strengthening the provision of - sa-dhan.net bringing quality hr for the growing sector. ... the...

Strengthening the Provision

of

Microfinance Services in India

Smt. Ela R. Bhatt (Chair Emeritus)

Founder

SEWA Bank

Ms. Jayshree Vyas (Chairperson)

Managing Director

SEWA Bank

Mr. Amiya Sharma (Co-Chair)

Executive Director

Rashtriya Gramin Vikas Nidhi (RGVN)

Mr. Vivekanand N. Salimath (Treasurer)

Chairman

IDF Financial Services Private Ltd.

Mr. Girija Satish

Executive Director

Nav Bharat Jagriti Kendra (NBJK)

Mr. K. Paul Thomas

Executive Director

ESAF Microfinance & Investments Pvt. Ltd.(EMFIL)

Ms. Vijayalakshmi Das

Friends of Women's World Banking(FWWB)

Mr. Chandra Shekhar Ghosh

Executive Director

Bandhan Financial Services Pvt. Ltd

Mr. C. S. Reddy

Chief Executive Officer

Mahila Abhivruddhi Society, (APMAS)

Mr. Suresh K. Krishna

Managing Director

Grameen Financial Services Pvt. Ltd.

Mr. Rajesh Singhi

Executive Director

IBTADA

Dr. S L Kumbhare (Independent Director)

Chief General Manager

MCID, NABARD

Mr. P K Saha (Independent Director)

Chief General Manager

SIDBI

Mr. R. Prabha (Independent Director)

Ex – Chief General Manager

Canara Bank

Sa-Dhan Board of Directors*

* As on 31st August 2010

Chairperson's Statement i

Executive Director's Statement iii

Background 1

Sa-Dhan Review 2009: Rejuvenating Sa-Dhan 4

Our Response to the New Challenges: Programmatic Interventions 5

Sa-Dhan Interventions 8

Future Challenges and Road Ahead 39

Sa-Dhan Member List - State wise 40

Auditors' Report to the Members of Sa-Dhan Association 55Con

tent

Sa-Dhan : The Association of Community Development Finance Institutions i

Sa-Dhan Annual Report 2009-2010

Chairperson's Statement

The year 2009-10 witnessed upsurge in

efforts towards financial inclusion of the

poor, both by the government as well by

the microfinance sector in India. Apart from

the government efforts, microfinance through

small, medium and big Microfinance

Institutions (MFIs) reached to 2.67 crore (26.7

million) poor. More importantly, the efforts

through MFIs is now witnessing growth in

underserved regions of the past such as East,

where microfinance growth has been

impressive.

It is very heartening to know about the

government efforts, whether it is increasing the

corpus of the Microfinance Development and

Equity Fund (MFDEF), Financial Inclusion

Fund (FIF), Financial Inclusion Technology

Fund (FITF) or Aadhar towards unique

identification development primarily targeting

the poor. The UID would potentially facilitate

a range of financial as well as non-financial

services to the poor.

Microfinance in India is a movement as well as

an industry, bringing challenges of unique

nature arising from the target group i.e. the poor

household. In the formative years of the sector

the challenges before the microfinance sector

were to increase outreach, being sustainable

both financially and operationally, and more

importantly bringing the poor into the

mainstream of formal financial sector. Since

then the sector has come a long way in terms of

the vision that was envisaged of providing

access to large number of poor in a sustainable

manner.

The growth in the microfinance sector is led by

the NBFCs that have expanded their operations

to multiple states. The small and medium MFIs

consisting of mostly not for profit organizations

registered as Societies, Trusts and Section 25

companies are reaching out to the poor in the

remotest areas. While this diversity of

organizations is providing financial services to

the poor, there are issues and challenges that

exist. Microfinance bill going forward will pave

way for legitimacy for these hundreds of not

for profit organizations, as well thrift services

for the poor.

The SHG bank linkage programme has

expanded very fast and has been instrumental

for facilitating access of financial services to the

poor. However, the movement has witnessed

few trends like deteriorating quality of SHGs,

declining bank lending, declining bank

branches in rural areas that are detrimental for

the sustenance and expansion of the

programme.

Within this growth story of the microfinance

sector, it is very heartening to inform that Sa-

Dhan has made tremendous efforts towards

informing the policy debate on microfinance,

reputation management and building

transparency within the sector, highlighting the

issues around SHGs, sector building and

providing platform for stakeholders to

deliberate on key issues. In pursuance of the

above, the strategic review exercise taken up

and its recommendations have clearly helped

in terms of prioritizing the issues as well as

redefining the membership processes and

organizational structure.

Sa-Dhan : The Association of Community Development Finance Institutionsii


While sustained efforts have yielded few policy

wins specifically around the legal form of MFIs

and the Business correspondent model and its

potential in facilitating rapid expansion of

financial services, more importantly, the

Association has directed its energy towards

diminishing the priority sector threats by

constantly disseminating information on the

industry and client practices, and by regular

engagement with the regulators. On the other

hand, the work on implementation process on

"Code of Conduct" along with newly formed

state chapters would help in the compliance on

the code. Sensitization workshops on "Social

Performance' with banks and investors has

helped in bringing perspective on the issue of

client sensitive lending. The Diploma in

Microfinance is a critical initiative along with

IIBF bringing quality HR for the growing sector.

The SHG work has been given a new emphasis

through a "Task Force" on SHGs. It has brought

lot of focus on the strategic engagement with

the government programmes around SHGs and

the issues with the members working with

SHGs. Engagement with BIRD has been crucial

in terms of contributing to their training module

for bank staff.

The year also witnessed few developments that

affected the reputation of the sector. There were

issues and concerns raised with MFIs about

multiple lending to poor leading to

overindebtness, transparency, recovery

practices, interest rate, governance etc. by the

key stakeholders. Most of these happened in

states where microfinance is growing very fast.

We as a sector should work towards putting in

place systems that prevents such stray and

rogue incidents from happening in the future.

Members need to make investments in training

and monitoring that will help in improving

practices in the field. They also need to regularly

engage with the local administration, banking

community, local media to inform about their

work. As a sector, more importantly, we should

constantly strive to reduce interest rate and

deploy part of the profits for the enhancement

of livelihood skills and other such requirements

of the borrowers that would enable them to

enhance their earning capacity.

Therefore, going forward, adherence to the Sa-

Dhan Code of Conduct will be critical. As the

implementation process on the code of conduct

has already been put in place, the challenge for

Sa-Dhan would be to ensure compliance. Issues

around the business correspondent model

needs to be deliberated among stakeholders in

greater detail. The Association should put

emphasis on "Social performance" and seek

greater appreciation of it among members,

banks and investors. The work on the

microfinance bill needs to go forward with

concerned stakeholders. There is a need to build

capacities of our clients through financial

literacy. The smaller organizations need to be

helped to grow.

We are at a stage of recognition and need to be

together as an industry. Sa-Dhan should focus

on this growth, both as an industry and as a

movement and Sa-Dhan members should also

participate in the dialogue, to enable poor

clients to feel the ownership of the industry.

The seat at the Prime Minister's Council on

Micro, Small and Medium Enterprises is an

acknowledgement of Sa-Dhan's growing

stature and recognition as the voice of the

microfinance sector in India. Sa-Dhan is doing

a good work, it should continue to do it in the

coming year as well

Sd/-

Jayshree Vyas

Chairperson

Sa-Dhan : The Association of Community Development Finance Institutions iii


Executive Director's Statement

The year 2009-10 witnessed turmoil in the

microfinance sector in India, emanating from

the issues related to the growth viz. multiple

lending leading to over-indebtness of clients,

high interest rates, coercive repayment

practices, transparency etc. There were few state

level crises erupting in Karnataka and Andhra

Pradesh. Threat to the sector was in the form of

application of State moneylenders' Act in states

and delisting from the priority sector list for

banks, both having potential to severely hamper

sustainable delivery of microfinance by the

MFIs. The year also witnessed slowing down

in the growth of the SHG bank linkage model.

"In terms of percentage growth, the bank loan

disbursement to SHGs came down from 38.5%

in 2008-09 to 17.9% in 2009-10"1. During 2009-

10, banks financed 15.87 lakh (1.59 million)

SHGs, including repeat loan to the existing as

against 16.10 lakh (1.61 million) SHGs during

2008-09, registering a decline of 1.4 per cent.2

The year also witnessed the implementation of

the recommendations of the Sa-Dhan Strategic

review report, that helped the Association to

articulate the issues and plan out strategic

intervention to attend to above situations. The

recommendations also helped us in revitalizing

the membership processes that facilitated

articulation and prioritization of issues that the

Association was required to attend for each of

the constituency of Sa-Dhan membership.

Arising from the recommendations was the

constitution of Task Forces on For Profit, Not

for Profit and SHGs to articulate and prioritize

the issues of each of the legal form/ operating

model. This tremendously helped us taking

forward issues related to these legal forms. We

also worked on the organizational structure to

respond to the demands of the diversity of

membership as well as to the complex agenda

of the sector. "Restructuring of Sa-Dhan"

framework was developed responding to the

new tax regime and towards enhancing Sa-

Dhan's self-sustainability.

Inspite of the turmoil, the growth story of Indian

microfinance sector continues. As on 31st March

2010, the total loan outstanding and client

outreach of Sa-Dhan members was Rs. 18, 344

(4 billion USD) and 2.67 crore (26.7 million)

respectively. More important than these

numbers are some of the positive trends that

have been witnessed. The year witnessed

growth of microfinance in regions other than

the traditional South. While Southern region

leads with maximum client outreach, followed

by the eastern region, other regions of north and

west are the likely growth drivers for the sector

in the future. Nearly half of the MFIs working

today have come into existence in the last five

years with one third being more than eight years

in operations, reflecting the growth in number

of MFIs as well presenting an ideal mix of old

and new MFIs, conducive for an orderly growth

of the microfinance sector. Microfinance is

expanding in urban areas with nearly one third

of the MFIs having more than half of their clients

in the urban areas. Despite the substantial

inflow of private equity into the Indian

1 NABARD Report: Status of Microfinance in India 2009-10

2 Ibid.

microfinance sector in recent years, the

dependence of MFIs on debt funds led by the

public sector banks still remains significant.

Women clients constitute about 95% of the total

clients reached by all MFIs together. The

coverage of socially disadvantaged i.e. SCs and

STs and religious minorities by MFIs is growing

every years.

The issues were dealt at different levels. The

perceptible reputational risk to the sector was

attended to by expediting the code of conduct

refining and implementation process(refer to

4.2), engaging the membership in workshops

to sensitize about the potential risk and

importance of adherence to the code as well as

reporting on social performance (refer to

4.2.2.3), building transparency through

improved reporting (refer to 4.2.2.1), client

practices etc. On the other hand, the Association

was in constant engagement with the RBI

providing updates on the progress, as well as

communicating their concerns with the

membership. In order to prevent state level

crisis, the Association initiated the process of

forming Sa-Dhan Chapters (refer to 4.2.2.6) in

states where microfinance has witnessed rapid

growth. Sa-Dhan also supported a nationwide

study (refer to 4.2.2.4) to capture the effect of

MFI interventions in 14 states with a sample of

35,000 borrowers. These were substantiated by

field visits to areas reported for multiple

lending for stock taking, and providing training

to enhance skills within MFIs on risk

management and governance( refer to 4.2.2.7.2).

Our National Microfinance Conference (refer

to 4.1.10) in collaboration with FICCI

specifically focused on the issues of growth and

microfinance plus services. While the

conference attracted participation of more than

1200 delegates, presence of key people from

stakeholders paved way for new opportunities

for contributing to the UID, PFDRA, producer

companies issues with Ministry of Corporate

affairs.

Apart from attending to concerns about the

sector by the key stakeholders, Sa-Dhan closely

engaged with the RBI, Ministry of Finance and

NABARD on specific issues related to legal

form of MFIs. Prominent among these were the

issue of microfinance bill, resource flow,

capacity building funds for small and medium

MFI, strengthening the SHG movement

etc(refer to 4.1).

Latest trend of declining lending by banks to

SHGs in certain states, declining bank branches

in rural areas, and deteriorating quality of SHGs

is a matter of great concern for the SHG

movement. Sa-Dhan has been engaging at the

highest level with the parliamentarians, as well

as officials in the Ministry of rural development

on these. A specific Task Force on SHG has been

constituted to take the work forward in relation

to the SHGs (refer to 4.1. & 4.3).

Our sustained sector building initiatives in the

eastern region for many years has resulted in

growth of microfinance services as well as

number of MFIs in the region. The strategic

review recommendations helped us in

attending to old issues in innovative ways. In

this regard, we engaged with the bankers'

training institute to facilitate microfinance

perspective to bank officials, information

sharing on different scheme of banks,

appropriate training on the present requirement

of the sector i.e. MFI transformation,

livelihoods, micro-insurance and social

performance. A very important initiative has

been the "Diploma in Microfinance" (refer to

4.4.7.3)to bring quality HR to a growing sector.

In terms of the membership of Sa-Dhan, thirty

two new members have joined Sa-Dhan that

includes a diverse set of institutions including

public and private sector banks. This year, we

also focused on our membership services

through formation of State chapters and

member visits.

Looking into the future, seeking compliance on

the Code of Conduct would be the top priority

for the Association, along with reporting on

social performance and improved analytical

transparency report. Sa-Dhan would continue

Sa-Dhan : The Association of Community Development Finance Institutionsiv


to take up the issues of NBFCs, Not for profits

and SHGs with the concerned stakeholders.

Enhancing resource flow to the sector is critical

at the present growth stage of the sector.

Bringing entities providing microfinance within

the purview of a regulatory framework would

facilitate that. We would focus on the

parliamentarians and legislators for greater

appreciation and need for it. The potential of

Business Correspondent Model needs to be

realized in this context.

We will continue work towards facilitation of

common good infrastructure for the

microfinance sector. One of the other focus areas

will be the expansion of micro-insurance

services among members.

Our Chair Ms. Jayshree Vyas has provided the

association with critical strategic insights

specially in taking forward the work on the

implementation of the recommendations of the

Strategic review exercise. Her availability and

readiness to guide us has been very helpful. The

Board of Directors have provided continuous

guidance and direction to the Association. All

critical issues affecting the microfinance sector

were discussed and deliberated at the meetings

of the Board of Directors in a structured manner.

I am grateful to all our Board of Directors, the

past and the present, for their keen interest in

the activities of the Association.

I must express my sincere thanks to each and

every member of the staff of the Association

who had worked tirelessly to help the

Association to meet the challenges arising from

changing requirements of the microfinance

sector. I also acknowledge the financial support

provided by Ford Foundation, SEEP Network,

Omidyar Network, Citi Foundation and HIVOS

for the Association's various initiatives. The

following pages would describe the

interventions of our thematic subgroups in

detail, and I hope you will enjoy reading it in

the same spirit as our work.

Sd/-

Mathew Titus

Executive Director

Sa-Dhan : The Association of Community Development Finance Institutions v


Sa-Dhan : The Association of Community Development Finance Institutions 1


In the times of the global meltdown,

together through the government led

SHG-bank linkage programme and the

MFIs; the agenda of “financial inclusion”

was pursued unhindered. As on 31st March

2010, under the SHG bank linkage

programme total number of 48.51 lakh (4.85

million) SHGs were having outstanding bank

loans of Rs. 28038 crore (6.23 billiion USD)3.

As on 31st March 2010, microfinance in India

through the MFIs has reached to 2.67 crore

(26.7 million) clients with a loan outstanding

of Rs. 18, 344 crore (4 billion USD)4.

The RBI and the government have made

efforts to increase banks’ penetration into

the poor community through various

initiatives. Some of these measures include

the creation of State Bank of India in 1955;

nationalization of commercial banks in 1969

and 1980; initiating the Lead Bank Scheme in

1970; establishing Regional Rural Banks

(RRBs) in 1975; introducing a Self-Help Group

(SHG)-Bank Linkage Programme in 1992 and

formulating the Kisan Credit Card in 2001.

Further in November 2005, banks were

advised by the RBI to make available a basic

banking ‘no frills’ account with low or nil

minimum stipulated balances as well as

charges to expand the outreach of such

accounts to vast sections of the population.

Further, Know Your Customer (KYC) norms

were simplified to ease the process of opening

bank accounts. In January 2006, banks were

permitted to utilize the services of non-

governmental organizations (NGOs/SHGs),

micro-finance institutions and other civil

society organizations as intermediaries in

providing financial and banking services

through the use of business facilitator and

business correspondent models.

In terms of some of the recent efforts by the

government, in the budget announcements

2010-11, the corpus of Microfinance

Development and Equity Fund (MFDEF) was

doubled to Rs. 400 crore (88.9 million USD).

It was also announced that the Business

Correspondent model with appropriate

technology back up will be provided to the

people who have no access to banking,

especially in villages with a population of

more than 2,000 by 2012. Financial Inclusion

Fund (FIF) and the Financial Inclusion

Technology Fund set up in 2007-08 by

NABARD to reach banking services to the

unbanked areas have also received support

in the budget with an increase of Rs.100

crore (22.2 million USD) for each of these

funds; to be contributed by the government,

RBI and NABARD. Rural Development got

an infusion of Rs.66,100 crore (14.7 billion

USD) while the four-year-old Mahatma

Gandhi National Rural Employment

Guarantee Scheme (formerly known as

NREGA) received Rs.40,100 crore (8.9 billion

USD) in 2010-11. NREGA beneficiaries will

also be covered under the Rashtriya Swasthya

Bima Yojana (insurance cover package) that

was given to provide health insurance cover

to below poverty line workers and their

families. All Mahatma Gandhi NREGA

beneficiaries who had worked for more than

15 days during the preceding financial year

will come under the scope of this insurance

cover. The Aadhaar [formerly Unique

Identification Development Authority of

India (UIDAI)] is going forward primarily

focusing on facilitating government

programmes for the poor and expansion of

banking services.

Despite all these efforts; within the poverty

debate in India, the estimation of percentage

of people living below the poverty line by

the Tendulkar committee is quite disturbing

and alarming. The report has estimated the

percentage of people below the poverty line

as high as 37.2% which is higher than the

figure of 27.5% in 2004-05 and even 36% in

1993-94.

1. Background

3 NABARD Report: Status of Microfinance in India 2009-104 Sa-Dhan Report: Financial Performance of Indian MFIs - A Quick Review, 2010

Sa-Dhan : The Association of Community Development Finance Institutions2


Apart from the effort of the government

through various programmes/ schemes, the

other channel for delivery of microfinance

services in India is led by the Non Banking

Finance Companies (NBFCs) that constitutes

a large part of the loan outstanding as well

as the outreach. Though drastically less in

number as compared to the not for profit

institutions, many of the NBFCs are operating

in multiple states, some of them in close to

20 states in the country. In recent times, they

have come under severe attack from media,

state government, academicians, researchers

etc. who were quite critical on issues such as

charging high interest rates from poor clients,

loan recovery practices, accumulation of

profits, compromising social agenda in

pursuit of growth and return to investors,

and contributing to the over-indebtedness of

clients.

In addition, MFIs in general and NBFCs in

particular are operating in an environment

where there is a constant threat of application

of Money Lenders/Usurious Loan Act in

states. Some of the states have already

witnessed this in past. The NBFCs engaged

in microfinance are striving for a separate

category of MFI-NBFCs with the RBI apart

from issues such as inclusion under the

provision for Business correspondent, service

tax exemption, opening of ECB route for

resource mobilization etc. There is perceptible

threat in terms of redefining priority sector

lending norms vis-à-vis the organizations that

are included in the provisions.

In the past 5-6 years, inability of the Not for

Profit entities in the microfinance sector to

raise debt as well as equity, that arises as a

limitation of their legal form as they explore

opportunities to meet the credit needs of

their poor clients, has forced them to

transform into for profit NBFC. The issue of

sustainability and scale in the existing Not

for Profit legal structure continues to confront

these entities. Despite the trend of conversion

of MFIs into for-profit legal structure, the

microfinance landscape in India is still

dominated by the NGO-MFIs in terms of

numbers. Most of these are small and

medium tier MFIs. In addition to the issues

like lack of supportive/enabling policy

environment, inadequate fund flow,

inadequate management capacities, poor

governance etc. that is being faced by this

segment for long, they also grapple with

issues like, possibility of harassment by State

Government under Money Lenders/

Usurious Loan Act, likelihood of decline of

credit flow from bank given the possibility

of withdrawal of lending to MFIs under

Priority Sector Lending etc. that have

emerged recently.

