, methodologies, systems, target marketsand clients, and even objectives. It is agreed that all microfinancepractitioners and institutions, if it comes to performance measurement, mustbe judged against standards that take into consideration our particularcontext and not by a blueprint set of standards.

Therefore, INAFI’s executive committee would endeavour to designappropriate sets of quality standards to guide us in improving our work. Thesestandards must be designed in line with our respective market niches, clientprofiles and institutional objectives. We do not mind being measured,evaluated, assessed or rated as long as we agree with the standards appliedand as long as we believe that the process is transparent and the raters,evaluators and assessors are accountable, first and foremost towards us asthese are our programmes that are being scrutinised.

Henceforward, the INAFI will design and establish collective ratings andevaluation facilities where we, as a network, can buy services in bulk to meetour verification and learning needs and where we can be assured of highquality, transparent and accountable services.

d. Regulation

We appreciate that money is a most valuable commodity. When we take ingrants, loans, savings or deposits to finance our financial services, we alsoappreciate that the grant and capital providers need guarantees that theirmonies are prudently managed and effectively put to use. Consequently,we welcome central or reserve bank efforts to regulate the microfinanceindustry in their and our respective countries. We do insist, nonetheless, thatregulation efforts take into account the dynamics and characteristics of themicrofinance industry. Supervision is fine, as long as it applies standards andregulations that make sense in view of what we are doing, does not lead tooverwhelming bureaucratic requirements and is geared towards helping usto improve and scale up our service provision.

And INAFI should play a role in the regulation debate by linking anddisseminating the various experiences to date and by helping country-based networks of MFIs in their dealings with their respective supervisoryinstitutions.

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In a number of countries encouraging inroads have been made towardindustry-wide patterns of self-regulation. INAFI would bring these experiencesto the fore of the industry at large, as we believe that there is a lot to say infavour of self-regulation.

e. Capacity building

As practitioners we have a fair assessment of the obstacles preventing us toscale up the microfinance industry. We realised that not capital but humanresources development is the single biggest obstacle we have to overcome.We have skills that are marketable; often our best people are lured away towork in the formal banking sector. At the same time, the opposite careermove is a difficult one: not many experienced bankers are attracted to joinus and help strengthen our institutions. For that reason we need to train ourown staff at all levels.

Remarkably, donor agencies spend huge amounts on capacity building andtechnical assistance. Unfortunately, the results and impact have not beenimpressive, as our staffing problem remains a formidable one. For that reasonINAFI would design need-based capacity building programmes for itsmember organisations. Similar to the verification issue, the time has comethat we offer grant makers our own facilities. We will design the programmes,based on our real needs, to smooth the progress of an appropriate matchbetween supply and demand.

f. Capital provision

To dramatically scale up our collective outreach and performance we willneed to access significantly more capital than we do today. Some of ushave developed the capacity to access additional capital ourselves; othershave not been able to do so. To make the industry at large a more equitableone, we believe that collectively we have to play a role in matching supplyof and demand for capital. We happen to think that we know of competentorganisations in our own countries that could use some more capital. Webelieve we know where the overlooked niches are to be spotted. We feelthat together, as a network, we can help solve the mismatch betweensupply and demand. Therefore, INAFI would take up the challenge and playa pivotal facilitating role in this respect.

At the same time we feel that many potential but hidden capital sources arethere to be tapped. Individually we might not be able to access thesesources but collectively we might be able to do so. Our market intelligenceallies have informed us that ample supply of additional capital is potentiallyavailable from ethical or socially responsible investment funds in the North. Inorder to attract this capital base we need to build so-called lubricantmechanisms to reduce or minimise risks, especially currency risk. Hence, wewant INAFI to pioneer building such mechanisms to make the matchbetween supply and demand possible because we need those resources.

Lastly, we must realise that our clients themselves bring up the bulk of ourloan capital resources. It is their savings and deposits that constitute the vast

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majority of the capital we work with. Moreover, they provide the capital thatsuits us best: there is no foreign currency risk and the cost of capital isaffordable to us. Unfortunately, in many countries we face serious problems inattracting more local savings. Sometimes this has to do with supervisoryregulations, in other countries it is largely due to lack of consumer confidencein the MFI’s prudent management of their assets.