SHG institutions have emerged as principal

tools for poverty eradication, women

empowerment and social change. The

program emerged as one of the world’s

largest social mobilization and community

based microfinance programs. As on 31st

March 2010, a total of 69.53 lakh (6.95 million)

SHGs were having saving bank accounts with

the banking sector with an outstanding

savings of Rs. 6199 crore (1.37 billion) as

against 61.21 lakh (6.12 million) SHGs with

savings of Rs. 5546 crore (1.23 billion USD)

as on 31st March 2009, thereby showing a

growth rate of 13.6 percent and 11.8 percent

respectively. Over 100,000 SHG federations

emerged and provided many valuable

services like sustenance of SHGs after

withdrawal of promoting agencies, cost

effective promotion of new SHGs, promoting

and managing the quality in SHGs, apart

from acting as an interface between SHGs

and mainstream institutions.

However, the average savings per SHGs with

all banks had marginally decreased from Rs.

9060 as on 31st March 2009 to Rs. 8915 as on

31st March 2010. Also, NPAs to total bank

loans outstanding against SHGs as on 31st

March 2010 stood at 2.94 per cent amounted

to Rs. 823 crore,(183 million USD) ,which

showed an increased from 2.90 per cent and

Rs. 625 crore (139 million USD) during 2008-

09. Rising NPAs of SHG portfolio over the

years and declining savings within the groups

are some of the indicators of issues that the

SHG movement is facing in the present

context. These include low awareness levels



on the part of many primary and secondary

stakeholders, varied quality SHGs and

federations across the country and heavy

dependence on promoting agencies and their

staff for day to day functioning.

The year 2009-10 has been a watershed year

for Sa-Dhan in many ways. The strategic

review of Sa-Dhan helped in envisaging the

future trends in terms of opportunities as

well as challenges in the present context of

the sector. The report clearly articulated some

of the key issues that Sa-Dhan needs to

attend. Prominent among these were the

follow up on the microfinance bill, resource

flow, expanding the horizon of engagement

to parliamentarians, Standing Committee (s),

reputation management of the sector through

implementation of the code, consumer

protection, enhancing transparency through

improved reporting and analysis, social

performance reporting, media engagement,

capacity building of smaller and medium

level MFIs through implementation support

such as toolkits, manuals, training etc,

facilitation of common good infrastructure

like creation of quality HR and Credit

Guarantee Fund, attending to state level

issues etc.

Emanating from the growth in the sector,

MFIs in growth states are in constant threat

of possibility of imposition of State

Moneylenders' Act on them, which would

put a cap on their interest rate, and therefore

could lead to their operations becoming un-

viable. Another critical issue arising of the

growth is the threat of delisting from the

organizations that banks can lend to as part

of their priority sector lending targets.

Delisting would mean that it is directly going

to affect the fund flow to the sector from the

local banks.

In the reporting period, within the context of

challenges of legal form /operating models

as well as sectoral issues, Sa-Dhan has made

substantial efforts towards responding to

these for expansion of provision of

microfinance services for the poor household

in India.

Our Chair Emeritus Smt. Ela R. Bhatt along with Sa-Dhan Staff



After the completion of ten

years of the Association, Sa-

Dhan undertook a Strategic Review

Exercise that included interaction with

external stakeholders such as the policy

makers, government, banks, donors etc. and

internally with the diverse membership of

Sa-Dhan across states and regions. Within

the membership, there has been a close

interaction of the board and the Secretariat

with the NBFC members of Sa-Dhan.

Together, these two processes have helped in

defining the contours of the “Work” and

“Working” of Sa-Dhan for the coming few

years.

In this direction, following from the board

retreat, the recommendations of the review

report and subsequent deliberations within

the board, on identifying the challenges as

well as the new organizational structure to

respond to these, Sa-Dhan has begun the

implementation process.

As part of the implementation process, in

terms of “Working” with the membership

three Task Forces were created viz. Task Force

on For Profit, Task Force on Not for Profit

and Task Force on SHGs of members to

articulate the issues and challenges arising

from the legal form and operating models.

Through the meetings of these Task Forces,

Sa-Dhan has been able to firstly, identify the

critical issues and bottlenecks within the

specific legal form/ operating model towards

expansion of microfinance services and

secondly, prioritization of issues to be dealt

with through a participatory diagnostic

process. The prioritized agenda from these

deliberations led to detailing out of the work

arising from it.

Simultaneously, in order to respond to the

issues and challenges of the sector, Sa-Dhan

underwent a process of re-organization

internally that led to articulation of the

“Work” into five thematic pillars viz. Sector

Representation and Policy Advocacy, Member

Affairs and Standards, Self Regulation and

Standards, and Communications. Teams were

developed corresponding to each thematic

pillar, and within each team necessary

experience and skills sets were provided. In

the process, we have also brought new people

with new skills to the staff, focusing on the

“Work” under each thematic pillar.

2. Sa-Dhan Review 2009: Rejuvenating Sa-Dhan



While the strategic review

report helped us in

enhancing our understanding on the

issues and challenges within the sector, the

new “Working” structure of Task Forces

facilitated the prioritization of issues that need

attention from the Sa-Dhan Secretariat during

the year.

Taking forward some of the prioritized

recommendations of the Task Force on For

Profit, Not for Profit and SHGs we had some

very important and crucial meetings at the

RBI, NABARD, Ministry of Rural

Development, that turned both into challenges

as well as opportunity for the microfinance

sector. Through our new design we have been

able to take forward issues of the various

legal forms and operating models within the

membership. We also plan to take up key

research to address the concerns raised by

regulators, policy makers and government

from time to time with us.

During this period, following from the

recommendations of the board to establish an

alliance with industry associations from the

other sector, we engaged with what we

believe has been a fruitful collaboration with

FICCI for our National Microfinance

Conference, that created space for Sa-Dhan

and the microfinance sector vis-à-vis

association from other sectors. Substantial

engagement with parliamentarians resulted

in some of the participation from this

constituency in our National Microfinance

Conference.

As part of our strategy to refine existing

models of microfinance, the Secretariat

substantially engaged with the RBI and

Ministry of Finance on the issues arising from

the existing provisions under the Business

Correspondent Model and its implementation.

The RBI incorporated some of the

recommendations.

More importantly, the work on self regulatoryframework has begun and we have been able

to engage both with the experts as well as the

diversity among the membership on thesubject. Amidst the growth in the sector, we

have given priority to the work on

implementation of the code of conduct.Contributing to this work was our

sensitization and education process within

the MFIs, banks, investors on “Socialperformance ‘and efforts on opening of State

chapters of Sa-Dhan to facilitate closer

interaction of the microfinance sector withthe local stakeholders. We have continued

with our work on building transparency

within the sector through the BharatMicrofinance Reports apart from flagging

critical issues that the sector is facing through

them.

SHG work has been given a new impetus interms of strategy as well as the engagement

itself, dovetailing efforts with the ministries,

bank training institutes, SHG practitioners andthe Parliamentarians.

The sector building strategy includedproviding perspective of some of the credit

plus approaches like livelihoods, micro-

insurance to addressing the new requirementof growing organization in terms of

perspective on transformation. Skill building

initiatives included covering issues such as‘risk management’ and governance. Various

standard manuals on HR and other aspects of

microfinance were produced for the MFIs.

Towards creating a common good

infrastructure for the sector, initial work onthe “Credit Guarantee Fund” and its

recommendation to the RBI and Ministry of

Finance has been pursued, apart fromdissemination the “Diploma in microfinance”

in collaboration with IIBF, engagement with

universities on curriculum on “microfinance”towards facilitating entry of quality HR in

the sector.

3. Our Response to the New Challenges:Programmatic Interventions



The following pages provide a brief of someof the key initiatives taken up by Sa-Dhanduring the year.

3.1. Summary of Sa-Dhan Interventions

Sector Representation and Policy Advocacy

While the restructuring within Sa-Dhan helpedin articulating the issues of the diversity moreclearly, our engagement with the RBI, Ministryof Finance, Parliamentarians, and ministrieshelped in two ways. Firstly, these engagementshelped in articulated the issues of the sector beforethese key stakeholders and seek incrementalchanges in policy development. Specifically, inour engagement with the RBI and Ministry ofFinance, we have been able to facilitate changes inthe provisions under the draft mf Bill as well asthe business correspondent model which is theonly existing microfinance model that facilitatessavings services apart from other services for thepoor. Secondly, it provided the space to understandthe concerns of RBI and Ministry of Finance, forinitiating corrective measures within the sector.Our intensive engagement also resulted inparticipation of key people from the RBI, Ministryof Finance, Parliamentarians in the NationalMicrofinance Conference.

On the common infrastructure for the sector, theRBI has welcomed the idea of a “Credit GuaranteeFund”. Many policy constraints arise becausethere is little dialogue between the differentparticipants. Therefore, facilitating that has beenan important initiative of Sa-Dhan.

In face of reputational risks and constraints toencourage the ability to talk and identify the risksthat the sector faces, our work has primarily beendirected to diminish priority sector threats for thesector. This was done through disseminatinginformation on the industry and client practices,engagement with the members from time to timein terms of warning and corrective actions andconstantly engaging with the agencies such asRBI to diminish these.

Reputation Management of the Sector

During the year, few internal developments aswell as some of the developments in the externalenvironment led the Association to expedite itswork on the reputation management of the sector

with a new strategy. The internal developmentswere in the form of Kolar issue as well as beginningof what appeared to be turning into a difficultsituation for microfinance operations in AndhraPradesh. During both the situations, practice ofsome of the MFIs was under the scanner. Apartfrom the above, serious concerns were expressedin Sa-Dhan’s meeting with the RBI on MFIs’practice, specifically in relation to lack oftransparency, consumer protection etc. Further,an RBI Committee has been constituted to reviewthe priority sector guidelines that could potentiallyhave detrimental effect on the resource flow to thesector by the banks.

In this context, efforts were made to refine theexisting code of conduct and initiate the processof implementation of the same. Efforts in terms ofaction steps being taken by the Association werecommunicated to the RBI.

Along with the implementation process of Code ofConduct, sensitization and education workshopswith investors, banks and practitioners wereconducted to apprise them on the critical need ofconsideration of “Social performance” apart fromfinancial performance of MFIs.

Efforts to enhance transparency are on. Everyyear the Bharat Microfinance Report is capturingdata of more MFIs in comparison to the previousyear. Chapters on “Social performance” areincluded in the reports to bring increased focusand attention on the issue.

A nationwide study to capture the effect of MFIintervention in 14 states covering 35,000households is being supported to showcase thedifference the interventions of MFIs has made tothe lives of the poor before the policy makers,regulators and government. Also, field visits wereconducted on a regular basis to take stock of thesituation on the ground with regard to multipleborrowing.

Workshops/ Training programme on riskmanagement and governance were conducted toprovide perspective and skills to MFIs.

Towards preparedness to deal with Kolar/ AndhraPradesh kinds of situation, five state chapterswere planned in growth states to liaison with thelocal stakeholders as well as facilitate informationdissemination on the activities of the MFIs to the



local administration. Three of these state chaptersare already in the process of formation. To attendto issues at the state level; the strategy of Statechapters in growth states is a forward step onreputation building of the sector.

We hope that a multi-pronged strategy onreputation management of the sector will reducepolitical as well as operational risk for the sector.

Strengthening the SHG Movement

We have derived conclusions for our interventionon SHGs from the NABARD report and the SHGdata that was collected by us over the years.Through the membership process in the form of“Task Force on SHGs’the identified issues havebeen related to resource flow, declining bankbranches in rural areas, rising NPAs in some ofthe states and support to SHPIs. Therefore, ourintervention on rebuilding the SHGs has beendirected by three broad levels of issues: need forworking on building linkages for technical supportfor the sector, resource flow, knowledge andprogramme efficiency.

To engage with the issues of the largestmicrofinance programme in the world, there wasneed to engage at different level within thegovernment as well as the practitioners. Ourintervention framework, included engaging at thehighest level with Parliamentarians and thespecifically the Ministry of Rural Developmenton the issues concerning them such as resourceflow to SHGs, declining bank branches in ruralareas and increasing SHG numbers, unlockingfunds within the government system etc. Anotheraspect of our intervention has been in the form offacilitating banks as the drivers of the resourceflow to SHGs, re-orientation of their officers tomicrofinance etc. In this context, the breakthroughwith BIRD has been a critical outcome in terms ofproviding inputs on their training to bank officialson microfinance. It was also important to engagewith the practitioners through workshop oncollectively identifying and highlightingoperational issues related to SHG/ Federations.Emphasis on the SHG data and highlightingrelated issues has been a distinct aspect of ourBharat Microfinance Report.

Sector Building Initiatives

Apart from engaging on policy and reputationbuilding issues, as an Association we have engagedon a range of sector building initiatives in thepresent context of the sector.

The recommendations of the strategic reviewexercise have helped us to sharpen our initiatives,and we have been able to find new solutions to theold problems that the sector was facing. Arisingfrom this new structure, we have enhanced ouremphasis on knowledge building for the sector.

These engagement range from meetings with thebankers’ training institute to facilitate appropriateperspective within the bank officials involved inmicrofinance, information sharing on differentscheme of banks, organizing training programmesto facilitate appropriate perspective to deal withissues related to the trend in the sector such as on“MFI transformation”, micro-insurance,livelihoods, social performance etc.

In order to prepare work force for the sector wehave engaged with different players such asacademic institutions, universities, traininginstitutes etc. In the context of the growth in thesector and towards an appropriate HR that lookscritically at the incentives to the staff of theMFIs, we developed an HR manual and a StandardManual of microfinance for uniform understandingon the subject. These initiatives are directed atdiminishing risk of client behavior.

The “Diploma on Microfinance” continues to bean important initiative towards bringing qualityHR to the sector. Educating on Social performancehas been one of the key initiatives.

While the engagement has been wide spread, thekey is the approach that Sa-Dhan has undertakento deal with these critical sector building issues.The engagement with the practitioners involvedinteraction at more than one front viz. rangingfrom development of manuals to educating/providing perspective through a workshop. Theemphasis on HR has resulted in producing qualityHR of around 10,000 in terms of numbers in ayear.

As a result of these initiatives, 120 Not for Profitagencies (with a loan outstanding of Rs. 4500crore) with six million clients are directly affectedby the above products.



4. Sa-Dhan Interventions

4.1. Sector Representation and Policy

Advocacy

4.1.1. Follow up on the Legislation of

Microfinance Bill

4.1.1.1. Meeting with Ministry of Finance

In terms of the follow up on the

microfinance Bill, Sa-Dhan team met the

Joint Secretary and the Director at the

Ministry of Finance on 5th June 2009. It was

shared with the ministry officials that more

and more MFIs are transforming into

companies after reaching a certain scale. In

this context, concerns were expressed on the

inclusive nature of the provisions of the

microfinance bill vis-à-vis the intent to expand

the provision of financial services to the poor.

Alternatively, it was also proposed that in

case the NBFCs are kept outside the purview

of the bill, then there should be necessary

changes in the banking Act to facilitate the

operations of the NBFCs. The ministry officials

expressed willingness to look at the

suggestions that Sa-Dhan might send them

on the draft.

4.1.1.2. Meeting with Secretary, Department

of Financial Services, Ministry of

Finance

Sa-Dhan Team met the Secretary, Department

of Financial Services, Ministry of Finance to

submit the sectoral recommendations on the

microfinance Bill. It was suggested that

‘microfinance’ needs to be properly defined

in the Bill to include all legal forms. It was

stated that the microfinance Bill 2007 excluded

the NBFCs and the Section 25 companies from

its ambit, leaving behind almost 70-80% of

the microfinance clients outside its purview.

This would exclude the most eligible entities

from providing thrift services to the

borrowers. Concern over the existing

definition of charitable activities and thereby

the tax status of microfinance was brought to

the notice of the Secretary. It was shared that

the tax liability of the MFI would ultimately

increase the cost of borrowing for the poor

Further, it was discussed that the buying out

of the portfolio of the MFIs by the commercial

bankers might lead to problems of huge

service tax burden for the MFIs in the time to

come and can also cause a high default rate in

the loan repayment.

4.1.1.3. Consultative Meeting of the

Stakeholders at Ministry of Finance

A consultation meeting on the Micro-Finance

Bill with the Ministry of Finance was held to

seek suggestions/views of the stakeholders

on certain aspects of the draft Bill. As there

were divergent opinions on the present form

of the draft Bill, the Ministry of Finance finally

decided to refine the draft Bill after getting

feedback from the sector. Ministry officials

shared the contents of the working draft Bill

and asked the participants to submit their

suggestions/feedback.

The draft Bill was sent to all our members for

their inputs and recommendations. A

document incorporating all the relevant

suggestions and the recommended changes

as obtained from our members was

subsequently submitted to the Ministry of

Finance. Further a comprehensive Bill initially

drafted in 2005 by Sa-Dhan through extensive

consultations with the microfinance

practitioners and other important stakeholders

was re-submitted to the Department of

Financial Services.

After the receipt of various feedbacks, the

MoF and NABARD incorporated the feasible

suggestions into the draft and an internal

discussion was held among NABARD, RBI

and MoF on the revised draft on April 23,

2010. Sa-Dhan was invited as special invitee

for this discussion and they took note of Sa-

Dhan’s feedback on the Bill.



With respect to the definition of microfinance

services, there was a detailed discussion andit was decided to examine the definition of

financial services to include all the financial

services required by the poor. In respect offinancial assistance to eligible clients under

2(i) A, B & C, it was decided to remove the

ceiling (Rs50000/ or Rs.150000/ etc) andrewrite the amount as specified from time to

time. The definition of “thrift” was revised as

“thrift”, meaning any money collected notwithdrawal by cheque (the words ‘other than

in the form of current account or demand

deposit by a group’ were removed) . In respectof the discussion on Net Owned Fund under

chapter III 10(1) c, there was a suggestion to

increase the net owned fund and then finallyit was suggested to Sa-Dhan to share the data

on net owned fund of MFIs. Based on the

existing net owned fund and Task forcerecommendation on Net Owned Fund, final

decision can be arrived.

On Sa-Dhan’s suggestion to include equityunder 2 (d), it was discussed to examine theinclusion of equity to facilitate the operationthrough the mutual benefit trust mechanism.The recommendation on inclusion of Section25 companies under the purview of the billwas considered for examination.

It was agreed to bring all funds under MFDF

and to include MFDC to provide broad

operational guidelines to operate MFDEF .

Regarding Sa-Dhan’s suggestion of excluding

State Money Lenders (Chapter IX 36), it was

clarified that the Act is not regulating lending

but it regulates thrift. Further, to examine this

issue, Ministry of Finance needs time and it

cannot incorporate at this moment.

4.1.2. Meeting with Dy. Governor, RBI

A delegation of Sa-Dhan constituting of the

Secretariat and some of the senior members

of Sa-Dhan met the new Deputy Governor to

update him on the sector and its prevalent

issues. During the meeting, the delegation

highlighted some of the key issues that the

sector is confronting with viz. the need for a

separate category of microfinance NBFC,

opening up of ECB, changes required in the

Business correspondent model, representation

of the microfinance sector in the SLBC/DCC

meetings etc. In addition, the issue of non

repayment of the MF loans in Karnataka was

also brought to his attention.

The delegation also met the CGM of RPCD

and CGM-DNBS separately to brief them on

the Karnataka situation and other issue

mentioned above.

4.1.3. Meeting with NABARD:

Enhancing Resource flow

A delegation from Sa-Dhan comprising of the

Secretariat and few members met the

Managing Director, NABARD, on 3rd July

2009.

The meeting focused on enhancing resource

flow to the sector through the Rs. 500 crore

each Financial Inclusion Fund (FIF) and

Financial Inclusion Technology Fund (FITF)

dedicated for meeting the cost

of developmental and promotional

interventions and technology adoption

respectively.

Following the meeting a note containing

clause by clause analysis of the microfinance

Bill was sent to NABARD

4.1.4. Facilitating Improvement in

Practice of Microfinance Models

4.1.4.1. Meeting with RBI “Working Group”

on Business Correspondent Model

In order to put forth issues related to the

Business Correspondent Model, a delegation

from Sa-Dhan met the “Working Group”

within RBI working on the “Business

Correspondent Model”. Through the

documents sourced by Sa-Dhan members

Swadhaar, ACCESS, IDF and BASIX a sectoral

note highlighting the issues within the model

was shared with the “Working Group”. All

the contributing members were part of the

delegation to the “Working Group”. Further,

a note was developed and circulated among

members.