Yet, we want to capture the savings and deposit market as the mostappropriate and affordable source for the large-scale growth of our capitalintake. And INAFI needs to design innovative and challenging approachesfor capturing this market

g. Industry-wide co-operation

We are ambitious; we subscribe to the challenges put forward by the firstMicro Credit Summit. We are convinced that the microfinance industry has togrow considerably in order to meet present and future demand. And we willgo all the way to meet that challenge. And we cannot do it all by ourselves.Therefore we appreciate and welcome the efforts made by the variousnetworks, co-ordinating bodies, support institutions and alliances in theindustry as we basically share the same agenda.

Yet, we strongly sense that at the level of international co-operation andsolidarity, a new common platform needs to be built. In the past decade wetoo often experienced that well-intended efforts to move the industryforward were planned and executed without consultation / dialogueprocess. Since we shared the same agenda, we nevertheless went alongand we participated in the networks and discussion forums offered. Wedeveloped a wait-and-see attitude, hoping for the best but increasinglysomewhat disappointed with the outcomes. Agendas, concerns andpriorities appeared to diverge. We found ourselves moving forward ondifferent tracks. We, as practitioners, have to deal with the realities we faceevery single day: how to reach the poorest-of-the-poor, how to deal withnatural and man-made disasters, how to get our clients insured against theirenormous risks, how to empower them, how to deal with the inhumanpoverty they are faced to deal with every single day of their lives.

Progressively, we experienced that these fundamental concerns becamesidelined in the international debate on quality standards in favour of anever-growing list of institutional concerns such as self-sufficiency andprofitability. As much as we accept the need to be prudent and efficient,we’d like to spell out that prudence and efficiency is not our major drive;beating poverty, injustice and lack of equal opportunities is our drive. That iswhat we are in the business for in the first place and we need to ally withorganisations and coalitions that share this drive and motivation and weneed to influence those that are not as well.

Given our concern with the course the international debate on qualitystandards has taken, we have little options available but to take a leadingrole ourselves. So the most important resolution of our meeting is that INAFI

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would take up this specific challenge, to tell and show the world howmicrofinance needs to be done in the context of development.Microfinance for development, nothing more, nothing less. That is our thrustand that is what INAFI wants to promote and support. And we have askedthem to develop an inclusive strategy. In charting out a new future formicrofinance, INAFI will need many allies and a lot of support and we invite allorganisations to join us in meeting this enormous challenge.

3. How INAFI is going to realise these changes

Obviously our ambitious plans require revised strategies / approaches in theway INAFI operates. To realise our goals, our network needs to betransformed from a debate and reflection platform to a highly professionalworking body. We want it to be the locomotive of change. Hence, the globalassembly adopted a number of resolutions to make that change.

a. Professional management and supervision

When we started the network in 1995 in Cuzco, Peru, we were all convincedthat a discussion platform was all we needed. So we designed INAFI as anetwork that would be run on a voluntary basis with strong memberinvolvement in the implementation of its relatively small programmes. Nowwe need to change all this. Practice has showed us that this voluntaryapproach increasingly falls out of line with the size and scope of ourprogrammes. We, as member organisations, want INAFI more for us and thatmeans that management needs to be strengthened.

The first decision we took is to professionalise our management. All currentthree regional secretariats will appoint managing directors to overseeprogramme implementation. At the same time in all three continents we willseparate management from governance to create the necessary checksand balances. Where so required INAFI chapters (regional or national) will belocally registered to sustain proper governance and facilitate management.

b. Research and development

Being a network of close to a hundred microfinance practitioners, INAFIrepresent a huge body of experiences. INAFI needs to share theseexperiences among members and with other stakeholders in a systematicway. Interestingly, the recent credit rating drive undertaken by INAFI Africahas made us aware that each individual member agency has somethingunique to offer to the industry, ranging from methodologies to productdevelopment, from management information systems to linkages with theformal industry.

We took the cue and it has been decided to set up our own INAFI R&Dfacility to disseminate our experiences and make these available to others.In the past we have been trying to do these on a voluntary basis but we feelwe have to scale up and strengthen our efforts in this field. We aim to set upthis facility with a strong regional focus.

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c.Capacity building

Members need to further improve the skills and performances and to achievethat they have to further build our capacities. We were impressed with theway INAFI Africa has been able to conduct a lateral learning and capacitybuilding programme that suited the needs of the African memberorganisations. At the same time many of us have participated in capacitybuilding programmes offered by others and as much as we have learnedfrom such programmes, we feel that more needs to be done to meet ourparticular needs. Too often such programmes are supply-driven. Weparticipate but have little to say on the design or curriculum offered.