Some of the key recommendations of the reportare:

● The fact that the process of financial

inclusion involves the three critical

aspects of (a) access to banking

markets, (b) access to credit markets

and (c) financial education, the BC

model should, therefore, encompass

each of the above three aspects in order

to be able to address the issue of

financial inclusion in a holistic manner.

The full scope of the model can be

realized not just by opening no-frills

accounts but by synthesizing the above

three aspects as integral components

of the model. Towards this end, there

should be proper understanding and

appreciation of the BC model by all

stakeholders, in particular, by banks.

● Banks may need to have a relook at

the compensation structure for BCs.

● The range of services to be delivered

through the BC should be ramped up

to include suitable small savings,

micro-credit, micro-insurance, small

value remittances etc.

● Banks may bear the initial set up cost

of the BCs and extend a handholding

support to the BCs, at least during the

initial stages. Banks may also need to

bear the costs relating to transit

insurance of the cash handled by BCs.

● In order to improve the viability of

the BC model, banks may consider

providing reasonable temporary

overdrafts to the BCs free of interest

charges

4.1.4.2. Highlighting Requirements of

Operating models: Field Visit of

Finance Ministry in Orissa and

Andhra Pradesh

In order to understand the ground level

operations in the microfinance sector, Ministry

of Finance sought facilitation from Sa-Dhan.

In this regard, a visit to Sa-Dhan members in

Orissa and Andhra Pradesh was facilitated by

Sa-Dhan.

The Finance Ministry officials undertook the

field visit to Sa-Dhan members Adhikar and

SMCS in Orissa and SKS in Andhra Pradesh.

As a part of the preparation for this meeting,

profile of the organizations and note on their

particular field operation was sought from

the respective organizations, before it was

briefed to the Ministry officials.

In their visit to Orissa on 21st August 2009,

the Ministry officials visited the retail micro

financing models, systems, processes, record

keeping and MIS of the MFIs etc. They also

saw the remittance program, the self help

cooperative model of Orissa and SHG

federation’s activities

In Andhra Pradesh, visits had been planned

to Sa-Dhan members viz. Spandana, Roshan

Vikash, Dove and Trident Microfinance. The

team visited a PACS near Hyderabad, before

the visit was called off because of the sudden

demise of Chief Minister of Andhra Pradesh.

4.1.5. Pre-Budget Consultation Meeting

Continuous engagement with the office of

Finance Ministry yielded invitation to Sa-Dhan

for the first time for the pre-budget

consultation meeting with the MoF. After

incorporating the relevant suggestions from

the members, Sa-Dhan’s team developed a

pre-budget consultation note & submitted to

the Ministry. The recommendations in the

consultation meeting mainly focused on issues

such as re-introduction of the microfinance

sector Bill in the forthcoming budget session,

recognizing microfinance as a legitimate

activity and encouraging banks to lend to

small and startup institutions in the

underserved regions, loan and equity support

to NGO/MFIs in underserved regions to the

tune of Rs. 200 Crore earmarked from the

MFDEF etc. It was also recommended that as

microfinance is considered as priority sector

lending, accordingly the interest rate charged

by the banks for onlending should be



determined. To provide liquidity support to

the MFIs, refinance from NABARD can be

provided for onlending to SHGs as has been

provided to banks and the RRBs.

It was recommended that NBFCs engaged in

financial inclusion should be categorized as a

separate category of NBFCs, should be

allowed to provide small savings, micro-

insurance and micro-remittance under the

Business Correspondent Model. In this

direction, the government may recommend

and advise the RBI to re-examine the issue.

Also the MF-NBFC may be allowed to raise

ECBs through the automated route.

Other recommendations were related to

service tax of 10.3% on microfinance loans on

less than Rs. 25,000 and micro-insurance

products (insurance less than Rs. 25,000) be

waived off from poor customers. Ministry of

Finance may advise the state governments to

waive the Stamp Duty on loans given by

MFIs to SHGs, JLGs and individuals. It was

also recommended on creation of a Credit

Guarantee Fund for risk mitigation of bank’s

lending to MFIs as well as lowering of cost of

borrowing for the MFIs and in turn to the

borrowers.

Creation of a Credit Information Bureau,

setting up of a dedicated fund for promotion,

nurturing and capacity building of SHGs and

federations with a Special Purpose Vehicle,

and a dedicated portion of Rs. 250 Crore from

the Financial Inclusion Fund should be

earmarked for financial literacy and should

be channelized through the NGOs and MFIs.

These were some of the other

recommendations.

4.1.6. Regulatory Constraints and

Resource Flow for NBFCs, Not for

Profit and SHGs: Engagement

with RBI

To articulate and present the issues of the

NBFC members of Sa-Dhan, a meeting was

sought with Deputy Governors of Rural

Planning and Credit Department (RPCD) and

Department of Non Banking Services (DNBS)

at RBI, Mumbai on 25th & 26th November

2009.with A memorandum was developed by

the Secretariat after compiling all the

suggestions received from the NBFC members

of the association before the meeting.

Sa-Dhan delegation comprising of the Sa-Dhan

Secretariat and members made a

representation before the governors.

The following issues were included in theMemorandum:

● Need for a separate category of NBFC

with lowered CAR and allowing ECB

● Exemption from State Moneylenders

Act,

● Consider bank advance to NBFC-MFIs

under priority sector lending

● Making NBFCs eligible under BC

model

● Exemption from service tax and stamp

duty etc

RBI has shared its concerns on the following:

● Lack of transparency and non

disclosure of effective interest rate to

the borrowers and practices followed

by the organizations in delivering the

financial services and recovering the

outstanding portfolio

● Serious concerns with regard to the

operations of some of the NBFCs.

The RBI was apprised of the following:

● Debt and equity support to the sector

especially for the small and emerging

institutions and emphasized the need

for increasing such support to the MFIs

● Need of saving services

● Specific to the SHG movement it was

recommended to review the portfolio

of banks vis-à-vis SHGs as well as to

look at the issues of lack of resource

flow to SHGs



After discussion with the delegation, Deputy

Governor assured to examine the issues in

detail and take a considerate opinion by

engaging with the sector closely. She was also

open to support the setting up of a Credit

Guarantee Fund for microfinance sector.

As the way forward to this, Sa-Dhan began

consultations with members on different

aspects of self regulation including code of

conduct, social performance indicators, and

transparency and governance norms with a

definitive time line for their dissemination in

public domain. We believe this work would

serve the sector well in dealing with the

current debate as well as in the long run.

4.1.7. Monetary Policy 2010-11:

Representing the Microfinance

Sector at RBI

With reference to the meeting held on 25th

and 26th November 2009, Sa-Dhan thanked

RBI for convening a joint meeting of the RPCD

and DNBS. In response to the concerns

expressed by the RBI during the meeting with

the Deputy Governor’s office on 25th & 26th

November 2009, Sa-Dhan briefed about the

action steps it has taken in relation to that as

follows:

● Advised its membership on critical

feedback of RBI about the operations

and practices of microfinance

institutions.

● Initiated an independent nationwide

large sample study through a credible

and independent research organization

to understand the impact of

microfinance services on the client’s

life.

● Initiated the monitoring of the

implementation of Code of Conduct

to improve the practice part of

microfinance operations.

● In the process to set up a complaint

redressal mechanism.

● The monitoring & reporting

mechanism includes reporting on

identified key indicators to track the

practices in MFIs.

● A suitable incentive and disincentive

mechanisms will be built into the

system. These measures will strengthen

the client protection system in the

microfinance sector.

In terms of the recommendations, following pointswere made:

● Funding from banks to the MFIs at

reasonable rate of interest without

affecting the profitability of banks

under the existing Differential Rate of

Interest Scheme

● In line with the recommendation of

the RBI Working Group on BC Model,

it is also highly recommended by the

sector that NBFC with a portfolio of

not less than 80% in microfinance

should be made eligible to act as BCs

of the banks.

● The proposed NBFC-MFI classification

would facilitate an operating

environment that systemically

encourages the unique needs of

microfinance companies while

ensuring that the poor have an ethical

market-driven mechanism to escape

poverty.

● It was suggested that the microfinance

NBFCs be considered as a separate

category of NBFCs as it has been done

for Asset Finance Companies and

Infrastructure NBFCs. Under this

category CAR is maintained at 10%.

4.1.8. Addressing the Issues of Producer

Companies: Meeting with the

Minister for Corporate Affairs

After meeting Mr. Salman Khurshid,

Honorable Minister for Corporate Affairs in

the first week of March 2010, Sa-Dhan’s team

met the officials in the Ministry of Corporate

Affairs on 15th March 2010 and appraised



them on the importance of considering the

interest of Producers Companies while

effecting amendments to the Companies Act.

Subsequently, the Ministry officials have

arranged for the sector ’s presentation on

Producers Companies to the Secretary and

other officials of the Ministry of Corporate

Affairs on March 26, 2010. In all these

meetings, Sa-Dhan pleaded for incorporating

the part pertaining to the Producer Companies

with necessary amendments into the new Bill

instead of retaining the Part IX A of the

Companies Act, 1956 in the old Act without

repealing this part.

Some constraints in the current legislation

pertain to inability to refuse membership, lack

of premium on patronage and overarching

role of the Registrar of Cooperatives.

The proposed amendment Companies

(amendment) Bill 2009 is not repealing this of

part (Part IXA) of the Act, it is necessary to

look into these (following) aspects:

● The principle and practice of “Open

Membership’ lack of incentives to long

standing loyal members and delinking

capital with user ship. No provision

for proxy voting even for

geographically spread large

organizations.

● Inadequate governance and control

due to voting & decision making not

linked to patronage (in case producer

companies other than the ones formed

exclusively by Producer Institutions),

absence of external scrutiny etc.

● While there is difficulty in mobilizing

internal capital, there is no provision

to mobilize external capital.

● The value addition to the producers is

dependent on additional investment,

interest conflict arising out of returns

based on patronage as against that on

investments.

Following are some of the requirements that

were recommended for incorporation in the

amendment

● Provision for valuation of equity shares

and for transfer of shares within

members at freshly assessed value

incentivizes the members to acquire

more shares resulting in capital

formation for growth & expansion.

● The valuation of shares to be given to

new members

● Easy exist for non-active members

● Provision to include financing agencies

in the board without affecting the

control by the members.

The Secretary agreed to retain the part

pertaining to the producers companies in the

new Bill during the presentation on March

26, 2010. However, any amendments in the

nature of major changes in the provisions of

the Act need to go through the route of

presenting the same to the Parliamentary

Standing Committee.

4.1.9. Financial Inclusion of Dalits and

Religious minorities

With specific reference to the financial

exclusion of Dalits, the Dr Rangarajan

Committee report states that 49.77% of

Scheduled Caste (SC) households, 63.68% of

Scheduled Tribe (ST) households and 48.58%

of Other Backward Class (OBC) households

are financially excluded. Clearly, those worst

affected by financial exclusion are the most

marginalized sections of society: Dalits (SC/

ST) and others. Similarly, the largest minority

Mr. Ratnesh, Program Analyst, UNDP



i.e. the Muslims do not have easy access to

financial services.

In order to highlight the issue of financial

exclusion of these communities and to carve

out of the way forward in terms of efforts of

stakeholders for financial inclusion, an

Interface on “Financial Inclusion of Dalits,

Tribals and Religious Minorities: Issues,

Challenges and Way Forward” was organized

at India Habitat Centre, New Delhi on 15th

January 2010.

The Interface was attended by a wide range

of practitioners from fields as diverse as the

government, banking and community service

sectors. All the participants brought their

conceptual frameworks, experiences from the

ground and ideas for the future to the table,

making it possible to create an initial matrix

through which the issue of financial exclusion

may be approached in the future.

The interface was exclusively designed to

converge the diverge ideas of the different

stakeholders to address the issues encircling

Financial Inclusion of Dalits, Tribals and

Religious Minorities. It includes meticulous

selection of the participants and running them

through different case studies and others.

This running the participants through the

case studies and seeking their response prior

to the interface facilitated them to think on

the issues and attending the interface with

full preparation. The interface was moderated

by moderator with some questions but

without any design; this was a deliberate

drive to give opportunities for discussion

and converging the ideas.

The participants had been identified in

reference to their association with the issue

and magnitude of the work. It included senior

level government officials, educationist from

different streams i.e. finance, rural

development etc, senior microfinance

practitioners, journalists, representatives from

the fields and others. Total of 37 participants

had participated in the interface.

Mr. Mathew Titus, Executive Director, Sa-Dhan

Dr. Amar Singh, Ministry of Rural Development,

Government of India

Mr. Ganesh Pandey, Shramik Bharti &

Mr. Ali Asghar

Group discussion during the Interface



The larger understanding which had been

generated from the interface are 1) the

diversity of the groups and each community’s

concerns must be addressed within the specific

context of their livelihood and not through

broad conceptual grids 2) traditional financial

institutions must be encouraged to create

increasingly innovative products to best serve

the needs at the grassroots and there is a

need to focus on the credit plus products

such as insurance, non-formal savings and

remittances 3) crisis in human resources is

such that well-thought-out schemes

conceptualized at a senior level fail to take

root in the ground because of incompetence,

inefficiency, corruption or merely indifference

4) exclusion must be understood as a product

of not just financial deprivation but also social

and cultural traditions and practices 5) there

is a need to create interdisciplinary forums

together with government, academic and

financial bodies to access the best ideas and

create the most viable solutions to the complex

and widespread problem of financial

exclusion.

The interface was a pioneer drive from the

platform of the MFIs. The understanding gave

Sa-Dhan a basis to develop spearheaded

programs to address the issues concerning

the Financial Inclusion of Dalits, Tribals and

Religious Minorities.

4.1.10. Sa-Dhan-FICCI National Micro-

finance Conference on “Financial

Inclusion and Responsible

Microfinance”

Sa-Dhan’s National Microfinance Conference

on “Financial Inclusion and Responsible

Microfinance” was held on 17-18th March,

2010. The film titled ‘Responsible Finance’

surfaced the growth and challenges of the

sector developed by Sa-Dhan helped to set

the tone for the Conference. The conference

platform was used to put emphasis on issues

such as the Business Correspondent model,

multiple borrowing, social performance, code

of conduct etc.

The conference has been a landmark event for

us in many ways, foremost being Sa-Dhan’s

collaboration with FICCI, a network of the

corporate industry. The conference received

major sponsorship and support of public

sector banks and apex financial institutions.

More than 1000 participants attended the

Conference; including policy makers,

parliamentarians, regulators, apex financial

institutions, heads of public sector banks on

the one hand and, practitioners, academicians,

heads of prominent private sector banks,

community leaders on the other. Sa-Dhan

ensured the presence of parliamentarians to

listen in to the debates on the various issues

concerning the microfinance sector. Be it the

Proceedings of the Interface

Opening Session at the Conference

Proceedings of the Conference



speakers, or audience or the discourse, each

resonated the acknowledgement of the Sa-

Dhan forum.

The discussions ranged from endemic issue

of poverty to introspection by the practitioners

bodies such as the Planning Commission and

RBI were represented by the Deputy Chairman

and Deputy Governor respectively. It was

indeed encouraging to see people from these

institutions to grace and utilize Sa-Dhan's

forum. Dr. Montek Singh Ahluwalia

corroborated the views of his colleagues from

Ministry of Finance. Mr. Vijay Mahajan,

speaking in the conference agreed on a pan

sector bill.

resulting in potential solutions through mobile

technology as means of cost cutting, to

providing diversified and need-based

products and renewed focus on financial

inclusion with sustainable livelihoods.

The Micro Finance bill was discussed by key

functionaries from the government such as

Mr. R. Gopalan, Secretary Financial Services,

Ministry of Finance in whose presence a

consensus was arrived at for a cohesive Bill

that cuts across legal forms and not limited to

just one legal form. Further, as a means for

redressal of problems in the sector, creation

of an Ombudsman within the purview of the

bill was suggested. The regulatory and policy

Mrs. Naina Lal Kidwai, Chairperson,Financial Inclusion Committee, FICCI

Dr. Montek Singh Ahluwalia, Dy. Chairman,Planning Commission, Government of India

Mr. N K Maini, Executive Director, SIDBI & Mr. B M Mittal,CEO, Banking Codes & Standards Board of India (BCSBI)

Public and private sector bankers represented

by their chairmen cum Managing Directors

chose the platform to commit lending of $ 250

million in the near future to the Micro finance

Institutions towards realizing the Millennium

development Goals by 2015. With the

government’s focus on “Financial Inclusion”,

the political leadership represented by two

Ministers of the Central Government and one

Member of Parliament deliberated at the

conference to explain the government’s efforts

on inclusion. Mr. R. M. Malla, SIDBI and Mr.

Sarangi, NABARD highlighted their

Mr. Vijay Mahajan, Chairman, BASIX



commitment to the MF sector in order to

achieve total financial inclusion.

One of the most well attended sessions was

led by the Chair of Unique Identification

Authority of India Mr. Nandan Nilekani who

talked about UID, the largest resident database

using biometric features, utilized the

conference. Funded to the extent of $300

million by the government, it has the potential

to change transactions in microfinance.

Addressing the complexity of the issue, he

gave a key presentation for 45 minutes

Mr. Prakash Bakshi, Executive Director

NABARD, encouraged greater adoption of the

letter and spirit the Sa-Dhan’s Code of

Conduct. (Sa-Dhan developed the Code of

Conduct for the microfinance sector 2 years

ago. Paucity of funds for tools and training

components hindered the implementation of

the Code of conduct. Now the Code of

Conduct is recognized by Central Banks and

boards of MFIs have adopted it). Finally,

savings through the banking correspondent

route was discussed threadbare. Consensus

emerged on the need to participate in this

opportunity in a large manner & MFIs

requested Sa-Dhan to build a program around

savings products, given the Association’s

standing in financial markets.

To conclude, the conference continued to be

the “Microfinance Event” of the sector and

reinforced Sa-Dhan’s position as the industry

voice. While the conference was a success, lot

of critical work emanating from the

deliberations at the conference needs to be

taken forward by Sa-Dhan.Mr. Nandan Nilekani, Chairman,Unique Identification

Authority of India (UIDAI)

followed by a Q and A on the facilitative role

UID can play to enhance financial inclusion.

Mr. Nilekani chose the Sa-Dhan’s platform to

state how the UID is the biggest game changer

in India and would aid MFIs in reducing

their transaction cost. The Pension Fund

Regulatory and Development Authority

(PFDRA) the regulator on pension

immediately announced the role that is

expected of MFIs in rolling out the New

Pension Scheme (NPS) Lite.

Mr. Aloysius P Fernandez, Chairman, NABARDFinancial Services (NABFINS)

Mr. Salman Khurshid, Minister of State for CorporateAffairs, Government of India & Mr. P D Rai, MP

Mr. Jyotiraditya Scindia, Minister of State for Commerceand Industry, Government of India



Within the strategy of our engagement, the

National Conference platform was utilized in many

ways.

Firstly, it was the appropriate platform to highlight

and deliberate on some of the current issues related

to operating model/ legal form that need attention

viz. microfinance bill, business correspondent

model, savings services for the poor, technology

etc.

Secondly, there was need to highlight the need for

new products and offerings such as social security

for the poor, livelihood support, credit

infrastructure etc. The conference platform was

utilized to highlights some of the issues and

concerns on these.

Thirdly, the conference was aimed at opening new

avenues of engagement. In this context, we were

able to reach out to UIDAI (now Aadhaar), and

PFRDA for future work on bringing benefits from

the UIDAI project as well taking forward the

work on Micro-Pension. Knowledge about this

new initiative was important as practitioners need

to think how they can integrate with this new

elephant in the room; Changes in business plans

etc.

Fourthly, the sessions also demonstrated the efforts

it takes to bring consensus among key stakeholders

within the industry; incentives for adoption of the

code, getting banks’ support, the desire within the

sector on self-regulation etc.

4.1.10.1. Development of the “Curtain Raiser”

film for the conference

As part of the strategy to navigate the

discussion at the National Microfinance

Conference, the team conceptualized and

facilitated development of a film titled

“Responsible Finance” as a “curtain raiser” to

the conference. Various pertinent issues such

as multiple borrowing, social performance,

livelihoods, micro-insurance, technology, loan

products etc. were raised through the film

While an array of stakeholders, models, legal

forms were covered in the film on critical

issues facing the sector; the film was shot at

locations in Alwar, Kanpur, Bhubaneswar and

Hyderabad to give it an all India flavor.

Prior to the film shooting, specific questions

were developed for the stakeholders:

● What preparedness is required by the

sector considering the statement “total

financial inclusion in 2015 vis-à-vis the

current state of the sector”?

● What are the gaps/grey areas that need

attention for financial inclusion of the

excluded?

● What ‘quality’ issues do you see in the

services offered by MFIs?

● How does scaling up affects the client

centric approach /character of

microfinance? That differentiates

microfinance from others.

● MF practitioners are raising the issues

of financial intermediation / literacy

but what should be the strategy/

intervention to retain the social

intermediation part of microfinance?

And why?

● What are the various Designs/Model

in offering to meet the target towards

financial inclusion by 2015?

● What question one should ask to

oneself before copying/adopting any

Participants at the conference



model in a new region/market? And

why?

● Along with financial inclusion, what

other services and linkages are

required for poverty alleviations?

(livelihoods & social security)

● Considering the conference theme, one

question stakeholders would like to

ask to the participants? Without any

Constraints & barriers what’s their

vision of financial inclusion?

The film was well received by the participants

at the conference. Further, the film was

uploaded on the Sa-Dhan website

4.2. Reputation Management of the

Sector

The strategic review report has clearly

indicated that one of the prominent issues

that the sector has to deal in the near future

pertains to its reputation in terms of seen as

transparent, pro-poor, client sensitive,

coverage vs. quality etc. Towards this end,

the biggest task before the association is to

put in place a self regulatory framework for

the sector, enhancing transparency through

reporting, sensitization and education on

“social performance”, analyzing the situation

on the ground through studies, field visits

apart from dealing with issues arising out of

growth in regions/ states such as in Kolar.

The strategy review report recommended

interventions at the state level to respond to

local crisis. Towards this end, it was a crucial

year to put in place mechanisms in the form

of state chapters of Sa-Dhan in some of the

growth States. During this period, Sa-Dhan

has made efforts to focus on some of these

issues.

4.2.1. Towards Implementation of a Self

Regulatory Framework

The work on the implementation process of

the “Voluntary Code of Conduct” as part of

the Self regulatory framework has progressed

during the period. The Code of Conduct in

the context of Indian microfinance sector is

pertinent in relation to the recent crisis

erupting in states arising out of non-adherence

to client protection policies and would bring

discipline within the sector contributing to

reputation management as well as supporting

Sa-Dhan‘s work with the regulators and the

government.

In terms of the progress on the work, the

Code has been revised by the internal team

with the help of working groups and other

experts/ advisors. A draft concept note on

Self Regulatory framework for microfinance

sector was developed and shared with the

chair & co-chair of Sa-Dhan, Mr. M.R. Umarji

(Chief Adviser, IBA) and Mr. A.Vikraman. Sa-

Dhan team had initial discussion with

Mr.M.R.Umarji (IBA) & Mr. A.Vikraman

through teleconference on 16th December

2009. A meeting on Self Regulatory framework

for microfinance sector was organized with

Mr.M.R.Umarji (IBA), Mr. Ramana (consultant

on SRO, Sa-Dhan) & other practitioners on

28th December 2009.

The code was shared with RBI in preparation

for their Annual Monetary Policy Statement

2010 as well as in the form of a full session at

the Sa-Dhan National Microfinance

Conference at New Delhi on 17th and 18th

March 2010. Importantly, the SRO framework

was also shared with the participants of the

“Transformation” Workshop in March end.

The major elements of the code are integrity,

quality of service, transparency, fair practices,

privacy of client information, integrating

social values into operations and feedback

mechanism. The code puts emphasis on client

education and financial literacy, as well as

competition.

The compliance mechanism of the code

includes:

● Adoption of the code of conduct

through board and implementation at

MFI level

● Periodic reporting

● Periodic sharing of information on Sa-

Dhan’s website, publications and



reporting to RBI, Ministry of Finance

as per demand

In terms of the compliant redressal

mechanism, following are the action steps:

● Constitution of Ethics and Grievance

Redressal Committee: 3 Sa-Dhan

members and 2 independent members

with sound domain knowledge

● Involvement of committee in

investigations in complaints from

members or clients

·- Suggestions concerning membership to

the board of Sa-Dhan

The team working on the Code will consult

members on the Code in the coming months

4.2.2. Addressing Operational Issues

and Challenges Affecting the

Sector

Within the growth story of microfinance in

India, there are operational issues related to

resource, client responsiveness, governance

and transparency that keep confronting the

sector in growth states again and again. As

an association, it is pertinent to look into

these issues in relation to operations of MFIs.

During the reporting period, efforts have been

made to address these issues through different

instruments toward improving the practice of

MFIs with a special focus on the poor clients.

The intervention strategy included

engagement with stakeholders, transparency

reports, workshops, perspective building

programmes, field visit etc.

4.2.2.1. Bharat Microfinance Report 2009:

Responsive Growth

In the context of the present sectoral scenario,

the Bharat Microfinance Report 2009 was

appropriately dedicated to elements of

responsive growth. Based on the audited

financial data, this year’s report received data

from 190 MFIs across India as compared to

160 MFIs last year. Out of that data of 69

MFIs was found to be accurate in all

parameters and reported for two consecutive

years i.e. 2008 and 2009 permitting data

analysis. In the development of this analytical

report, data from MFIs as well as NABARD’s

data on SHG bank linkage has been taken

into consideration for analysis. The report

was released at the Sa-Dhan National

Microfinance Conference 2010.

Apart from usual financial performance

analysis, the report also contains separate

chapters on SHG performance, Social

performance, competition and MFI

performance. The SHG chapter captures three

aspects of the SHG programme, firstly, the

performance of SHG bank linkage programme

based on the NABARD’s quantitative data for

2008-09, secondly the analysis of qualitative

performance of SHGs based on Sa-Dhan’ field

work as well as review of some of the recent

documents available in public domain, and

thirdly, a brief account of Sa-Dhan’s SHG

standards setting and data collection initiative.

The last chapter covers the emerging

challenges and effect of competition in the

form of multiple borrowing and over-

indebtedness.

4.2.2.2. Building Transparency and

Credibility of the Microfinance Sector

through the Bharat Microfinance

Report

The work towards the Sa-Dhan Bharat

Microfinance report 2010 is under progress.

264 organizations (the last Side by Side Report

received data from 162 organizations)

contributed with their data for the report.

The analysis of received data is complete and

the chapters of the report are being written.

The report will contain chapters on MFI

performance, SHG performance, social

performance and emerging challenges in the

microfinance sector.

4.2.2.3. Education and Sensitization Meeting

on “Social Performance”

In the recent times many organizations are

transforming into for profit entity. It has been

observed that this may inflict “mission drift”

whereby the organization narrows its focus to



“pure lending”. The “Pure lending model” in

the context of weaker sections may raise

questions of social acceptability and carries

high political risk. Whereas the organization

doing community work in these situations,

always bail out other organizations in times

of trouble. In this backdrop, a focused group

discussion was organized on Social

Performance and Code of Conduct in

Bangalore on 8th August 2009. Primarily, the

participants deliberated on Sa-Dhan Code of

Conduct and its implementation and Social

Performance standards for MFIs.

4.2.2.4. Measuring the Effect of MFI

Interventions: A Study

Though many microfinance institutions are

doing good work, the Sector is facing a lot of

challenges. Over the last couple of years,

policy makers are becoming wary of the

microfinance sector. Media is rife with news

highlighting the pitfalls of the sector. Many

MFIs are moving on shifting grounds despite

the awareness that the sector is growing fast

and has immense scope for further growth.

There is no large scale study available in

India to inform the sector and stakeholders

on the nature of poor household economy

and no available study clearly spells out how

many people have benefited after availing

loans from microfinance institutions.

Sa-Dhan is supporting an independent and

reputed research organization i.e., India

Development Foundation for conducting a

research study. The study would assess the

effect of microfinance interventions on the

lives of clients. The large scale of this study

extends over 5 regions all over the country,

cuts across all legal forms and intends to

collect data from over 35000 households. The

study would cover 14 states: 2 in the North,

4 in the East, 1 in the North-East , 3 in the

West and Central and 4 in the South, will cut

across legal forms and would cover lending

methodologies i.e. SHG, JLG and individual

lending.

For the policy makers, the Study would give

a clear picture of the MF benefits on the

ground and the kind of effect microfinance

services have on the poor households. This in

turn would help the MF sector to fruitfully

engage with policy makers. For the MFIs the

study would give an in-depth and informative

view on how microfinance is making a

difference and how the practice can be made

better. For MFIs, the participation in the Study

would be a goal in itself that is, reaffirming

the social agenda and responsibility of the

sector. The Study would help Sa-Dhan in

further refining the work on Code of Conduct.

Keeping this in mind, Sa-Dhan is doing this

Study with IDF.

The study aims to ascertain the number of

poor people in India who have participated

in MFIs (including SHGs) and moved up from

USD 1.25 per capita per day to above it.

While the study’s rationale and objectives

have been communicated to the members, we

are encouraged to get a very positive response

from the diversity within the membership.

Already, 29 MFIs have agreed to be part of

the study. A data format was sent to these

MFIs seeking the data of their clients. We are

happy to state that our members have

cooperated very well in providing the data.

4.2.2.5. Addressing the Regional Issues

emerging from States

In the Kolar district of Karnataka, the sector

received a jolt in terms of clients refusing to

repay the loan to the MFIs. The crisis hit a

number of MFIs who were operating in the

district. To understand the issues on the

ground a Sa-Dhan team visited Karnataka

and met an array of stakeholders. It was

understood that multiple borrowing by clients

across MFIs has caused the non-repayment

within the clients. It was also understood that

slump in the local silk industry had direct

affect on the businesses of the clients and

therefore resulted in non-repayment.

The team also met Anjuman Committee at

Kolar to gauge into their view on the issues

of non-repayment by muslim clients.



4.2.2.6. Towards State Chapters of Sa-Dhan

The Indian microfinance sector is on a

tremendous growth path. The past few years

have seen significant changes in the character

of the microfinance sector in India in terms of

perception and operations. The sector

continues to be diverse in terms of

outstanding, outreach, operating models, legal

forms and regional skewdness. Even within

states/region, the organizations are at

different stages in their growth path. The

issues represent a broad spectrum ranging

from initiating the growth to managing it

across organizations. In the recent times, the

sector has witnessed expansion of MFIs

beyond district and state boundaries. This

expansion has also led these MFIs to operate

in underserved states in areas where the other

MFIs are already working. There is a potential

danger of multiple lending and therefore over-

indebtedness of clients. Moreover, this has

also led to issues of “Cooperation” and

“Competition” among MFIs working in the

same area. As a result, new issues in focus are

financial literacy of clients and client’s

perspective. The recent experience of Andhra

Pradesh and Karnataka has clearly

demonstrated that it will be very important

to engage with key stakeholders like banks,

government, policy makers, media etc. not

only at the national level but also at the

region/state level. From the recent experience

in the Southern states of the local

government’s crackdown on microfinance

service providers, the Association needs to be

proactive on region specific issues.

Looking into the above scenario, the board of

Sa-Dhan resolved to form State chapters in

growth states of Andhra Pradesh, Tamil Nadu,

Karnataka, West Bengal and Orissa. In this

direction, dialogue with members in all the

states has been initiated.

In the second meeting with members from

Orissa, team of Sa-Dhan introduced the

recruited State Coordinator for Orissa and

West Bengal to the local members and

explained his roles and responsibilities.

Further, it was suggested by members that

there should be a formal inauguration of the

State chapter by inviting all the stakeholders.

The executive members of the State chapter

would try and bring the Chief Minister or the

Finance Minister for the occasion. Some of

the action points suggested for the state

chapter were regular communication with

members and participation in cluster meeting

on a rotational basis, inviting stakeholders

for the quarterly meeting of the chapter,

conference at State level, image building of

Orissa MFIs, capacity building programmes

as per need of the diverse membership,

facilitating mechanism of self regulation &

code of conduct, data collection for the sector

report, member enrollment and renewal from

the state.

Towards Sa-Dhan State Chapter in Orissa: Interactionwith members

During our interaction with the AKMI Board,

in Karnataka many action points were

suggested. While AKMI has planned to merge

with the State chapter of Sa-Dhan, it was

proposed that the State chapter should ensure

presence of state level MFIs in the SLBC

meetings, district level bankers committee etc

apart from consolidating the data received

from MFIs on a periodic basis and submitting

it to offices like DC Office, cooperative

departments, police departments etc. It was

also suggested to bring out Karnataka State

Sector Report presenting the overall

microfinance sectoral scenario in the state. In

terms of sharing the cost of running the

chapter it was suggested that it should be on

a proportionate basis, certain percentage to

be shared between Sa-Dhan Head office and

state members.

Sa-Dhan Secretariat had circulated the Terms

of Reference (ToR) for the State forums to



members in the State of Tamil Nadu.

Subsequently, a meeting was convened to get

feedback from the members. Members

expressed deep concerns on the issue of

dilution of group quality, group discipline,

interest rate, multiple lending, client poaching

etc. It was informed that because of the

competition from the new generation MFIs

the members are forced to reduce the gestation

period for loan eligibility, which in turn could

impact the repayment performance and group

quality. It was opined that Sa-Dhan should

have, under its fold, only those members

adhering to the philosophy of community

development finance. In terms of action

points, it was recommended that Sa-Dhan

should collect data on effective interest rate

in the state in terms of the cost to clients and

group formation, group quality and generate

a report for the state. The state forum can

subsequently evolve on completing this

exercise and bringing all the members on

board on these social performance issues.

December 2009. At the end of the meeting,

the rating agencies agreed to develop some

indicators for monitoring Sa-Dhan’s Code of

Conduct/ ensuring responsible lending within

a month and then it was decided to take

forward the agenda in consultation with

MFIs/Sa-Dhan

4.2.2.7.2. Helping Members Explore to

Mitigate Risks: Workshop on Risk

Management & Governance:

Bangalore& Gurgaon

In 2005, microfinance institutions got

recognition when Finance Minister talked

about 60% inclusion in his budget. Since then

the whole scenario has changed. Bankers,

Investors, Technical Service Providers have

started showing interest to microfinance

institutions. Within this scenario there is an

urgent need to look into important issues that

require attention. The serious concerns are on

the issue of interest rate, lending, repayment,

equity, financial flow and qualitative human

resource. So, the risks must be looked into

from these aspects.

Risk is an integral part of financial

intermediation that MFIs do. When financial

institutions issue loans, there is a risk of

borrower default. When banks collect deposits

and on-lend them, to other clients, they put

clients’ savings at risk. Any institution that

conducts cash transactions or makes

investments risks the loss of those funds.

Development finance institutions can neither

avoid risk nor ignore risk. The financial

institution should understand all types of risk4.2.2.7. Addressing Issues of Risk

Management & Governance

4.2.2.7.1. SIDBI-World Bank initiative-

Responsible Lending under

Microfinance

As part of the strategy, Sa-Dhan is actively

participating in the initiatives that are led by

Apex Financial Institutions such as SIDBI on

the issues of responsible lending, In this

regard, Sa-Dhan participated in the SIDBI-

World Bank initiative-Responsible Lending

under Microfinance Meeting held on 9th

Towards Sa-Dhan State Chapter in West Bengal:Interaction with members

Workshop on Risk Management, Gurgaon



and able to adopt measures to mitigate those

risks.

Risk is an integral part of MF activity where

no collaterals are taken. Microfinance portfolio

is exposed to credit and operational risk.

Microfinance institutions (MFIs) face risks that

they must manage efficiently and effectively

to be successful. If the MFI does not manage

its risks well, it is likely that it will fail to

meet its social and financial objectives. When

poorly managed risks begin to result in

financial losses, donors, investors, lenders,

borrowers and savers tend to lose confidence

in the organization and funds begin to dry

up. MFI is not able to meet its social objective

of providing services to the poor and quickly

goes out of business.

The purpose of risk management from a

financial institution’s perspective is to protect

the institution from losses, attract capital and

instill confidence in regulators. It is also

important to highlight that all institutions

should perform a 360 degree risk assessment,

which is a review of all the institutions’ risks

(i.e.: operational risks, insurance policies etc).

The areas covered in these programmes were:

● Introduction on risk management and

governance, Overview on financial

risks in MFIs, Credit risks/ liquidity

risks in MFIs, Overview on operational

risks in MFIs

● Overview on strategic risks and

governance in MFIs, Strategic risks

(reputation risks), and SPM,

Transformation of MFIs to NBFCs,

Overview on governance, Governance

in MFIs – Requirements and Risks,

MFIs their response to environment,

risk and governance and bankers point

of view

The participants were from large, medium

and small MFIs apart from banks, training

institutions

Keeping in view the importance of topic,

Sa-Dhan organized two education programs

to make participant understand about this

critical aspect in the entire MFI operation.

These were held on 09th- 10th June 2009 at

Bangalore and 06th -07th October 2009 at

Gurgaon. The number of participants at

Bangalore was 71 where as in Gurgaon the

participation was 30.

Proceedings of the Workshop

Participants at the Workshop

4.2.2.8. Addressing Issues of Growth: Meeting

with the National Commission for

Minorities on Kolar issue

Sa-Dhan team met Shri Mohamed Shafi

Qureshi, Chairperson; the National

Commission for Minorities held on 17th

December 2009 and updated him about the

developments since the previous meeting.

Mr.Qureshi‘s queries on purpose of loan, its

utilization, quantum of loan locked in the

problem etc were clarified during the

discussion. Sa-Dhan sought Mr.Qureshi’s

intervention to resolve the issue. Finally, the

chairperson assured to advise the Secretary,

State Minorities Commission to mediate

between the MFIs and the Anjuman

Committee to resolve the issue amicably



4.2.2.9. Competition and Multiple Borrowing:

Interaction with field level staff and

ultimate clients

Sa-Dhan also made efforts to understand the

issue of competition and multiple borrowing

in different regions across models. Towards

this, a team visited Nirman Bharati (JLG

model) and Shramik Bharti (SHG model) to

look at the ground level operation in relation

to the issue of competition and multiple

borrowing. It was found that:

- SKS, Sonata and Nirman Bharti are

operating in the same area. Due to

multiple borrowing the default is 90%

for all the organizations. SKS has

already wound up their operations

from the area, and others are slowly

winding up.

- Staff incentive mechanism is driving

disbursement to clients without

assessing the group quality and the

repayment capacity of clients

·- Announcement of loan waiver by the

UP government encouraged clients not

to repay

-· Most of the loans taken in the name of

income generation are used for

consumption resulting in defaults

4.3. Strengthening the SHG Movement

4.3.1. Building the Agenda on SHGs:

Meeting of the Task Force on

SHGs

The strategic review report recommended

special focus to be provided to the SHG model

because of it being the government’s model

for delivery of microfinance services. To this

end, within the structure of the Association, a

Task Force specifically on SHGs was

recommended by the board.

We had the first meeting of the Task Force on

SHGs during this period. While concerns were

shared on the deteriorating quality of SHGs

and the lack of capacity of institutions engaged

in the SHG movement, the members

articulated the way forward for Sa-Dhan in

the SHG space.

Following were some of the key priorities

articulated by members:

● Engaging with RBI, NABARD, BIRD,

RRBs and other lead banks to improve

the processes of SHG bank linkage in

terms of address the issues around

diminishing credit flow to SHGs and

opening of bank accounts

● To take initiative and facilitate a policy

dialogue with Ministry of Rural

Development, Planning Commission

and State government on National

Rural Livelihood Mission (NRLM) on

design and additional promotional

funds.