INAFI would follow-up on the Africa experience and design need-drivencapacity building programmes for its members. It is realised that INAFImanagement itself probably is not best placed to conduct programmes ofthis nature, so INAFI would not itself do the capacity building but organise thefacilities members need. That is to take stock of our requirements andfacilitate in matching those with the supply available. All INAFI regions willtherefore develop their respective capacity building facilities.

d.Product innovation

There is a growing need to diversify our products and services to meet thedemand in the field. Many of the members are already individually engagedin pioneering new products and approaches, yet we know surprisingly little ofwhat our fellow members are doing in this field. INAFI R&D need to facilitatethe learning amongst us. But that will not be enough. INAFI would promotethe need to diversify products and to help members link up with third partiesinterested to support our efforts in terms of technical assistance, risk sharingand seed capital to finance pilot projects.

Therefore, INAFI would play an enabling role in this respect by making aninventory of our individual plans and help us scout those third parties.

e. Evaluation and credit rating

Similar to INAFI’s capacity building programme in Africa, we were alsoimpressed by the initiative of our African colleagues to establish the INAFIAfrica Rating Fund, aimed to achieve the goals of buying credit ratingservices in bulk and making service providers primarily accountable to usrather than to funding agencies or capital providers. We, as MicrofinancePractitioners / Institutions, above all, look at credit rating and so-calledperformance evaluations as managerial tools to improve our performanceand not as assessments to attract additional external capital. This impliesdifferent rules of the game in rating and evaluation. We want serviceproviders to meet our needs on our terms. To achieve that we will continueand expand the Africa experience of buying services in bulk in a centralisedway. That creates equity in the process. To date, mostly MFIs connected tofunding agencies have been able to avail of rating services. INAFI Africa hasmade those services available as well to non-connected MFIs by financing

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the services based on genuine practitioner demand. INAFI would establishrating funds in Latin America and Asia as well.

Moreover INAFI would play a pioneering role in developing regional andsector-based benchmarking. As stated earlier, members would not like to bemeasured and judged by a single set of standards that is supposed to be ofuniversal validity. We do not believe in such a concept. At the same time, wedo not mind being measured and judged, as we believe in publicaccountability. As much as INAFI Africa has been able to help in developinga first African benchmarking system that takes note of the Africanmicrofinance realities, we want the network to pioneer more benchmarkingsystems in line with the variety of practices we represent.

INAFI would play a role in the regulation debate by linking and disseminatingthe various experiences to date and by helping country-based networks ofMFPs/ MFIs in their dealings with their respective supervisory institutions.

In a number of countries in ASIA, encouraging inroads have been madetoward industry-wide patterns of self-regulation. INAFI would bring theseexperiences to the fore of the industry at large, as the network believes thatthere is a lot to say in favour of self-regulation.

f.Advocacy and alliance building

As a network we have been expressing our appreciation for as well asdissatisfaction with a number of current developments in microfinance. Weappreciate the efforts of so many organisations to support the microfinanceindustry. At the same time we are not altogether happy with the way theseorganisations implement their programmes and policies as these are oftendesigned without due consultation with INAFI network members. Facilitiesare being created without consulting us properly, without asking what reallywe need or require. Our needs are often assumed, frequently not verified. Asa result, we see a lot of well-intended efforts fail or at least not generating theimpact expected, which, ultimately, will backfire on the willingness to pour inmore resources into the sector.

Members have been asking why they feel somewhat overlooked aspractitioners and our answer is a simple one: we have not been able tomake ourselves more effective. For that reason we aim for INAFI to increaseour collective advocacy and lobby capacity. INAFI will seek to buildinternational advocacy capacity in order that our voice be heard where itmatters in the global arena. At the same time we need to strengthen thesame capacity at regional and national level.

The advocacy capacity also will strengthen our position in our funding drive.If we want all our intentions as spelt out in this document realised, INAFIneeds substantial financial resources. And although part of it will begenerated from the membership, larger contributions from the internationalfunding community will be needed. That is why INAFI will establish a fundraising capacity as well. Most likely this will also mean that INAFI will have toset up liaison offices in the North to communicate our concerns better to thedonor community and multilateral agencies.

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Introduction

MMicrofinance hasemerged as an

effective instrument toaddress the causes ofpoverty. That thepotential formicrofinance in INDIAis quite enormous inrelation to poverty is tostate the obvious.With a little over 300million poor thedemand formicrofinance servicesis so huge that itappears a dauntingtask. The sheerprepondendrance ofpoverty sets up the firstissue – of reaching thepoor, more importantly

* Presented in the 4th INAFI Global Assembly, Mombassa, Kenya, March 2002

MICRO FINANCE in INDIA – CHALLENGES*M. Kalyanasundaram*

Chief Executive, INAFI-INDIA

reaching the poorest.Further it is not theissue of upscalingalone with all outreach to all poor butthe depth and qualityof reach to make asignificant impact onpoverty.