● To lobby for and mobilize resources

from government, NABARD, funding

agencies in the area of promoting the

SHGs and facilitating capacity building

● Design and facilitate a campaign on

savings as a tool for sustainability of

SHGs

● Capacity building of SHPIs including

federations

● Data collection on SHGs with members

● Engaging with BIRD and other

banker’s training institution vis-à-vis

SHGs

o Enhancing capacity towards

SHG bank linkage

o Education and sensitization of

banks

● Bankers’ training program through

members of Sa-Dhan

4.3.2. Conceptualization and

Development of Approach paper

on SHGs for Sa-Dhan

Arising from the first Task Force meeting on

SHGs, it was recommended to conceptualize

and develop an approach paper on SHGs that



would define the contours of work on SHGs

for Sa-Dhan. The team developed the

approach paper and shared it with few of the

Task Force members. The approach paper

recommended the following for Sa-Dhan to

pursue on SHGs:

● There is a need to facilitate the flow of

resources to the underserved regions

(North, North East) & building the

capacities of the local institutions,

NGOs, government functionaries, to

achieve the agenda of financial

inclusion.

● Need to promote and strengthen the

institutions for enhancing the quality

of SHG by channelizing the funds

● Need for convergence of various

programmes for the holistic

development of poor.

● State/ Region specific focus and

helping in channelizing the fund to

strengthen SHGs as people owned

institution.

● Funding support is required for

promoting SHGs in regions with high

level of exclusion and in difficult

terrain such as the North East.

4.3.3. Recommendation on SHGs to the

Prime Minister

The SHG bank linkage programme is well

acclaimed as the largest microfinance

programme in the world. However, within

the large numbers both in terms of loan

outstanding and outreach that the programme

has reached, there are issues and challenges

that exist. These issues and challenges have

already reinforced itself in terms of high NPAs

in the programme with SHGs in some of the

states resulting in declining funds flows to

the SHGs. Further, the sector is debating on

the quality aspects of SHGs as well as the

need of enhancing capacities of the promoters.

Promotional cost is an issue that is pertinent

as ever. SHGs have been a vehicle for

implementation of many government

programmes, but these were marred by

absence of convergence of efforts of different

government agencies, NGOs, state

governments etc. apart from the constraints

inherent in the design itself.

Looking into these issues and to bring focus

on issues related to SHGs, a SHG Task Force

was created within Sa-Dhan. Subsequently,

the SHG Task Force recommended

engagement with the government, RBI,

NABARD, BIRD, RRBs and other lead banks

to improve the processes of SHG bank linkage

by highlighting the issues that exists.

The Prime Minister Mr. Manmohan Singh

called a meeting on issues and challenges for

the SHG movement on 6th March 2010.

Anticipating this as a great opportunity for

us to communicate to the government on

issues the SHG movement is facing in its

present form, recommendations were sought

from the Sa-Dhan members working with

SHGs. Further, the recommendations were

consolidated in the form of a recommendatory

note for the meeting with the Prime Minister

and provided to the sectoral representative

going for the meeting.

4.3.4. Communicating Issues and Challenges

within the SHG Movement to key

Parliamentarians

During the preparation for the Sa-Dhan

National Microfinance Conference 2010 an

invitation was sent to Mr. Rahul Gandhi,

General Secretary, AICC and MP to attend the

same. Though he could not make it because

of his preoccupancy with other prior

commitments, we took this opportunity to

send him a letter of recommendations on

SHGs which he is quite familiar with and

sees as potent model for financial inclusion.

The following were the recommendations sent to

him:

● Large amounts of funds designated

for promotional work lapse in many

government programs. A new

governance of such funds /corpus is

required to accelerate disbursal

especially for Institutional Capacity



Building of these groups, their leaders,

systems and their monitoring. It is

essential to provide technical support

to SHGs for setting up of financial

records, audits and account keeping.

Also, technology provides the

confidence among the members which

very less number of organizations are

able to do because of the lack of funds.

● Staff and offices in rural branches have

very sharply declined over the past

few years. Although the emphasis has

been given on the branch expansion

(2008-2009)5 but there is a need for

more staff, with proper training to

open service and monitor bank

accounts of SHGs.

● Convergence and synergy between

various government departments and

schemes. This will help poor to attain

holistic development which includes

livelihood, social security, health and

living standard of the family.

There are various government programmes

like National Rural Livelihood Mission

(NRLM) which focuses on universalization of

SHGs covering 4.5 crores BPL families;

promotion of SHG federations from village

level to national level; emphasis on training

and capacity building to strengthen SHG

institutions. For these lot of funds are required.

Various initiatives have been taken by the

government. For example, NABARD’s fund

has been enhanced from the existing Rs100

crores to Rs 200 crore which is meant for

Capacity Building, MIS, funding support etc.

Similar fund is lying with Ministry of Women

and Child Development (RMK) Rs.88.00 crores

in 2006-07.There is a need to have convergence

and synergy between various departments and

schemes. This will help poor to attain holistic

development which includes livelihood, social

security, health and living standard of the

family.

4.3.5. Facilitating Collaboration

between MFIs and Ministry of

Rural Development: Low cost

funds to MFIs to on lend to SHG

along with other support services

Subsequent to the meeting held on 14th

December 2009 between Sa-Dhan and Ministry

of Rural Development on possible

collaboration between MoRD and MFIs, Sa-

Dhan organized a meeting on 28th and 29th

December 2009 between member MFIs

working with SHGs and MoRD. It was

decided to develop a pilot project of this

collaboration and Sa-Dhan in consultation

with the participating members to submit a

detailed proposal in this regard.

A proposal note was submitted by Sa-Dhan

to the Ministry of Rural Development. The

pilot project attempts to address some of the

issues preventing the rural household

(explained above) to come out of the vicious

cycle of poverty. The major components of

this pilot project are as follows:

● SHG Promotion and Nurturing

● Capacity Building Component

● Handholding for livelihood

● Providing financial services at low cost

The proposed pilot project intends to reduce

MFI’s burden of cost of delivery on the one

hand and to provide financial services to the

Self Help Groups with low cost funding. This

will be achieved through the partnership

between the MFIs and the government in the

following manner:

● The handholding and capacity

building cost will be met by the Rural

Development Ministry, GoI. The

handholding fund to extent of

Rs.10000/ per SHG and the capacity

building fund to the extent of Rs. 5000/

to 7500/ per capita to the concerned

MFIs.

5 RBI has granted 785 licence to RRB’s of which 734 had already been opened( RBI 2009:81)



● The Rural Development Ministry, GoI

to provide an interest subsidy to the

extent of the difference between the

prime lending rate and 6 per cent.

● The MFI will receive funds at 6 per

cent through banks.

● Further, the banks can waive the

processing fees/service charges on the

loans to MFIs under the scheme.

● The MFI in turn will be able to provide

funds to the Self Help Groups at

6%p.a. plus small incidental expenses

depending on the region.

● Those MFIs who do not have sound

groundwork on livelihood can build

linkages with livelihood facilitating

organizations

● The project focuses on the capacity

building and hand holding of the

households, the loan loss is expected

to decline significantly.

● As one of the reasons for recurring

poverty in rural area is the household

inability to withstand against the

frequent shocks occurring on account

of natural calamities. This risk can be

mitigated through group insurance

scheme as available on other

government schemes.

After the proposal was submitted, the Joint

Secretary Incharge was transferred and

therefore Sa-Dhan needs to build liaison with

the new joint secretary to take the project

forward.

4.3.6. Focus on SHG Federations:

Workshop on “SHG Federations:

Scaling and Sustainability”

Sa-Dhan in collaboration with Chaitanya

organized a workshop on “SHG Federations

Scaling Up and Sustainability” on 1st October

2009. The objectives were to bring together

stakeholders and facilitate deliberation on

existing state of SHG federations, scope and

way forward.

Few of the presentation made at the workshop

focused on a study of federations in

Maharashtra, another study on the costing of

federations, need for IT in improving MIS of

SHG federations and federation model

promoted by MAVIM. Financial supporters of

federations viz. banks, NABARD and FWWB

were also present in the workshop.

The workshop discussed and set some clear

priorities with respect to the SHG federations

● Importance of building the capacities

of SHGs for building stronger

federations.

● Need for federating should come from

the women and should not be imposed

over them.

● Various laws for registering the

federations and also about the

microfinance Bill that is being

discussed in the Parliament.

● Emphasis on importance of linking of

federations with the banks and on the

need for bankers for identifying

federations as potential financial

intermediaries.

● The bankers on the other hand

encouraged NGOs and federations to

act as banking agents and also to

participate regularly in SLBC meetings

for putting forth their requirements.

Participant from IBM and Data Vision

presented the importance of technology in

strengthening the Information System of

federations and the possible services that the

federations can provide to their clients by

using IT

4.3.7. Exploration of Work with Public

Sector Banks on SHGs in Selected

States

Sa-Dhan team visited Central Bank of India,

Union Bank of India on 9th December 2009

and planning to explore working with public

sector banks to promote SHG movement in



selected states through a special purpose

vehicle. Also, Standard Chartered Bank,

Director-microfinance met Sa-Dhan team on

8th December 2009 and discussed the

possibility of sponsoring Sa-Dhan conference

4.3.8. Strengthening organizations

working with SHGs / SHG

Federations and Enhancing

Resource Flow: Meeting with

Honorable Minister, Ministry of

Rural Development

In order to highlight issues within the

government programmes involving SHGs as

vehicle, and the possible role organizations

within that, a meeting was sought with the

Honorable Minister, Ministry of Rural

Development on 18th June 2009 at Krishi

Bhawan, New Delhi. The delegation

comprised of a mix of SHGs and livelihood

practitioners from the membership of Sa-Dhan

along with the Sa-Dhan Secretariat.

The minister was apprised of the issues

concerning SHGs and SHG federations in

terms of the need to strengthen the promoters

as well as enhancing resource flow At the

outset, the minister shared that a lot of work

has already been done on micro-credit through

the SHG/ SHG federations, and suggested

that the focus now should be on “Social

Mobilization” along with micro-credit. In

this context, he suggested having SC/ ST and

minorities as the target group. In order to

have a better understanding of the

microfinance sector, he asked for a note on

the same. It was suggested to have a half day

workshop with the few of the representatives

of the sector.

As a follow up to the meeting, a concept note

on issues related to SHGs/ SHG federations

was developed and shared with the minister.

Another meeting took place with the minister

on 13th October 2009 seeking advice on the

proposed one day meeting with the members.

During the discussion it was shared with the

minister that people at the grassroots have

successfully been engaged in the work and

whatever things they take like livelihood,

social security etc, the small NGOs & other

practitioners have been successful in

implementing it on the ground in some areas

whereas the government schemes have failed

to do so. The reason may be the constant

engagement of the NGOs/organizations at

the grass root, which government has failed

to take care of.

It was suggested by the minister to develop a

note on the same. Further, on the issue raised

regarding restriction of schemes for BPL

families only, it was communicated that the

issue is already been raised at various forums,

and there is a need to engage with the

Planning Commission on the same. He

emphasized on the capacity building within

government schemes for success.

4.3.9. Need for Technology in taking the

SHGs to next level: Meeting with

NABARD

Sa-Dhan team met NABARD officials on 22nd

April 2009 to highlight the issues concerning

the SHG movement. It was suggested that for

the greater financial role of SHGs, for their

sustainable development and to take SHGs to

the next level, there is a necessity of

technology to support the process. It was

pointed out that though there is an influx of

softwares in the industry, but it is directed

primarily for the Grameen model and not the

SHGs( where there is a need to capture the

social inputs). Also, the existing softwares are

expensive and therefore unaffordable for the

federations.

It was also shared that federation of one of

the Sa-Dhan members, namely Roshan Vikas

is in the process to work as Business

Correspondent for the State Bank of India,

which is a financially viable model, where the

support of technology is inevitable. It was

proposed to introduce technology in the

operations of federations of Roshan Vikas as

a pilot that could be replicated in other places.

The NABARD officials asked Roshan Vikas to



develop a proposal and send it to them for

their concrete reflections on the NABARD

software called “Navyukti”.

4.4. Sector Building Initiatives

4.4.1. To Improve Banks’ Understanding

of Clients and mf Operations

Towards Increased Resource Flow

In the context of rural financial sector, BIRD

is playing an important role through Training,

Research and Consultancy services to its

customers and undertaking other related

activities in the field of agriculture and rural

development banking. In this context, it was

recommended by the Task Force on SHG to

seek institutional collaboration with BIRD in

building the microfinance sector in India

through contributing to some of the initiatives

of BIRD such as the training module specific

to microfinance directed at banks and

practitioners, training programmes, exposure

for Banks and practitioners etc. The objective

of the collaboration would be directed at

increased understanding of the clients and

microfinance operations among banks and

practitioners and therefore resource flow to

the sector.

Sa-Dhan team met the senior officials from

BIRD and explored the possibility of

engagement with the design and development

of its training programme on microfinance

for bank staff and MFIs, contribute as resource

persons in its training programme and

facilitation of participants for BIRD’s

programme from the sector.

The immediate result of the meeting was that

BIRD invited Sa-Dhan to participate in the

“Syallabus Committee meeting of BIRD”

where they seek inputs on the design and

module of the training programmes for the

next one year. Mr. Ganesh Pandey (member

of the Task Force on SHGs) represented Sa-

Dhan in the above meeting and provided

inputs to BIRD.

4.4.2. Facilitating Resource flow to

Members in States: Information

Sharing and Engagement with

Schemes of Banks

Being the largest network of microfinance

service providers, many of the banks approach

Sa-Dhan and seek information on the list of

member MFIs of Sa-Dhan for lending. In this

context, State Bank of India sought

information on the various eligible NGOs/

MFIs for MFI financing. Sa-Dhan shared the

information on the list of member MFIs with

the State Bank officials.

Similarly, Sa-Dhan conducted a study to

understand the profile of the RCFs, the

borrowers and relevance of the scheme for

the borrowers and viability for the bank. This

was in relation to the bank’s scheme called

“Rural Credit Franchisees (RCF) in South

India.

4.4.3. Perspective Building Programme

on “MFI transformation: Why,

How & the Impact”

There is a growing trend of NGO-MFIs

transforming into for profit legal from as a

result of the constraint that they face to raise

debt or equity for expanding the microfinance

operations. These coupled with many other

factors have been driving NGOs to transform

into more legalized/ regulated forms of

microfinance entities like NBFCs, Section 25

Company etc.

Panelists at the MEP



In order to analyze and inform the NGO-

MFIs on the nuances of transformation

process, Sa-Dhan organized a two – day

perspective building programme on “MFI

transformation: Why, How & the Impact” at

Goa during 24th to 26th March 2010. A total

of 30 representatives from organizations

participated in the programme.

The areas covered under the programme were:

Business & Financial planning for

Transformation

● Resources: Equity, Debt & Grants,

Practitioner’s perspective on resource

flow, Retaining Work culture & Ethics,

Professional v/s Voluntary Conduct

(Admin & HR), Expectations from the

stakeholders: Changing from a

beneficiary to a customer

The workshop participants invariably felt the

need for transformation and also were wary

of intensive financial, human and

technological investment that the process

would demand. There was also a consensus

among them that the majority of them lacked

technical expertise in completing the process

successfully. They wanted Sa-Dhan to repeat

such program periodically.

Following the feedback received from the

workshop, Sa-Dhan again organized a three

day comprehensive, inter-active education

program to enable MFIs to better understand

the transformation process.

Introduction of the participants at the MEP

Query session at the MEP

Mr. C S Ghosh, Board Member, Sa-Dhanaddressing the participants

● The need for Transformation:

Possibilities & Options, Organizational

& Business restructuring for

Transformation, Transformation &

Double Bottom Line, Rating &

Investment, Legal & Accounting

aspects,

● Transformation Process: Steps,

Strategic Business planning, NBFC

Statutory Compliance, Technology for

Business expansion, Key aspects ofParticipants at the MEP



4.4.4. Educating members to help their

clients to manage risk: Micro-

insurance Education Programme,

Hyderabad

Microfinance institutions have started

realizing the importance of insurance to their

borrowers. The organizations, so far providing

only credit, are getting convinced that for

creating long-term impact on poverty it is

essential to secure the loans and the income

generating assets of the borrower household.

As a result many MFIs are looking at micro

insurance as one of the essential services

rather a complementary one. Yet the Micro

insurance has not seen major expression

because of the lack of experience of most

MFIs, lack of suitable products and to a certain

extent lack of awareness and appreciation by

the clients about Micro-insurance.

In this context, it was envisaged to conduct

special education programme on Micro-

insurance that will not only facilitate

perspective on the subject of micro-insurance

but would also facilitate cross learning of

experiences of micro-insurance practitioners.

Designed for mid-career and senior decision

makers both from MFIs/NGOs who are

involved in mF operations, micro enterprise

development and commercial insurance

providers from public and private sectors; the

program provided excellent opportunity for a

platform for clients and prospective clients of

micro insurers to interact and collaborate with

each other for better social security practice.

The Micro-insurance Education Programme

conducted at Hyderabad from 4th to 9th May

2009 had an innovative design of class room

learning and field visits. There were 20

participants attending the programme. The

five day micro insurance education program

was inaugurated by Shri, J. Hari Narayan,

Chairman IRDA. The distinguished panel of

speakers consisted of representatives from

leading insurance companies, big MFIs, micro

insurance experts and research scholars. The

areas covered under the programmme were:

● Overview of Risk mitigation products

for the poor, scenario of Micro

insurance from regulatory perspective,

latent need of the rural market & role

of insurance providers, scenario of

micro insurance from regulatory

perspective, latent need of the rural

market, role of insurance providers,

competence of the present products,

Performance Standards in the Micro

Insurance Industry

● Asset Insurance, Health Insurance,

Credit Insurance, Live Stock and Crop

Insurance, Success stories /bad

experience

● Micro Health Insurance Present

scenario, Case studies

● Role of micro insurance in addressing

livelihood needs of the poor

4.4.5. Livelihood Expedition:

Practitioner’ Learning through

Demonstration

Micro credit, even microfinance for that

matter, is a means to an end and not an end

in itself. Certainly micro credit provides one

of the vital inputs, credit, for meeting the

poor’ needs. The poor borrowers’ sustained

repayment depends on their income flow.

Ensuring income generation for the borrowing

poor could entail ‘real’ repayment of micro-

credit. The obvious option would be livelihood

generation.

Mr. A. Vikraman, Ex-CGM, NABARD inaugurating the"Livelihood Expedition"



introduced to the history, concept of

Livelihood & Livelihood promotion,

challenges, risks, roles of livelihood promoting

organizations etc. The participants were also

made aware about portfolio mapping,

analyzing local resources, analyzing market

& market places, pinpointing activity &

interventions.

Livelihood in the context of microfinance

harnesses the organized nature of the clients

of Self Help Groups (SHGs), Joint Liability

Groups (JLGs) etc to produce and market the

output jointly and hence remuneratively.

Several SHPIs of Sa-Dhan have demonstrated

the sustainability of production and marketing

of meat, handicrafts and other farm produce

in Kerala. The purpose of ‘Livelihood

Expedition’ conducted from 7th to 11th

September 2009 in Cochin was to showcase

such successful projects to the MFIs, SHPIs,

NGOs and other development practitioners

to enable them implement the same among

their poor clients. A total of 33 representatives

The program was intended for senior

development workers from MFIs, Community

Development Finance Institutions, Self Help

Promoting Institutions, Livelihood Promoting

Organizations, Development Organizations

and other development professionals and

organizations involved in or support

livelihood promotion interventions for the

poor.

4.4.6. Workshop on Social Performance

In the times when the microfinance sector in

India is coming under the scanner because of

the alleged practices of some of the MFIs in

Field exposure of the participants (1)



from these organizations participated in the

programme.

The design of the “Livelihood expedition”

was a equal mix of class room learning and

field visit. In the class room participants were Proceedings of the Workshop



As part of the reputation management

initiative for the sector, it was pertinent for

Sa-Dhan to highlight the importance of social

performance in the context of the Indian

microfinance sector. Moreover, building a

common understanding on the concept of

Social performance was also important. To

this end, a workshop on “Social Performance”

was conducted by Sa-Dhan on 19th March

2010 at New Delhi. The workshop was

attended by 58 participants including

members in different categories, investors,

bankers etc.

Following were the key questions that the

participants deliberated in the workshop:

● How social performance is relevant

for Indian sector?

● What are the benefits and costs of

managing social performance?

● What is the experience of other

countries?

● Industry initiatives – what is their role

and how to use them?

● Diagnosing and improving your social

performance: how to start and what

can you implement immediately?

● What are the next steps for Sa-Dhan in

social performance?

Quality Audit Tool was also shared during

the workshop by Mr. Volodymyr Tounytsky,

Microfinance Centre, Poland and Ms. Leah

Nedderman, Social Performance Task Force.

different regions, ‘Social Performance” as a

concept has meaning and dimension to it. It

is pertinent within the growth trajectory of

the sector in India that is growing at a rapid

pace. The concept of Social performance and

it’s critical importance as an inherent

component in lending to the poor is being

recognized worldwide. In India, Social

Performance Concept is still evolving among

the MFIs.

Quality Audit Tool (QAT) is a practical

diagnostic tool that supports managers in

reviewing the status and effectiveness of an

MFI’s management processes in achieving

social goals. It helps in ensuring that an

MFI is on track towards achieving its social

goals, identifying the strengths (you can

build on) and addressing the gaps through

process of improvement, that avoids

overload.

The QAT focuses on:

● examining process management

● viewing internal systems

● assessing the status and effectiveness

of internal systems for strengthening

the social performance management

in supporting achievement of social

goals

● acknowledging good social

performance practice up to date

(strengths) and identifying gaps

(weaknesses)

● identifying and prioritizing necessary

actions to improve social performance

Presentation at the Workshop

Participants of the Workshop



4.4.7. Facilitating development of

Quality HR for a Resurgent Sector

Within the unprecedented growth in the sector,

one of the key issues that require attention is

the availability of quality HR in terms of

required skills for the peculiar need of the

sector as well as HR systems in MFIs so that

it can attract these resources. Sa-Dhan is trying

to address the issues at both ends, within the

estimation that about 35,000 to 40,000

personnel are required every year. With the

growth becoming more aggressive, these

numbers may go even higher.

Following are some of the initiatives that Sa-

Dhan has undertaken during this period:

4.4.7.1. Development of HR Manual

While efforts are on to bring more workforce

into the microfinance, suitable measures need

to be taken up to help MFIs to motivate and

retain the workforce. All MFIs have invariably

their own ways of managing their employees.

They have prescribed pay scale, leave facility,

medical, loan facility, training, etc. During

the interactions with Sa-Dhan members on

various occasions like visit to member

organizations, trainings, workshop, etc,

Sa-Dhan staff found that the members follow

different strategies for motivating and

retaining talents. Several members specially

small members want to know the best

practices followed by fellow MFIs as part of

overall HR management. They need to

understand the right recruitment methods,

training, adopting suitable incentives system,

etc to manage the existing talents.

Keeping the above requirement in mind,

Sa-Dhan in its sub-group meeting discussed

the matter and decided to bring out a User

Guide on HR for MFIs and NGOs. The user

guide is expected to help the users to design

appropriate HR practices in the light of

different methods being followed by their

counterparts. The manual has been developed

through a process that involved responses

from 31 members through questionnaire apart

from direct interaction with 8 members from

different regions. The first draft of the manual

is ready. The manual is going to be finalized

soon.

4.4.7.2. Developing Standard Manual to

Introduce Microfinance Course

It is in this context, Sa-Dhan being the

custodian of the sector is concerned with the

mentioned distortions in introduction of

microfinance by different people. Sa-Dhan has

therefore come up with the Standard manual

to guide people to explain the topic of

microfinance in a cohesive and structured

manner covering at least those topics which

are critical to ‘microfinance’ and without

which the introduction to microfinance will

not be complete. The purpose of this manual

is not to give details of the subject topic or to

elaborate on the technical issues but to point

out the topics for introduction, brief

description of these topics, and outlining their

relationship with each other. The speakers

can do their own research on the subject

topics. The manual however, does give

references of the reading material, publications

and websites.

The manual will guide teachers, trainers,

speakers and all those who are related to

microfinance and have to explain the topic to

others. The critical topics suggested by the

manual pertaining to microfinance in India

are poor, definition of microfinance and

services provided, microfinance institutions,

revenue model of microfinance, microfinance

models, and evolution of microfinance, best

practices and risks in microfinance. The

manual has been finalized through a feedback

mechanism through the capacity building

subgroup. The manual will be circulated to

interested educational institutes desiring to

initiative a course on microfinance as well as

in our educational workshops.

4.4.7.3. Engagement with the Universities to

Design Course Curriculum on

Microfinance

Foreseeing the future HR requirement for the

sector, Sa-Dhan had proactively engaged with



the Indian Institute of Banking and Finance

(IIBF) to develop the “Diploma in

Microfinance” as a mechanism to attract

quality HR to the sector. Arising from the

interest that the above course was able to

generate among the academic institutions,

several universities approached us in helping

them launch similar courses or as a subject in

their existing curriculum. The strategy to

approach the introduction of microfinance in

the course curriculum has been very cautious.

It is pertinent to first of all orient the

participants on the microfinance sector & its

human resource requirement, apart from

exploring solutions to meet the HR

requirement of the sector. It is in this context,

that Sa-Dhan is organizing workshops for

Universities in terms of providing perspective

on the sector as well as its HR requirements.

The targeted participants of these workshops

will be Decision making representatives of

educational institutes, academicians,

professors from economics, rural development,

agriculture development, social/community

work, etc and microfinance practitioners.

4.4.8. Facilitation for training support

from external sources

4.4.8.1. Training Calendar

The basic purpose of the training calendar is

to disseminate the information to all

stakeholders on various training programs

organized by specialized institutions across

the country. The Calendar provides details

about the trainings and organizers for the

current financial year. This time we made

exclusive online software for the same for its

wider visibility. This year calendar is already

available in our website www.sa-dhan.net

4.4.8.2. Resource Directory

Resource Directory is an attempt to identify

the available thematic area wise resource

persons across the country, who are ready to

offer their services. This time we made online

software to receive the CVs of potential

resource person and after appraisal finally

approving the same to be displayed on the

website. Already CV of more than twenty

resource persons has been approved and

available on our website for the use of

microfinance fraternity

4.4.9. Enhanced Technology Usage for

Managing Data: Sa-Dhan

Operations Management System

(SOMS)

Sa-Dhan has been endeavoring to manage the

data relating to members. The strength of

technology is harnessed for the purpose. A

specialized software (SOMS- Sa-Dhan

Operation Management System) has been

developed to handle the MFIs data collected

by Sa-Dhan.

The software now hosts financial data relating

to 233 MFIs (Mostly Sa-Dhan members) for

the past three years.

Sa-Dhan plans to upgrade SOMS with the

following objectives/needs in views:

● There have been multiple demands in

Member facilitation cell to furnish

members data in different permutation

and combination. Maintaining an

effective registry/filing/e-filing system

and information database for the

members will help cater to the needs

● Providing easy access for all kind of

information related to members

● Handling/Tracking of the member

admission process

● Ensuring smooth communication with

member organizations across the

country by forwarding information

and following up on specific issues

etc.

A full-fledged team has been working on the

project.



4.5 New Approach to Membership

Services

The “Strategic Review Report” provided clear

recommendations on how to improve Sa-

Dhan's services specifically to its members.

While the report recognized the diversity that

exists within the Sa-Dhan membership, it also

provided framework of the Task Forces that

facilitated articulation of the issues and

concerns of the same.

Some of the key recommendations of the report

were:

● Create "One-stop-shop" for member

queries

● Facilitate greater funds flow to the sector

● Provide networking platforms to

members with funders

● Track information on funding flow to

the sector

● Facilitate common good infrastructures

such as Credit Guarantee Fund, Credit

Information Bureau etc

● Attend to member related issues - staff

poaching, borrower information sharing,

sharing of good practice

● Facilitate resource people/ institutions

linkages

● Regionalization - specially in the

underserved areas

● Refinement in member induction process

While action on some of the above

recommendations has already been taken as

part of our programmatic agenda mentioned

in the previous pages , we are also working

on the mechanisms for others. During the

year, we have strengthened the "Member

Affairs Team" both in terms of numbers as

well as skill sets. The initiative on opening of

Sa-Dhan "State Chapters" is primarily directed

at strengthening the engagement with our

membership in states.

Refining the Member Induction Process

Within the debate of quality v/s quantity of

membership, under the guidance of the Board

of Sa-Dhan through its Membership Sub-

Committee, there has been a refinement in

the member induction process. The issue of

member induction holds significance in the

context of the growth of the sector and the

some of the concerns that have come to the

fore from different stakeholders.

In the light of the above, all new applications

received at the Secretariat are subjected to be

internal appraisal by the Member Affairs Team

against the minimum eligibility criteria. Those

found eligible are referred to the vetting

agencies, preferably existing primary members

based in the same region for their

recommendation on the applicant

organization. All such cases are placed before

the membership sub-committee for their

approval and the final approval from the

board.

In this financial year, Secretariat received 52

new membership applications (at least one

application per week) , all these applications

underwent each step of the induction process,

and finally Sa-Dhan inducted only 30 new

members and other applications were rejected

against the minimum eligibility criteria. Still

six new applications are at different stages of

the member induction.

Membership Growth

Besides induction of new members in this

financial year, membership of few of the

existing members has been terminated due to

non compliance on the mandatory

requirements, hence the actual number has

not increased accordingly (from 220 last year

to 237 during the year). Apart from this, Sa-

Dhan had received 63 promotion requests

from Associate members to promote their

membership to Primary. The Member Affairs

Team did the due diligence of these requests



and presented 49 such cases found eligible

according to the criteria of promotion for

Primary membership of Sa-Dhan, before the

Membership Sub-Committee of the Board.

Finally as per the membership sub committee

and Board approval, Sa-Dhan promoted 49

members as Primary members of the

association and the total number of existing

primary members is 87.

Field Visits to Various Stakeholders

Member Affairs Team carried out around 30

various field visits across the country

including Karnataka, Andhra Pradesh, Uttar

Pradesh, Kerala, Rajasthan, Tamil Nadu, West

Bengal, Orissa etc. These visits were made to

member organizations, banks, insurance

companies and academic Institutions across

the country to take stock of situation and to

collect information which was useful in

designing training modules. During these

visits the agenda of knowledge dissemination

was pursued through various forums.

Information dissemination

Member Affairs Team ensured smooth

communication with member organizations

across the country by disseminating relevant

information viz. circulars from RBI, Ministries,

, Sector reports, SEEP quarterly Microfinance

Forecast, IIBF Diploma examination etc. The

membership was kept informed on a regular

basis about the sector developments in the

policy space and its implications for the

microfinance sector. On an average members

received at least one such important

information every month apart from other

informations related to conferences and

events.

Member Affairs Team was also actively

involved with the external agencies like RBI,

SBI, FICCI, Solution Exchange, NABARD,

BIRD, IL & FS, ICICI, CITI Bank, SEEP

Network, Omidyar, ABN AMRO etc, feeding

them with required information on

membership from time to time.

Sponsorship Fund

Being aware of the difficulties faced by small

and start up organizations in mobilizing

resources for capacity building, Sa-Dhan has

instituted a Training Sponsorship Fund. The

objective of the Fund is to enhance the techno-

managerial knowledge and skill base of the

human resources in small and start up member

organizations by providing part support for

attending training programmes offered by

specialized local training institutes. This year

around 12 member organizations availed the

sponsorship fund opportunity to undergo

various trainings/events organized by sector

experts.

Other Activities

Following are some of the other activities that

the Member Affairs Team participated during

the year:

● Maintaining an effective registry/filing/

e-filing system and information database

on members of Sa-Dhan

● Mobilizing participation of members for

the National Microfinance Conference

● Organizing the Annual General Body

meeting and the Extra-ordinary General

Body Meeting

● Facilitating participation of members and

other stakeholders in various Focused

Group discussions specifically in

Karnataka and Tamilnadu on Effective

Microfinance, Cooperation, Competition

and Transparency.

● Continuous engagement with Sa-Dhan

members towards the formation of Sa-

Dhan State Chapters in Orissa and West

Bengal

● Facilitation of exposure visits for the

international delegates

● Handling queries from members and

other stakeholders and responding to the

same in the given time frame



5. Future Challenges and Road Ahead

The year has been a landmark year for

Sa-Dhan. In addressing, the

complexities arising in the sector, the

Association raised its standards of work and

developed new programs and strategies to

deal with these. Consequently, Sa-Dan has

repositioned itself during the year.

Sa-Dan was dealing with a dual challenge of

identifying itself within the contours of the

sector in India through the “Strategic Review

Exercise” as well as the pressure of delivering

in the context of what is required. To add to

the challenge, parallel to the strategic review,

we had to engage with the issues of the

NBFC members of Sa-Dan. These two

engagements helped the Association to

sharpen the framework around which it had

to work for the future.

Reputation management of the sector is the

priority area for the sector, and within that

next year will be crucial for initiatives like

the implementation of Code of Conduct as

the self regulatory framework for the

microfinance sector, apart from sensitization,

education, knowledge building and reporting

on social performance. Focusing on what is

happening to the poor households, and adding

value to our services in the context of

livelihoods and micro-enterprise will be new

areas of emphasis. Another, key initiative

would be the stabilization of the State chapters

of Sa-Dan that will be critical for our

engagement in the growth states.

Another area of focus will be the issue of

resource flow to the sector. Enhancing resource

flow from within the government system

through designated funds as well as from

banks especially to SHGs will be an important

issue that will seek our attention. Further,

engagement with Ministry of rural

Development and MSME on different

programmers/ funds will continue on the

SHGs as well as MFIs. Intervention on the

Business Correspondent Model would be

crucial to facilitate removing some of the

existing bottlenecks.

Microfinance Bill will continue to be an

important rallying point for the sector before

the policy makers. Our work on facilitating

creation of common good infrastructure viz.

credit guarantee fund, quality HR through

the Diploma and engagement with

Universities and colleges will further mature

and take shape in the next year. These are

crucial sector building initiatives.

Apart from the engagement with the

stakeholders in the sector, the next year would

focus on two important segments i.e. the

Parliamentarians and the Legislators and the

media. For growth, it is important that the

good work done by the sector is shared with

the larger public as well as their

representatives who are the most important

constituents of the policy formulation process.

We also need to revitalize our communication

strategy and the information dissemination

process through the website and publications.

Arising from the recommendations of the

Strategic review report, the year 2009-10 has

witnessed the realignment within Sa-Dhan in

terms of its focus, priorities, strategy of

interventions, organizational and member

engagement structures in terms of the new

thematic teams and new concept of Task

Forces. All these will be further refined as we

go forward to equip Sa-Dhan to respond to

the future challenges of the sector. To provide

impetus to some of our new initiatives we

would get new skills set to the organization.



Sa-Dhan Member List - State wise*

Type of membershipPrimary 87Associate 150Total 237Legal FormsNBFC 49Society 112Trust 25Sec. 25 Company 23Cooperative 10Bank 05LAB 01Pvt. Ltd Company 12Total 237

ANDHRA PRADESH

Mr Sajeev ViswanathanCEOBhartiya Samruddhi Finance Ltd(BASIX Group)3rd Floor, Surabhi ArcadeBank Street, KotiHyderabad-500 001

Mr. M Udaia KumarManaging DirectorShare Microfin Limited1-224/58, Rajeev Nagar, NacharamHyderabad - 500 076

Mr. Arijit DattaIndian Grameen Services (IGS)5-1-664/665/679, 3rd Floor, Surabhi ArcadeBank Street, Troop BazarKoti, Hyderabad-500001

Mr. M R RaoMD & CEOSKS Microfinance Pvt LtdAshoka Raghupathi ChambersD No. 1-10-60 to 62Opp Shoppers Stop, BegumpetHyderabad- 500 016

Mr. C. S. ReddyChief Executive OfficerMahila Abhivruddhi Society, (APMAS)Plot No.20, Rao & Raju ColonyRoad No: 2, Banjara HillsHyderabad - 500 034

Ms. G. Padmaja ReddyManaging DirectorSpandana Sphoorty Innovative Financial ServicesLimitedPlot No. 79.Vinayak NagarCare Crystal, Near Spencer Super MarketGachibowli, Hyderabad- 500032

Mr. Manmath Kumar DalaiManaging DirectorKrishna Bhima Samruddhi Local-Area Bank Ltd.7-5-108/B/1, 1st FloorVenkateshwara ColonyMahboobnagar - 509 002

Mr. S. C. HassainChief Executive OfficerStar Youth Association(Star Microfin Service Society)Central Office: 17-178-17/1Beside Telephone ExchangeVelgode (K) villageKurnool District -518533

* As on 31st August 2010



Mr. V. Paul Raja RaoExecutive DirectorBharati Integrated Rural Development Society26 / 130 B2, GnanapuramNANDYAL (RS) 518502Kurnool (Dist)

Mr. John GaddalaSecretaryPragathi Seva SamitiPragathi MAC Credit & Marleting Federation Ltd.2-6-45/2, New Shanthi Nagar ColonyRoad No. 2Circuit house Road HanamkondaWarangal - 506001

Mr. P. V. RavikumarCEOThe Payakaraopta Women’s Mutually Aided Co-operative Thrift and Credit Society Ltd.Flat No. 3 & 4, Siva Surya ApartmentsMain Road, Payakaraopeta-531126Vishakapatnam Distt

Mrs. R.GirijaCEOSWAWS Credit Corporation India Pvt. Ltd.12-5-32/8, Vijayapuri Tarnaka,R. R. DistrictSecunderabad - 500017

Mr. Uppe Raja RaoSecretarySocial Education and Voluntary Action-MicroFoundation of IndiaH. No 11-24-36, M. V. ColonyRoad No. 2 Deshaipet RoadWarangal - 506 002

Mr. M. Ernest PaulSaadhana MicroFin Society# 50-760A-116, 2nd FloorGayatri Estates, Kurnool - 518 002

Mr. B. V. RaoCEOGUIDE4th Cross road, Behind Z.P. High schoolMahalakshmi Nagar Colony, PorankiPenamalur Mandal, Krishna - 521137

Mr. G. Dasratha ReddyCEOFuture Financial Services Ltd.4-368, CB Road, Greams PetChittoor- 517002

Dr. G. MuniratnamGeneral SecretaryRashtriya Seva Samithi (RASS)Seva Nilayam, Annamaiah MargAIR By Pass Road, TirupatiChittoor District - 517 502

Dr. Rajiv SharmaDirector General & Executive DirectorCentre for Good Governance (CGG)Dr. MCR HRD IAP CampusRoad No. 25, Jubilee HillsHyderabad-500033

Mr. P. PremchandChief Executive OfficerKRUSHIP.V.Chary Bhavan#8-4-420/1, GaneshnagarKarimnagar - 505 001

Sundara RaoExecutive DirectorMaanaveeya Holdings & Investments P Ltd.Plot No. 107, Prasasan NagarJubilee Hills, Road No - 72Hyderabad-500033

Mr. S. Viswanatha PrasadChief ExecutiveThe Bellwether Microfinance Fund Pvt. Ltd.III Floor, 8-2-596, Road No. 10Banjara HillsHyderabad -500034

Mr. L. JayakumarSecretary & CEOHope Integrated Rural Development SocietyH-no 45/142/8, Upstairs, Road No. 2Venkataramana ColonyKurnool. 518003

Mr. Kishore PuliManaging DirectorTrident Microfin Private Ltd.H.No. 11-8-15, MIG 33, Shree Sai Arcade1st & 2nd Floor, SaroornagarRanga Reddy Dist, Hyderabad-500035

Mr. K. Naveen ChandCEOParishkaar Advisory Services Private LimitedPlot No 66, Sai Boda’s NilayamSecond Floor, Shilpa ParkKondapur, Hyderabad - 500032



Mr. Varikuty PrabhudasCEOCRESA Financial Services Pvt. Ltd78 - 9 - 11, Sri Ranga StreetGandhipuram - III, RajahmundryEast Godavari.-533103

Dr. Vidya SravanthiManaging DirectorAsmitha Microfin Ltd.1 - 2 - 58, Plot No. 1 -3, N Block,Kakatiya nagar HabsigudaHyderabad- 500007

Mr. N. SatyanarayanaCEOSiri Micro Fin Society28 & 29, 3rd FloorUcon Plaza, Park RoadKurnool - 518002

Sri C. Mohan NaiduCEODevelopment Organization for villageEnvironment (DOVE)1 - 92/2A, Prabhatnagar ColonyChaitanapuri, DilsukhnagarHyderabad - 500006

Dr. S. SrinivasSenior FacultyThe Livelihood School3rd Floor Surabhi Arcade, Bank StreetTroop Bazar, KotiDistrict Ranga ReddyHyderabad - 500001