Well, there have beenquite a lot of attemptswhich are still in thecontinuum to reachthe poor even beforethe microfinanceinterventions fromdevelopment sectorhave started emergingnear about lateeighties in India. Indeed, the vast

network of formalfinancial institutionscomprising ofcommercial banks,regional rural banksand the cooperativebanking system havebeen mandated bythe government toundertake microlending for povertyalleviation under thebanner of prioritysector credit. Thisinstrumentality ofdirected credit whichpreempted lendableresources for povertylending did reach outto the poor. But thisapproach has

floundered sooner intoa moribund stateowing to the structuralrigidities organisationalculture and thevitiated credit cultureexternally. Thus theclients were virtuallyback to square oneposition of not havingfacile access to theformal financialsources. The formalfinancial system thus inthe Indian context, ina manner of speaking,has not even touchedthe proverbial tip oficeberg. If at all, thereach seems to be justa token touch!!.

Microfinance Sector

The microfinance in INDIA has three distinct stream of actors:a) Demand stream : Self – help Groups, Federations of Self-help Groups of poor and

the individual clients.b) Supply stream : Micro Finance Institutions, Commercial Banks, co-operative

banks, Regional Rural Banks, and other NBFCs involved indelivering of credit to the poor.

c) Enabling stream : NGOs / Development institutions involved in promotion ofgroups and Federations through social inter-mediation. Theregulatory and government bodies, institutions also form part ofthe enabling stream as they play critical role in providingfavourable policy framework and supportive environment,which enables the growth and development of the microfinance sector.

The concern of the demand stream of poor is about getting the microfinance services which aretimely, easy to access, affordable with simple flexible terms and adequate.

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From the supply side,the developmentfinance has beenthere for long in theIndian context. Themuch-vaunted Indianadvantage of vastdelivery network couldnot acquit well withlittle innovation,improvisation andinvolvement. They areconfronted with issuessuch as:

a) Upscaling thereach

b) Cost effectivenessof delivery

c) Simple responsiveproducts andpackages

d) Problems of poorrepayment owingto vitiatedrecovery culture

e) Structuralweaknesses –Organisationculture, policiesetc.,

f) Commitment tomicrofinance asmeans to addresspoverty

g) Positioningmicrofinance ascommercialbusinessproportion

h) Rewards /incentives for staffengaged inmicrofinance inrural milieu

The other spectrum ofsupply side - NGO MFIsand NGO promotedcommunity financialinstitutions areconcerned withdifferent set of issuesas under:

a) Sustained resourcemobilisation

b) Appropriate legal/ regulatoryframework

c) Skilled manpower/ Professionals tomanage financefunctionality

d) Capacity buildingof the staff

e) Cost coverage forthe peoplesinstitutions

f) Upscaling andattaining scale ofoperation

g) Evolving systemsand MIS forhandlingmicrofinanceoperations

The issue beforeenabling streaminvolving thegovernment andregulatory bodies i.e.,Reserve Bank of India(RBI) is one of how tofacilitate microfinanceintervention withappropriate userfriendly and institutionfriendly measures andprovide freedom ofoperation and how tonudge the mainstream

financial institutions tolook at microfinanceas commercialproposition andprovide necessaryincentives whichinclude tax sops.

Enabling / promotingNGOs are concernedabout the cost ofcreating social capitalof peoplesorganisations, the issueof reducingdependence ondonor funds andattracting mainstreamfinancial institutionstowards investing inthe local context notonly for promotingpeople’s institutionsbut also providingcredit is also a spot ofbother.

Challenges

1) Organising thepoor and creatingsocial capital forupscaling

Building local financialinstitutions to shapethe developmentfinance (readmicrofinance) andnurture theseinstitutions guided bynew value framework,which can be definedas:w Focusing on Poor

and impactingpoverty throughdevelopmentfinance.

w Developingappropriateinstitutions andservices controlledby clients.

w Going beyondmicrofinance

The emphasis is ondeveloping suitableinstitutions andfinancial servicescontrolled by the users.For centuries the poorand sociallydisadvantaged haveremained alienatedfrom the mainstreamof the society andexisting financialinstitutions have beencontributing to thisprocess. To reverse thisprocess, the members,poor, who are servicedby these institutionsneeds to beorganised.Community financialinstitutions provides amechanism toorganise poor andinitiate a process ofdeveloping andmanaging of theseinstitutions by poor.Sustainability can beachieved only whenpoor are able tomanage theirproblems through self -reliance and mutualcooperation.