Mr. Patan Nazeer KhanPARTNER1/71-4, Rajiv MargYeramukka PalliKadapa- 516004

Mr. B. Umamaheswara RaoChief Executive OfficerIndur Intideepam MACS Federation Ltd.5-67, P&O- Dharmaram (B)Mandal Dichpally, NizamabadAndhra Pradesh- 503230

Mrs. V. Prema JyothiCEOAshajyothi Mahilabyudaya Society69-27-03, Gandhipuram - 04Lalacheruvu, RajahmundryDist- East Godavari

ASSAM

Dr. Amiya SharmaExecutive DirectorRashtriya Gramin Vikas Nidhi (RGVN)Rajgarh Road, 8th Bye Lane, KamrupGuwahati - 781003

Dr. Anjana BorkakatiManaging DirectorProchestaSonadhar Senapati RoadGoswami Service StationHouse No - 2, 2nd Floor, SilpukhuriGuwahati - 781 003

Md. Suleman Ali DayalGeneral SecretaryManab Sewa SanghVill: and P.O. Amgaon, Dist. KamrupGuwahati- 781 026

Dr. Dhattatreya H.Chief FunctionaryInstitute of Integrated Resource ManagementBS Road, RangapukhuriparP. O. DekargaonDist Sonitpur- 784501

Mr. K.N. Hazarika,Chairman & Managing DirectorNorth Eastern Development Finance CorporationLimitedNEDFi House, G.S. RoadDispur, KamrupGuwahati- 781 006

Mr. N. Irabanta SinghCEOUNACCO Financial Services Pvt. Ltd.4-15/402, National Games Village ApartmentBorrajai, Beltola, KamrupGuwahati-781029

Mr. Sarat Ch. DasGrameen Sahara2nd floor, Samabai buildingKulshi road, chhaygaonKamrup-781124

Pratim ChellengPresidentGlobal Welfare Society, GLOWS2nd floor, Dewan MarketOpp. ESIC office, BamunimaidanKamrup, Guwahati- 781021



Dr. N. P. SinghCo-Chairman

Asian Society for Entrepreneurship-Education &

Development (ASEED)Aseed House, C-8/8007, Vasant KunjNew Delhi - 110070

Rtn. Mr. T.K.MathewSecretary & Chief ExecutiveDeepalaya46, Institutional Area, D BlockJanakpuri, New Delhi - 110 058

Mr. H. P. SinghChairman cum Managing DirectorSatin Creditcare Network Limited5th Floor, Kundan BhawanAzadpur Commercial ComplexDelhi-110033

Dr. Rajesh KumarSociety For Promotion of Youth & Masses (SPYM)111/9, Opposite Sector B-4Vasant Kunj New Delhi - 110070

Mrs. Gomathi NairPresidentAll India Women’s conferenceSarojini House, 6, Bhagwan Das RoadNew Delhi - 110001

Mr. Ravi Gupta,Manager -Humanitarian AssistancePlanned Social ConcernB-7 Extension/110A, Safdarjung EnclaveNew Delhi - 110029

Shri J.N.L SrivastavaChairmanIshara Finance & Rural Development Pvt. Ltd.IFFCO Foundation, IFFCO House34, Nehru PlaceNew Delhi - 100019

Mr. Satyavir ChakrapaniCEOShikhar Development Foundation157/9, 1st floor, Kishangarh (Near Car Market)Vasant Kunj, New Delhi -110070

Mr. Ajaya MohapatraChief Executive OfficerWe the People102, D-211, Laxmansingh Complex-IMunirka, New Delhi-110067

Mr. Hiren KalitaSecretaryAjagar Social CircleAgia, Goalpara - 783120

BIHAR

Mr. Arbind Singh,Executive Director,NIDAN Microfinance FoundationSudama Bhawan, Boring RoadPatna - 800001

Mr. Thakur Rabindra NathSecretarySocietal Upliftment & Rural Action for job &Empowerment (SURAJE)AT & P.O. KargharDistrict Rohtas - 821107

Mr. R.R. KalyanCEOCentre For Development Orientation & Traning(CDOT)607, Verma Boring Road CrossingPatna -800001

DELHI

Mr. V. SatyamurtiChief Executive OfficerAll India Association for Micro EnterpriseDevelopment (AIAMED)K - 6, Akash Barathi Apartments24 - I. P. Extension(Left turn from Mother Diary Plant)Delhi-110 092

Mr. D. NarendranathProgramme DirectorPRADAN# 3, Community Centre, Niti BaghNew Delhi - 110 049

Mr. Vipin SharmaProgram DirectorAccess Development Services28, Hauz Khas VillageNew Delhi-110016

Mr. Sanjay KumarCo- ordinatorSEWA Bharat# 7/5, 1st Floor, South Patel NagarNew Delhi - 110008



Mr. Kultar SinghCEOSambodhi Research & Communications Pvt. Ltd.O-2, Second FloorLajpat Nagar Part-II New Delhi-110024

Mr. Gobinda BanerjeeCEOPunjab National BankPriority Sector & Lead Bank division(Agri-Business Cell)Head Office: Atma Ram House1,Tolstoy Marg, New Delhi-110001

Mr. Manab ChakrabortyChief ExecutiveMimoza Enterprises Finance Pvt Ltd35/2/9, Kishan Garh, Opp: D-3 ChurchVasant Kunj, New Delhi - 110070

GUJARAT

Ms. Jayshree VyasManaging DirectorSEWA Bank109, Sakar-II, Opp. Town HallEllisbridge, Ahmedabad -380 006

Ms. Anshu BhartiaCEOFriends of Women’s World Banking India101, Sakar I BuildingOpp: Gandhigram StationAshram Road, Ahmedabad - 380 009

Ms. Gazala PaulManaging TrusteeSamerth TrustQ-402, Shrenand Nagar Part-II, VejalpurAhmedabad -380 051

Mr. Divyang BhatnagarCEOThe Saath Savings and Credit Cooperative SocietyLtd. 0/102, Nandavan-VNear Prernatirth Jain DerasarJodhpur, Ahmedabad-380 015

Dr. Dinesh AwasthiEntrepreneurship Development Institute of IndiaNear Village BhatVia. Ahmedabad Airport & Indira BridgeP.O.Bhat, Dist. Gandhinagar - 382 428

Mr. Bhadresh RawalChief ExecutivePRAYAS (Organisation for SustainableDevelopment)60, Maruti Nagar, Near Yadav NagarMeghpur Road, Anjar, Kuttch- 370110

Mr. Jayendra PatelVice Chairman & MDArman Financial Services Limited502-3-4, Sakar III, Opp. Old High CourtOff. Ashram Road, Ahmedabd-380 014.

Dr. Anjali MehtaSenior DirectorIndian School of Microfinance for Women2nd floor - Shukun ArcadeNr. Medisurge HospitalMithakhali Six RoadAhmedabad-380006

Ms. Vijyalakshmi DasCEOAnanya Finance For Inclusive Growth Pvt. Ltd.401,Shaan,Nr.Sakar 4Opp. M.J Library, Ashram RoadAhmedabad-380006

HARYANA

Ms. Frances SinhaExecutive DirectorEDA Rural Systems Pvt. Ltd# 602, Pacific Square, 32nd Milestone, NH 8Gurgaon 122 001

Dr. Aqueel KhanDirectorAssociation for Stimulating Know How (ASK)V- 30/3, DLF Phase IIIGurgaon -122002

Mr. Deepak AlokDirectorPrime M2i Consulting Pvt. Ltd.206 A, Sushant TowersSushant Lok IISector 56, Gurgaon-122003

Mr. Neeraj SehgalCEOS. V. Credit line (P) Ltd.10th Floor , Tower ’D’Global Business ParkM. G Road, Gurgaon-122002



KARNATAKA

Mr. R.D. GadiyappanavarChief Executive OfficerSanghamithra Rural Financial ServicesNo. 612, 1C Main Road, Domlur LayoutBangalore-560071.

Dr. Godfred Victor SinghExecutive DirectorOUTREACH109, Coles Road, Fraser Town, Bangalore - 560 005

Dr. Ramesh BellamkondaProject DirectorBSS Microfinance Pvt. Ltd.Working HO: No. Com - 9 Devraj Urs TruckTerminal, Peenya Industrial Area, Opp. KanteeravaFilm Studio, Yeswanthpur - 560022, Bangalore

Mr. Suresh K. KrishnaManaging DirectorGrameen Financial Services Pvt. Ltd.Avalahali,Anjanapura PostJ.P. Nagar, 9th Phase, Bangalore-560 062

Ms. Santosh VasChairpersonJanodaya Public TrustNo.3, 9th Cross, 5th Main, Jaymohan ExtensionBinson Town post, Bangalore -560 046

Mr. Albin PintoManaging Director - FinanceOpportunity Microfinance India Ltd.#139 (1st Floor), Infantry Road, Bangalore-560 001

Mrs. Malini B EdenManaging DirectorKaveri Credits (India) Pvt. Ltd.No. 219/26, 6th main, 4th Block, JayanagarBangalore-560 011

Mr. Narayana Swamy M.Chief ExecutiveSAMUHA157/48/1, 2nd cross, T Ramayya GardenSOS Childrens Village Post, Hulimavu VillageBannerghatt road, Bangalore -560076

Dr. L. H. ManjunathExecutive DirectorShri Kshethra Dharmasthala Rural DevelopmentProjectDharmashri Building, Dharmasthala, BelthangadyTaluk, Dakshina Kannada District - 574 216

JHARKHAND

Mr. Girija SatishExecutive DirectorNav Bharat Jagriti Kendra (NBJK)At-Amritnagar, PO KorrahDist. Hazaribag-825301

Sister RosilyDirectressHoly Cross Social Service CentrePost Box 59, Hazaribagh - 825301

Mr. Tanay ChakravartyManaging DirectorAjiwika SocietyBehind SBI Training Centre, Williams TownB.Deoghar - 814 112

Mr. Bhawani Shankar GuptaSecretarySUPPORTD.V.C. Colony, Behind Hanuman MandirHazaribagh- 825301

Ms. Deepmala SinghTrustee & TreasurerSociety for Empowerment and WomenAdvancement(SERV-SEWA)Chhota Akhara Road, P. O. IchakDist. Hazaribagh -825402

Dr. Shyam Kunwar BhartiGen. SecretaryMahila Kalyan SamitiStaff Colony, Near Dhori DispensaryP.O -Dhori, Dist- Bokaro - 825102

Mr. Gautam JainManaging DirectorVedika Credit Capital Ltd.406, Shri Lok Complex, 4th Floor, H.B. RoadRanchi - 834001.

Mr. Bajrang SinghDirector cum SecretarySamarthan Weakling Development FoundationRajbari (Tali Bangala), Mihijam, Jamtara - 815354

Ms. Sakina A. AhmadDirectorAman Microfin7/2 Risaldar NagarDoranda, Ranchi - 834002



Mr. C.Y.BhardwadChaitanya Institute for Youth & RuralDevelopment (CHINYARD)At/PO: Agadi, Via Aralikatti, Tq. HubliDist. Dharwad- 581207

Mr. Ganesh RengaswamyCountry DirectorUnitus Advisors Pvt. Ltd.No. 9 / 3, Kaiser-E-Hind, 1st FloorRichmond Road, Bangalore - 560 025

Mr. Vivekanand N. SalimathChairmanIDF Financial Services Private Ltd.141 A, ‘Usha’ 25th Cross, II Block, Rajajinagar

Dist. Bengaluru -560010

Mr. Samit GhoshChief Executive Officer and Managing Director,Ujjivan Financial Services Private LimitedManjunath Complex, No. 93 Jakkasandra ExtensionSarjapur Main Cross Road, 1st Block KoramangalaBangalore- 560034

Mr. H. Siddhartha ChowdriCountry Head - IndiaACCION Technical Advisors IndiaNo. 9/3, Kaiser-E-Hind, 3rd Floor Richmond Town, Bangalore - 560 025

Mr. Niranjan SheelavantSecretary / CEONirantara Community ServicesNo- 19-1-160, Basavashraya, 5th Cross, 6th House,Shivnagar South, Bidar - 585401

Mr. Paramasivaiah N TNavachetana Microfin Services LimitedMali Compound, Shivabasavnagar,Havri-581110

Mr. P. NarayanappaCEOPrakruthi FoundationRegd. Office: 41, Sri Srinivasa Nilayam1st floor, 7th main, Jayaram reddy layoutHoramavu Main road, Bangalore - 560043Head office: Seegenahalli, Mulbagal- 563131Kolar District

Mr. P. S. ReddyManaging DirectorRORS Finance Private Limited65, Ramakrishna ExtensionSrinivaspur P.O., Dist. Kolar- 563135

Ms. Anna Somos KrishnanExecutive DirectorPlanet Finance India12/1 2nd floor, Haudin Road, UlsoorBangalore- 560042

Mr. R. SrinivasanCEOJanalakshmi Financial Services Pvt. Ltd.Ist Floor, UNI Building, Thimmaiah RoadVasanth Nagar, Banglore -560052.

Mr. Harish KhareSenior Manager- Development FinanceHousing Development Finance Corporation Ltd.HDFC Limited, HDFC HouseNo.-51, Kasturba Road, Bangalore- 560001

KERALA

Mr. B. S. BalachandranGeneral SecretaryBharat Sevak Samaj (BSS)Sadbhavana Bhavan, Brahmins ColonyKowdiar P.O., Thiruvananthapuram - 695003

Mr. K. Paul ThomasExecutive DirectorESAF Microfinance & Investments Pvt. Ltd.ESAF Centre P. B. No. 12, 2nd FloorHephzibah Complex, Mannuthy, Trichur-680651

Fr. Thomas VaikathuparambilSecretaryWelfare Services ErnakulamPonnurunni, Vyttila P.O., Dist. ErnakulamKochi -682 019,

Mr. Jayson Joy M.JManaging TrusteeShalom Microfinance LimitedBldg.No-59, Shalom Bhavan, Devi NagarNurani P.O., Palakkad - 678004

Mr. Raju KuriachanChairmanHOPE Microcredit Finance (India) Pvt. Ltd.SreeSakthi Complex, Coimbatore RoadKalmandapam, Palakkad - 678 001

MADHYA PRADESH

Mr. Indra Bhusan VermaExecutive SecretaryBal Mahila Vikas Samiti - VAMA9-C, Maharana Pratap Nagar, Near Jiwaji Club,Lashkar, Chetakpuri Road, Gwalior- 474009



Kum. Arti KushwahChief ExecutivePriyasakhi Mahila Sangh92/4, Bhagat Singh Nagar, Sanwer RoadBanganga, Indore - 452 007

MAHARASHTRA

Mrs. H. BediManaging TrusteeDevelopment Support Team (DST)Flat No. 2, Pooja Heritaje ApartmentsPlot No.46, Anand Park, Lane No.3, AundhPune - 411007

Dr. Sudha KothariManaging TrusteeChaitanyaMoti Chowk, At. P:ost. Rajgurunagar,Tal. Khed, Dist. Pune-410 505

Dr. Marcella D’souzaProgram CoordinatorWatershed Organization Trust (WOTR)‘Paryavaran’ Behind Market Yard,Ahmednagar - 414 001

Mr. P S MukherjeeDirectorDevelopment Initiative for Self-Help andAwakening (DISHA)C/o. Samaj Seva Kendra

S. N. 4272, Behind Akrudi P.O

Akrudi, Pune - 411 035

Mr. A. K. KaleManaging DirectorMahila Arthik Vikas Mahamandal Ltd. (MAVIM)Mezzaninie Floor, MHADA BLDGKalanagar, Bandra (E), Mumbai- 400 051

Ms. Preeti TelangGeneral MangerSwadhaar FinaccessKherwadi Market branchAbove Maharashtra Shramik Senakhernagar, Bandre (E)Mumbai- 400051

Mr. K. HariharanAVP, Microfinance Institution group, DevelopmentBankingYES Bank LtdNehru Centre, 09th floor,Dr. Annie Besant Road, Worli,Mumbai- 400018

Mr. A. K. GargManaging DirectorAgricultural Finance Corporation LimitedDhanraj Mahal, First FloorChhatrapati Shivaji Maharaj MargMumbai - 400 001B – 1/9, Community Centre, JanakpuriNew Delhi-110058

Mr. Rajesh BadakhCEOSakhi Samudaya KoshPlot No. 16, Umberge NiwasMeher Nagar, Bijapur roadSolapur - 413001

Smt. Shikha SharmaManaging Director & CEOAxis Bank Ltd.6th Floor, Maker Tow ers- E,Cuffe Parade, Colaba, Mumbai -400005

Mr. Anil JadhavChairmanHindusthan Microfinance Pvt LtdHindusthan Bhawan, Ambedkar NagarJarimari, Kurla Andheri RoadKurla, Mumbai - 400072

Mr. Crispino LoboExecutive DirectorSampada Trust“Sampada”Behind Market YardAhmednagar-414001

Mr. Murali NatarajanManaging Director & CEODevelopment Credit Bank3rd floor, Trade Plaza414, Veer Savarkar MargPrabhadevi, Mumbai- 400025

Mr. Ramraj PaiDirector CRISIL RatingsCRISIL Ltd.CRISIL House, 121/122Andheri-Kurla RoadAndheri (E), Mumbai- 400093

Ms. Subhada DeshmukhPresidentCHALANAAmhi Amchya Arogyasathi,C/o, Mure Memorial Hospital,Cottage No.2, Maharajabag RoadSita Baradi, Nagapur - 440 001.