2) MainstreamingMicrofinance

The demand streamclients have multipleneeds of finance to

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address the poverty.The internal resourcesgenerated by theirown savings havesevere limitations toaddress their need.Perforce, then,microfinance calls formainstreaming forreaching the vastmultitude of poor inthe country. TheIndian advantages ofbanking networkafford this opportunity.The challenge is tocreate a win-winsituation of sustainablelinkage on a long haulbetween themainstream institutionsand the poor, theirSHGs/Communitybased financialinstitutions.

3) Promotional cost ofsocial capital

Microfinanceintervention to bemore effective requiresbuilding localcommunity basedfinancial institutions ofpoor women. This isbecoming clear in thelight of experiencesgained so far in theIndian context.

Building social capitalrequires organising theunorganized poor andbuild their capacity tomanage their

microfinanceintervention effectivelyand to build linkageswith formal financialinstitutions.

Obviously, this requiresgood amount ofinvestment.Interventionshappened so far in thecountry have beenbacked byphilanthropic fundsfrom within andwithout the country.This cannot be apermanentarrangement. Whichmeans from long termperspective ofupscaling thisarrangement is neithersustainable norpractical. Thepromotional cost ofbuilding social capitalneeds to be met bythe mainstream –financial institutionsand government.

4) Multiple needs formicrofinance

The causes andsolutions to povertyare more complexthan often assumed.The poor valuefinancial services notonly to help them withtheir investmentprojects, but also tosmooth consumption,bear risk and reduce

their vulnerability.Understanding thebehaviour andcomplex financialmanagementstrategies of the poor isessential to providethem with multipleservices which couldmeet varied savingsand credit needs.

5) Mitigation of risk

This is quite crucial toreduce thevulnerability of poor soas to stabilize theincome. Eventraditional activities /avocations such asdiary which are rootedin local context, and,by and large insulatedfrom market forces areexposed and theclients vulnerabilitythereby increased.This would mean thatthe economicopportunities availabletowards viability ofclients are dwindling.A case in point is thedecimation of smallbroiler / layer poultryunits operated by poorclients as IGP. Theseare smothered by bigunits with highcompetitiveadvantage in cost,price and marketing.How do we do that?.A huge challenge?

6) Microfinance andAgriculture

The agriculturecontinues to remain asa highly relevanteconomic activity andhow the microfinancewould evolveinnovativeapplications andmethodologies inagriculture lending toagriculture householdsposes a greatchallenge to thepractitioners .

7) Businessdevelopment services

This matters a lot andbears relation to howwell the clients use themicrofinance for thechosen microenterprises. Infact, theexperience has shownthat constraints forbusiness developmentinfact limit thedemand for credit.There has also beendemonstration thateven the very low endof micro-entrepreneurswill acquire BDS on acommercial basis if itmeets immediateneeds such asimproved marketaccess that translateinto higher earnings.

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8) Support system toaddress naturalcalamities

These eventualitiesaggravate the miseryand therebyvulnerability. How dowe meet thischallenge? atleastpartly. The need forsocial security system isfelt for long. Insuranceand pension productswould be crucial insuch a system.

9) Financialsustainability andusury

There is an increasingtendency to ignorethe affordability of thepoor to availmicrofinance servicesin the name of viabilityand sustainability. It isnot the question ofaccess alone. In thealtar of sustainability,poor should not beexposed to usury.

10) Enabling Legal /Regulatory framework

The enabling stream ofNGOs anddevelopmentinstitutions are doingmicrofinanceinterventions withdiverse approachesand models and someof the NGOs aremorphing as afinancial

intermediatory. Thereis a need to create theenabling legal /regulatory frameworkfor handlingmicrofinanceinterventions by thesedevelopmentorganisations.

11) Development ofsound financialSystems and Practices

In the Indian context,Self help group of poorwomen and theirfederations haveemerged as acommunity basedfinancial institutions.

They need to evolveas an independentfinancial institution forsustainable financialintermediation andalso for linkage withbanks. The enablingstream of NGOs whichpromote suchcommunity basedinstitutions need todevelop soundfinancial andmanagement systemsat group / institutionslevel and build theircapacities to manageindependently. For thisthe capacity buildingof enabling stream isan importantdesideratum.

12) Self-regulation

As the communitybased financialinstitutions – SHGs and

its federations, bid fairto be a sustainablemicrofinanceintervention with self-management and self-regulation, thechallenge is to buildthis practice across thesector for healthygrowth.

13) Social capital toSocial collateral

The local communitybased people’sorganisation for themicrofinance serviceswould build enormousamount of socialcapital. The challengeis then to convert themto social collaterals toattract themainstream financialinstitutions for greaterand longerinvolvement inextendingmicrofinance servicesto the poor.

To conclude,microfinance as aneffective instrument toaddress poverty hascome to stay with thegrowth of the sector onthe fast lane now.Which means it hasmoved from adevelopmentproposition to a newdevelopmentparadigm for poverty

alleviation. Ifmicrofinance is tomake wider anddeeper dent on thepoverty in the Indiancontext, themainstream financialinstitutions with its vastbranch network in therural and semi urbanareas needs to step upits supportive role. Theexperience gained sofar has already set atone. It is a matter oftwo track approach.On the one hand itrequires to reach outto SHGs and itsfederations for linkagewith credit facilitiesand on the other, itneeds to support theenabling stream ofNGOs to promote theSHGs and federationsto create thenecessary socialcapital for better andquality linkage withexcellent creditculture. In otherwords, the formalfinancial sector shouldseek to collaboratewith NGOs of reputeand proven trackrecord asdevelopment partnersfor lending to poor withfunding support for thepromotion of SHGs andthe like social capital.

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SSelf-Regulation has been recognised and acknowledged as aneffective instrument to guide the growth of microfinance

interventions / programmes of the member organisations with order,quality and equity. It has been accepted and adopted as a INAFImethod and the member organisations of the INAFI-INDIA networkhave pledged to enable the people organisations / SHGs promotedby them to evolve and practice self-regulation in the Asia internationalworkshop organised at New Delhi on August 29-30, 2001.

Sequel to the workshop and with a view to introduce self-regulation inthe INAFI-INDIA network, inception workshops were organised by the

member organisations under the aegis of INAFI-INDIA network to sensitise, create awareness and togenerate appreciation for the concept. These inception workshops were organised during 2001 andearly part of 2002 and the professionals / field staff of the members of the network had participated.It has been agreed by member organisations that self-regulation would be taken up to promote thethree performance standards – Institutional, Development and Financial.Each of the member organisations have chosen a broad set of standards relevant to their context ofworking although there have been common grounds under institutional and financial standards. Inother words developmental standards will have to be evolved by the members with specificrelevance to the context.

Self-regulation now moves to the next phase, with member organisations, with better understanding/ appreciation of the concept, will, now, senstitise peoples organisations, SHGs and its federations toadopt this method for focus on poverty reduction and development with discipline. During themonth of May 2002, members PREM, Orissa, Manavodaya, Lucknow, Grameen DevelopmentServices (GDS), Lucknow have taken the step forward in this exercise. Follow-up workshops havebeen organised by the above organisation with the support of INAFI-INDIA. The leaders of the peopleinstitutions, SHGs and federations also participated in the workshop along with the professionals of theabove three member organisations.

Way forward1. The self-regulation method for the people’s institutions would be developed in four phases

a) Awareness / sensitising b) Evolving c) Practicing d) Advancing

2. The process would begin with identifying the respective SROs from within the peopleorganisations as per the model promoted by the member organisations. Memberwise (PREM,Manavodaya and Grameen Development Services) SRO structure has been identified as under:PREM : The people organisations have SHGs, its federations and a state apex body called UtkalMahila Sanchya Bikas. Typically, 100 SHGs form a federation in this model. UMSB would be SRO forfederations which would in turn play the SRO for SHGs.Grameen Development Services (GDS): GDS has two models of people institutions. The one atLucknow location has joint liability groups (7 members), Sanghs (7 JLGs - 49 members) andMahasanghs (a total of 500 members). Mahasanghs would be SRO for sanghs which will in turnassume the role of SRO for JLGs.

The other at Eastern Uttar Pradesh has SHG and its federations. The federation will be SRO for SHGsand an SRO for federations needs to be evolved.

EVOLVING SELF-REGULATION

in INAFI-INDIA NETWORK

20

Manavodaya: The SHG model with its federations form the people institutions promoted byManavodaya. The first federation of SHGs is being organised. As such till such time federation isformed Manavodaya would enable the process of SRO.

3. The member organisations would begin the process of sensitising the respective SROs and alsothe grassroot structure (SHGs and JLGs) and build the capacity of the leaders, the governancestructure and also the leaders to adopt and practice the self-regulation. This phase ofsensitisation followed by evolving the standards framework for all these structures would becompleted by March 2003.

4. A common standards framework under institutional and financial indicators is getting evolved ascaptured here under:

Institutional Standards

Standard Bench Marking

Group size Membership not less than 15-20 All groups (100%)Regularity of Meetings All groups / federations should hold fortnightly/ monthly meeting (100%)Attendance of members 100%Rotation of leadership All groups should adopt this standard (100%)Evolving consensus and inclusiveness in 100% by all groups / federations, etc.,decision making and not by votingAll Financial Transactions in fortnightly 100% by all groups / federations, etc.,/ monthly meetingConducting Annual general body meetings 100% by all groups / federations, etc.,and demonstrating transparency andaccountability through sharing of auditedaccounts, future plans etc.,

Financial Standards ( for base structure SHGs / JLGs, etc.,)

Standard Bench Marking

Regularity of saving 100% by all groupsLoan Graduation 100% by all groupsPortfolio at risk 2% or lessRepayment 100%Systema)Accounting / RecordsThe minimum Financial records- members To be maintained uptodate and complete inpassbook, cash book, general ledger, all respectsBank passbook, DCB etc.,b) Audit / MonitoringInternal / External Internal – Once in six months External - Annual

Mutatis mutandis, the standards framework would undergo recasting specific to the membercontext as well as the institutions model promoted by the member organisations of the network.

Development standardsObviously, the member organisations will be enabling the people’s institutions promoted by them toevolve suitable development standards keeping in view the context specific needs andrequirements.The network and member organisations would monitor and review the progress in follow upworkshops to be organised in 3-4 months frequency.

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Countries Population 2002 Potential clients Active clients Penetration ofmarket (%)

Bolivia 83,29,000 2,32,353 3,12,400 134.50

EIS alvador 62,78,000 1,36,311 58,500 42.90

Paraguay 54,96,000 82,984 30,203 36.40

Honduras 64,17,000 1,43,310 50,750 35.40

Peru 2,56,62,000 6,18,288 1,94,938 31.50

Nicaragua 50,71,000 1,16,375 32,600 28.00

Chile 1,52,11,000 3,07,832 83,000 27.00

Guatemala 1,13,85,000 2,23,125 51,500 23.00

Costa Rica 40,24,000 79,201 11,500 14.00

Colomba 4,21,05,000 8,18,505 1,13,250 13.90

Rep. Dominicana 83,73,000 1,85,720 23,278 12.50

Ecuador 1,26,46,000 2,67,537 21,000 7.80

Panama 28,56,000 48,790 3,000 6.10

Brasil 17,04,06,000 32,93,428 59,215 1.80

Mexico 9,88,72,000 22,55,025 40,000 1.80

Uruguay 33,37,000 3,00,000 1,500 0.50

Argentina 3,70,32,000 19,00,000 5,700 0.30

Venezuela 2,41,70,000 5,22,945 1,000 020

MICROFINANCE SCENARIO in LATIN AMERICA

MMicrofinance had its background in Latin America in the seventies of last century. Bolivia andPeru are the two Latin America countries where the microfinance has made rapid strides. The

market penetration is well above 100% in Bolivia and 60% in Peru where typically the microfinanceInstitutions came up for supporting micro and small enterprises (EDPYMES). The continental picture isin the table.

* Adopted from the paper presented by Ms.Susana Pinilla Cisneros, IDESI, Peru

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KUTCH MAHILA VIKAS

SANGETHAN (KMVS), GUJARAT

Introduction

KKMVS is the latest addition toINAFI-INDIA fold being a

new member workingexclusively with rural women inthe Kutch District of GujaratState. It is a unique non-government organisation co-sponsored by Government andNGO bodies. Jan vikas ( AnAhemdabad based NGO anda support organisation) andState Government bodies -Gujarat State HandicraftDevelopment Corporation,and District Rural DevelopmentAgency promoted the KMVS.

KMVS is a registered trust with amembership of 9500 ruralwomen organised intocollective throughout 5 taluksof Kutch district spanning 150villages. The women membersof the KMVS have cometogether initially, for addressinga variety of issues includingDrinking water, Health, Literacy,Land development, LegalRights, Craft production andtraining of women inPanchayati Raj.

Aims and objectives

KMVS aims to createawareness and to init iateprogrammes and processwhich serves to empower therural women of Kutch byincreasing their capabilitiesto....

< Question various formsof socio economicand polit icaloppression.

< Comprehend thebasis of these forms ofsuppression andoppression.

< Act upon information,training, knowledgeand their ski l lsaccessed by them toboth establish theirposit ion as activechange agents in theircommunities with theobjective of improvingtheir socio economicsituation.

< Establish, access, andcontrol over resourcesas well as decisionsregarding themselves,their families, work andenvironment.

< Increased capabilitiesto make informedchoice with self-esteem and dignity.

In this way education andawareness training form thefoundation of all KMVSactivit ies effecting smallchanges in their own villages.(For e.g. sangathan memberscan be seen extending supportto other women). Thus

Profile of KMVS

23

capacity building is top priorityfor KMVS in its promotion ofsubstantive and sustainabledevelopment.

Structure

The basic structure of KMVS atthe village level is the MahilaMandals with 30-40 members.Every mandal elects a leadercalled Agewan who issupported by core team withsome members taking onspecific responsibilities – health,handicraft, savings,environment, water etc.,

At taluk level, the MahilaMandals form Sangathans withmembership of 1000-2000women. This is akin to ourkalanjiam federations. Thecore groups of the differentmandals constitute the leadgroup of the Sangathan and itis their role to provide necessaryleadership and initiative to theSangathan activities.

A Taluka Samiti of 8-10 womenin turn supports the lead group.They are selected bySangathan members andoperate from an office at theTaluka headquarters. Samitimembers have designatedroles according to their area ofinterest and expertise. TheTaluka Sangathans have nowbegun to access independentgrants and manage theirfinances (with technical helpfrom KMVS), including income-generating schemes.

The taluk sangethans areintegrated into KMVS which

acts as a resource centre forthe sangethan activities. TheKMVS organisational structureconsists of the apex levelgoverning, executive, andadministrative body. Apartfrom the executive team, KMVSconsists of 7 in-house resourceunits – education, health,savings / credit, legal support,craft production, naturalresource management, andpanchayat – that areindependently co-ordinatedby KMVS members.

The uniqueness of thegovernance structure of theKMVS lies in the fact that thispromoting body also hasrepresentation from the fourtaluk sangathans – one electedtrustee each from sangathansto ensure shareholderparticipation, representation,and provide a space toachieve accountability.

Microfinance programme

Education and awarenesstraining on the above issuesform the bedrock of all KMVSactivit ies to br ing aboutchanges for the benefit of thewomen members. Themicrofinance operations havefollowed the initial interventionsfor health literacy etc., andnow is an emerging as afulcrum of developmentstrategies. The programmereaches all the members of theKMVS around 9500.

The savings mobilisation fromthe members is of the order ofthe Rs 40 lakhs and the loangenerated from within and alsofrom banks amounts to Rs 81lakhs.

< Every village mahilamandal collects themonthly savings andbrings it to theSangathan office fordeposit ing it in acommon pool on afixed banking day.

< Each group consist of30-35 members andsometimes more.When the # exceeds60-75 women, this splitsinto two groups underthe same MahilaMandals.

< The Sangathan bank ismanaged by TalukaSamiti which again iscomprised of womennominated by MahilaMandals.

< Each village decidestheir own saving norms

< Women earn 6%interest on deposits.The landing rate is 24%annually as opposedto 120-200% beingcharged by localmoney lenders.

< Interests onproductive loans arereduced to 18%. Therepayment schedulefor loans is 6 months.

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INAFI India InfoNewsletter

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Email: indiainafi@eth.net

To

INAFI Global Assembly

Inception workshop onself-regulation

Review / fol low upworkshops on self-regulation in themember institutions

Mombassa, KenyaMarch 18-20, 2002

KMVS, GujaratMay 25, 2002

PREM, OrissaMay 21, 2002

Manavodaya, LucknowMay 28, 2002

Grameen DevelopmentServices (GDS)May 31, 2002

More than 70 memberpractitioners from across the globeparticipated and deliberatedupon the main theme of theconference Charting the Future ofMicrofinance

In order to introduce self-regulationpractices in the Mahila Mandalsand Sangathans promoted byKutch Mahila Vikas Sangathan, asa first step, the professional staff ofKMVS has been introduce to theconcept and sensitised about theimperatives of self-regulation forpeople institutions involved inmicrofinance operations

Fol low up / review workshopsorganised on self-regulationpractices involving the leaders ofthe people institutions promotedby the inst itut ions along withprofessionals for sensitising theleaders of people institutions, todraw action plan for building thecapacity of the members of thepeople institutions and to evolvelocation specific standardsframework for practicing self-regulation.

EVENTS AND ACTIVITIES

Events When and Where Remarks