Mr. Ruben MoraCEOFullerton India Credit Co. Ltd.Mail Room, Building No 12, Second FloorSolitaire Corporate ParkAndheri - Ghatkopar Link RoadChakala, Andheri (East)Mumbai 400 093

Ms. Veena MankarManaging DirectorSWADHAAR Finserve Private Limited5/39, Shree Om Co-op Housing SocietyAnand Nagar LIG Nehru RoadSantacruz (East) , Mumbai- 400055

Mr. Royston BraganzaCEOGrameen Capital India Ltd.402, 5th floor, 36 Turner roadBandra (W), Mumbai- 400050

Ms. Aparajita AgrawalVice PresidentIntellectual Capital Advisory Services Pvt. Ltd512 PalmspringLink Road, Besides D-Mart Malad West, Mumbai-400064

Mr. Sanjay KherNational Sales Manager- Special ProductsSME Rating Agency of India Ltd.Seagull House, 1st floor, Plot No. 06Shivaji Colony, Chakala, Andheri -EastMumbai- 400099

Mr. Utpal IsserDGMMicro Banking GroupICICI Bank LtdICICI Bank Towers, Bandra Kurla ComplexBandra (East), Mumbai- 400051

MANIPUR

Mr. Tennyson KazingmeiExecutive DirectorVolunteers for Village Development, (VVD)VVD Training Centre, Border roadKharar Shongza, Hundung, Dist- Ukhrul -795142

Mr. Y. Biren SinghSecretary GeneralOISCA-Manipur ChapterSangaiparou, Air port Road,Imphal-795-001

Mr. AK. Tikendrajit SinghCEOYouth Volunteers UnionWaiview Bhavan,Thubal WangmatabaThoubal- 795138

Mr. Lamkhomang KipgenCEOWSDS- Institute of Innovative technology transferand EnvironmentGOLLUT GENS Post Box No. 58(HPO)New Lambulane, Imphal (East)- 795001

ORISSA

Mohammad N. AminPresidentADHIKAR113/2524, Khandagiri Vihar, KhandagiriBhubaneswar-751 030

Mr. Pradeep Kumar BeheraSecretaryADARSAAt-Gourpara (Farm Road),P. O. Modipara, Dist. Sambalpur -768 002

Mr. Prafulla Kumar SahooChairmanCentre for Youth & Social Development (CYSD)E-1, Institutional Area, Gangadhar Meher MargP.O. R.R.L., Bhubaneswar - 751013

Mr. Govind DasSecretaryGRAM-UTTHANAt/Po: Pimpuri, Via-RajkanikaDist-Kendrapara -754 220

Mr. Khirod Chandra MalickChairmanBharat Integrated Social Welfare Agency (BISWA)At - Danipali, PO - Budharaja,Dist-Sambalpur-768004

Mr. Kedareswar ChoudhurySecretaryDarbar Sahitya Sansad (DSS)At. Sodhua (Arapada), P. O. DalakasotiVia-Balipatna, Dist-Khurda

Mr. Subrat Kumar Singh DeoExecutive DirectorMadhyam FoundationN-3/202, Ekamra Kanan Road, IRC VillageNayapalli, Bhubaneswar, Dist. Khurda - 751 015



Mr. Parshuram NayakDirectorSwayamshree Micro Credit Services (SMCS)M-75, Samanta Vihar, Near NALCO ChhakBhubaneswar -751 017

Mr. Hari Shankar RoutSecretarySocial Welfare Agency & Training Institute (SWATI)At. Malerimaha, P. O. PaburiaDist. Kandhmal -762112

Mr. Pabitra Mohan BalChief FunctionaryMahila Vihas Prathamika Sanchaya Samabaya Ltd.AT/PO: Kantabad, Via: JanlaDist: Khurda - 752054

Mr. Baman Charan MohantyChief ExecutiveUpkarAt/Po: Nimapara, Canal RoadDist: Puri - 752106

Mr. Rajendra MeherSecretaryYouth Council for Development AlternativesAt. /PO: Baunsuni, Tikirapara RoadDist: Boudh-762015

Mr. Nagendra Bihari MaharanaChief ExecutiveKhandagiri Madhyamika Mahila Samabaya SanghaLtd.Plot No. 192, Dharma Vihar KhandagiriPo- Khandagiri, Bhubaneswar- 751030

Mr. Babula Kumar PrasadChief ExecutiveCooperation Development Council (CDC)V.I.P Road, Puri- 752001

Ms. Sagarabala SahooChief ExecutiveOrissa Rural Infrastructure DevelopmentAssociation (ORIDA)Durgabazar Colony, P.O- Daspalla,Dist: Nayagarh- 752084

Mr. Jugal Kishore PattnaikManaging DirectorMahashakti FoundationSanchaya Shakti Bhawan,Madanpur Rampur - 766102Dist. - Kalahandi

Mr. S. Kathiresan

CEOKAS FoundationA - 58, Saheed Nagar, BhubaneswarDistrict Khurda - 751007

Er. N. SatapathyPresidentAsian Institute for Rural RegenerationAt - Kalamishri, P.O. LenduraDistrict Cuttack 754203

Ms. Sujata Priyadarsani BarickMember SecretaryBudhhanath Seba SanghaBada Bazar, I.B. Square, AulDistrict Kendrapara - 754219

Mr. Ajit Kumar DashSecretaryBright Association for Noble & Decent HumanUnderstanding (BANDHU)AT: Madhuban, 3rd LanePO Puri - 752002

Mr. Gopal Chand SahuSecretaryODISHAAt Mahulapalli, P.O. MadhupalliVia -Poolasaran, Dist. Ganjam - 761105

Ms. Sharda PatelPresidentSanginee Secondary Co-operative Ltd.AT - Hill Town, Near JP Evening CollegeP.O. Bhawanipatna - 766001District Kalahandi

Mr. Keshab Ch. BeheraSecretaryBanki Anchalika Dibasi Harijan Kalyana ParishadAT/P.O. Banki, District Cuttack - 754008

Mr. Basant Kumar JenaSecretaryPRAGATIPragati Complex, College SquareDuttatota, Puri-752001

Mr. Kshetra Mohan KhuntiaChief ExecutiveOrganization for Development Coordination122, Kedar Gouri ViharBehind Mesco TowerBhubaneswarDist- Khurda- 751014



RAJASTHAN

Ms. Bharati JoshiProgram DirectorAssociation for Rural Advancement throughVoluntary Action & Local Involvement(ARAVALI)Patel Bhawan, HCM RIPAJawahar Lal Nehru Marg, Jaipur - 302017

Mr. P. M. PaulDirectorCecoedecon Development CentreCECOEDECON, SWARAJ BhavanPlot No. F-159-160 Industrial & Institutional AreaSitapura, Tonk Road, Jaipur-302 022

Ms. Neelima KhetanChief ExecutiveSEVA MandirOld FatehpuraUdaipur -313 004

Mr. Amar Chand PurohitChief ExecutivePushtikar Laghu Vyaparik Pratishtan Bachat &Sakh Sahakari Samiti Ltd.Setubandh Rameshwr Temple ComplexInside Jalori GateJodhpur - 342001

Mr. Rajesh SinghiExecutive DirectorIBTADAPlot No. 4, Scheme 8Gandhinagar, Alwar - 301001

Mr. Amitava BanerjeeExecutive DirectorBhoruka Charitable Trust1, Prabhu Dayal Marg, Near Sanganer AirportJaipur - 302011

Mr. Pramod K. PaliwalSecretaryArth Micro Finance Pvt. Ltd.A-11, Mahaveer Udyan PathBajaj Nagar, Jaipur-302015

Mr. Ajay VermaManaging DirectorSahayata Microfinance Pvt. Ltd303, 3rd floor, Mahaveer complex5C Madhuban, Udaipur - 313001

Mr. Sudhir KumarCEOMITRCity/Town -Alwar, District -Alwar - 301001

Ms. Richa AudichyaCEOJan Chetna Sansthan1-C-40,Housing Board Colony, Akra BhattaAbu Road-307026, Dist. Sirohi

TAMIL NADU

Mr. S DevarajChairman & Managing DirectorGrama Vidiyal Microfinance Ltd2-A, Sathia Illam, 2A- 10th CrossAlli Street, Annamalai Nagar, Tiruchy-620 018

Mr. N. Peter PalanisamyManaging DirectorNanayasurabhi Development Financial ServicesNo.16. Panbagam, Grace Garden,Thiru.Ve.Ka. Nagar, Behind Govt. HospitalPuthur, Trichy - 620 017

Mr. B. Mahendran,Chief Executive OfficerIndian Association for Savings & Credit (IASC)726/B, Second Floor, Srivenky ComplexCross Cut Road (Near Fly Over)Coimbatore - 641 012

Mr. Asok Kumar RathnamChairman & Managing DirectorSarvodaya Nano Finances Ltd.279, Avvai Shanmugam SalaiRoyopettai, Chennai-14

Mr. R. AsokKumarCEOSarva Jana Seva kosh Ltd. (SJSK)279, Avvai Shanmugam RoadRoyapettah, Chennai - 600 014

Mr. Ramesh S. ArunachalamSenior ConsultantMicro Finance Consulting Group (MCG)# 240 A, Lloyds Road, (Besant Road)Gopalapuram, Chennai - 600 086

Ms. N. RadhaExecutive DirectorLeague For Education And Development [LEAD]# 80/40, 1 Street, Rayar Thoppu, SriramapuramSrirangam, Trichirapalli - 620006



Dr. C. Joslin ThambiDirectorRavi Chandran, Gen. Manager.Bullock-Cart Workers Development Association P.Box No-93, 858 East Pondy RoadVillupuram-605 602

Mr. Peter Rex CharlyDirectorNew LifeFlat ‘B’ Adhiyaman Towers, 2nd CrossKamban StreetKumaran NagarTrichirapalli - 620017

Mr. P. DhandapaniSecretary & Executive DirectorMahasemam1 & 2, Lake Area, Uthangudi PostMadurai-625 107

Mr. E. Vijay JacobsChief ExecutiveEcumenical Church Loan Fund of India (ECOLOF)29, Poonamallee High RoadFins CampusPeriamet, Chennai-600 003

Mr. S. P. AnnaduraiExecutive DirectorGuidance Society For Labour Orphans & WomanSowlore Village, K. Pudur PostTirupattur TalukVelore Dt. 635653

Mr. M. SathiyamoorthiManaging DirectorSMILE Microfinance LimitedNo. 4/22, Dr. Natesan Road(Opp: Police Training College)Ashok NagarChennai- 600083

S.Suvisedagan AruliahNational Co-ordinator - MicrofinanceInnovative microfinance for poverty alleviation andCommunity transformation (IMPACT)# 16, VOC Main Street,Kadambakkam, Chennai 600024

Mr. P PandianDirectorCommunity Development CentreMain Road (Near Ghat Road)GenguvarpattiTheni Dt. -625203

Ms. N. RadhaChief ExecutiveSangamam Women’s Multipurpose Thrift andCredit Co-operative Society Ltd.# 8/40, Ist Street, Royar ThoppuSriramapuramviveka, Srirangam, Trichy - 620006

Mr. K. HirudayasamiChief ExecutivePeople’s Action for TransformationNo-A, A-Block, St Paul’s ComplexBharathiar Salai, Trichy - 620001.

Mr. G. GeorgeDirectorCommunity Services TrustRakshas Building, 16-E, Sathyanarayan StreetSwarnapuri, Salem-636004

Mr. J. Anthoni SamyCEOManidham Grameen Savings cum Credit ServicesNo. 5, Sathiyamurthy streetSuvalpettai Arakkonam, Vellore - 631001

Mr. P. N. VasudevanCEOEquitas Microfinance India Pvt. Ltd.4th Floor, Temple Towers, 672 Anna Salai Nandanam, Chennai-600035

Dr. C. Joslin ThambiDirectorBWDA Finance Ltd (BFL)P. Box No-93, 858 East Pondy RoadVillupuram-605 602

Mr. P PandianDirectorCDC Microfinance Pvt.LtdMain Road (Near Ghat Road)Genguvarpatti, Theni Dt.-625203

Mr. D. SelvamFounder SecretaryRural Education and Action Development (READ)1926, Sakthi Vinayagar StreetVilandai, Andimadam, Ariyalur- 621801

TRIPURA

Mr. Binoy PaulSecretaryOrganization for Rural Survival (ORS)EK No. Tilla Belonia, South TripuraTripura - 799155



UTTAR PRADESH

Mr. S. K. DwivediExecutive DirectorGrameen Development Services (GDS)B - 1/ 84, Sector-B, AliganjLucknow - 226 024

Mr. Ganesh PandeyConvenerShramik Bharti392, Vikas Nagar (Lakhanpur)Kanpur - 208 024

Mr. Mukul JaiswalManaging DirectorCASHPOR Micro Credit B/4, D.I.G. Colony, Varanasi - 221002

Mr. Anil K. SinghChief Executive OfficerNetwork of Enterpreneurship & EconomicDevelopment (NEED)39, Nil Vihar, 14-Sector Power HouseIndira Nagar, Lucknow-226 016

Mr. Ambarish SinghCEOPAHEL Livelihoods1/13/190, Civil LinesNr SBI-Main BranchFaizabad - 224 001

Mr. Rahul J MittraDirectorMargdarshak Development ServicesB-905 CIG ColonyMahanagar, Lucknow

Mr. K. N. TiwariDirectorDisha India Micro CreditSultanpur-Chilkana, Saharanpur - 247 231

Mr. Anil SinghDirectorParmarth Samaj Sevi SansthanMona House, Opp. CollectrateChurkhi Road, ORAI (Jalaun) - 285001

Dr. Shiraz A. WajihPresidentGorakhpur Environmental Action Group (GEAG)# 224, Purdiplur, M.G. College RoadPost Box: 60, Gorakhpur- 273001

Mr. Paras Nath SinghSecretaryYuva Chetna KendraGayatripuram, Kasia Road, Deoria - 274001

Mr. Anup Kumar SinghManaging DirectorSonata Finance Private Limited1/1-A Rai Bahadur Ram, Charan Das RoadBalrampur House, Allahabad - 211003

Mr. Vinod JainManaging TrusteeTrust Microfin Network3/455, Vishal Khand,Gomti Nagar, Lucknow - 226 010

Mr. Moses Prashant RaoChief ExecutiveNirman Bharti Samajik & Arthik Vikas SangathanB-991, Sector-A, Mahanagar, Lucknow 226006

Mr. Sunil AgrawalManaging DirectorS.E. Investments Ltd.Block- 54, Sanjay PlaceAgra- 282002

Mr. Graham A.N. WrightCEOMicroSave India FoundationB-52, Kapoorthala Crossing,Mahanagar ExtensionLucknow –226006

Mr. Pragyesh Kumar SinghCEOJaago Samajik Arthik & Harit Vikas Sangathan305, Chandralok TowerKapoorthala, Lucknow - 226024

Ms. Mamta MishraCEODrishtee FoundationKnowledge BoulenardTower B, 8th Floor, Plot No: A-8A, Sector-62Noida, Gutam Budh Nagar - 201301

UTTARAKHAND

Mr. Mahendra Singh KunwarSecretaryHimalayan Action Research Centre744, Indira Nagar, Phase II,P. O. - New ForestDehradun - 248 006



Mr. Islam HussainExecutive DirectorPAHALGola Bairrage Road (Near Railway Station)Kathgodam, Nanital – 263126

Mr. Vijay KumarCEOUttarakhand Micro-finance and LivelihoodPromotion Cooperative InstitutionSaras Marketing ComplexVikas BhawanSurvey ChowkDehradun - 248001

WEST BENGAL

Mr. A. K. MaityCMDVillage Welfare Society (VWS)Village Tower, F-15, Geetanjali Park, 18/3A-KumudGhoshal Road,AriadahaKolkata- 700057

Mr. Chandra Shekhar GhoshExecutive DirectorBandhan Financial Services Pvt. LtdEC-76, Sector-1, Salt Lake City,Kolkata - 700064.

Smt. Bani SaraswatiSecretarySreema Mahila SamityVill + P.O.Duttapulia, Nadia-741 504

Dr. Gopal C. BaidyaSecretaryKotalipara Development Society (KDS)Santa Nir, ArabindapallyBarasat - 24 Pgs. (N)Kolkata-700124

Mrs. Gitanjali SatapathySecretaryKalighat Society for Development Facilitation(KSDF)# 57/A, Gurupada Haldar RoadKalighat, Kolkata - 700026

Mr. Asit Kumar PramanickSecretaryRajapur Seva NiketanVill: Rajapur, P.O. KaratberiaP.S. UluberiaDist- Howrah - 711316

Mr. Uma Sankar MukherjeeSecretaryAgradut Polly Unnayan Samity

Vill. & Post Gaza, Howrah - 711 226

Mr. Kapilananda MondalCEO cum SecretaryVivekananda Sevakendra-o-Sishu Uddyan(VSSU)Vill: Ullon, P.O. RamlochanpurDist. South 24 Parganas - 743 336

Mr. Chinmoy KhaskelChief FunctionaryUllon Social Welfare SocietyPost Office: RamlochanPur, Village: UllonPolice Station, Mondir BazarSouth 24 Pgns - 743336

Mr. Shubhankar SenguptaManaging DirectorAROHAN Financial Services LtdPrafulla, 195/1, Rajdanga, ChakrabortyparaKasba, Kolkata - 700107

Mr.Kuldip MaityChief ExecutiveVillage Financial Services Pvt. LtdVillage Towers, F-15,Geetanjali Park, 18/3AKumud Ghoshal Road,Ariadaha, Kolkata-700057.

Mr. Malay DewanjiHony. General Secretary,Liberal Association for Movement of People(LAMP)66, Surya Sen Street, Kolkata -700009(Near College Square )

Mr. Ganesh Chandra ModakSecretarySociety for Model Gram Bikash Kendra107, Jodhpur Park, Kolkata - 700068

Mr. Pranab RakshitChief Executive OfficerSarala Women Welfare Society4/2/3 Dino Master Lane, ShibpurHowrah - 711103

Mr. Bishwajit DasExecutive DirectorBelgharia Janakalyan SamityBF - 94, Sector - 1 Saltlake CityKolkata - 700064



Ms. Pronoti SadhankSecretaryParama Mahila SamityKamalpur, PurbanawaparaNadia- 741501

Sk. Hasibur RahmanSecretaryUlkunda Tarun Seva SanghaUlkunda, TaluaBurdwan - 713424

Mr. Pulak Kuamr DeyCEOCoochbehar Khagrabari Relief Services, KRSVill- Khagrabari (Taltala),Post & Dist- Coochbehar- 736101

Mr.Animesh NaiyerCEODhosa Chandaneswar Bratyajana SamityVill & Post- Dakshin BarasatP.S-Jaynagar -743372

Mr. Ranjib GhoshCEOSEBA Rahara30, R.N.Avenue, Parichay Apartment1st floor, Near Pansila Post office, Kolkata-700112

Mr. Kashinath HaldarSecretaryHaridanga Ramkrishna Vivekananda SanghaNabudaya Palli (Baghar Gole), 237Boral Main road, Kolkata, 24 Pargana (South),West Bengal- 700103

Mr. Sudipta BanerjeeCEOSahara Utsarga Welfare SocietyKalibari Sarani, P.O. Michael Nagar, MadhyamgramDistrict 24 PGS (N), Kolkata -700133

Ms. Sanghamitra PayraSecretaryTajpur Ma Saradamayee Nari Kalyan SamitiVill- Jinandapur, P.O. BhuniajibarhDist- Purba Medinipur-721423

S. N. State Primary Members Associate Members Total

1. Andhra Pradesh 16 16 32

2. Assam 02 07 09

3. Bihar 01 02 03

4. Delhi 05 10 15

5. Gujarat 04 05 09

6. Haryana 02 02 04

7. Jharkhand 02 07 09

8. Karnataka 09 11 20

9. Kerala 03 02 05

10. Madhya Pradesh 01 01 02

11. Maharashtra 06 16 22

12. Manipur 0 04 04

13. Orissa 08 17 25

14. Rajasthan 05 05 10

15. Tamil Nadu 12 11 23

16. Tripura 0 01 01

17. Uttar Pradesh 08 09 17

18. Uttarakhand 0 04 04

19. West Bengal 03 20 23

TOTAL 87 150 237



Auditors' Report to the Members of Sa-Dhan Association

We have audited the attached balancesheet of Sa-Dhan Association atMarch 31st 2010, Income and

Expenditure and Receipt and Payment accountfor the year ended on that date annexed thereto.

Respective responsibilities ofManagement and Auditors

These financial statements are the responsibilityof the entity's management. Our responsibilityis to express an opinion on these financialstatements based on our audit.

Basis of opinion

We conducted our audit in accordance withstandards on Auditing generally accepted inIndia. Those Standards require that we planand perform the audit to obtain reasonableassurance whether the financial statements arefree of material misstatement. An audit includesexamining, on a test basis, evidence supportingthe amounts and disclosures in the financialstatements. An audit also includes assessing theaccounting principles used and significantestimates made by management, as well asevaluating the overall financial statementpresentation. We have obtained all theinformation and explanations, which to the bestof our knowledge and belief were necessary forthe purpose of our audit. We have norelationship with or any interests in theAssociation other than our capacity as auditors.

Opinion

We believe that our audit provides a reasonablebasis for our opinion. In our opinion and to thebest of our information and according to theexplanations given to us, the financial statementsread along with the notes give a true and fairview in conformity with the accountingprinciples generally accepted in India.

1. In the case of the balance sheet, of the stateof affairs of Sa-Dhan Association as atMarch 31st 2010 and

2. In the case of Income and Expenditureaccount, the excess of Income overExpenditure for the year ended on thatdate;

3. In the case of fund based receipt & paymentaccount of the receipt & payment of thefund for the year ended on that date.

for BANSAL & CO.,Chartered AccountantsFirm Reg. No. 001113N

Sd/-

(D.S.RAWAT)PartnerM.No.83030

Place : New DelhiDated : 25th August, 2010



Balance Sheet

(Amounts in Rs.)

As per our report of even date for and on behalf of Boardfor BANSAL & CO.,Chartered Accountants

Firm Reg. No. 001113N

Sd/- Sd/- Sd/-

(D.S. RAWAT) (VIVEKANAND SALIMATH) (JAYSHREE VYAS)Partner Treasurer Chairperson

Sd/-

(MATHEW TITUS)Executive Director

Place : New DelhiAugust 25, 2010

AS AT MARCH 31, 2010 2009

SOURCES OF FUNDS SCH

Corpus Funds 1 47,867,160 46,303,160

Grants and Committed Project Funds 2 20,659,984 16,405,057

Capital Asset Fund 3 1,092,016 1,071,683

TOTAL 69,619,161 63,779,900

APPLICATION OF FUNDS

Fixed Assets (at cost less depreciation) 4 1,092,016 1,071,683

Investments 5 56,860,679 55,666,754

Current Assets, Loans and Advances (A) 6 16,695,258 10,005,244

Current Liabilities (B) 7 5,028,792 2,963,782

Net Current Assets (A) - (B) 11,666,466 7,041,463

TOTAL 69,619,161 63,779,900

Receipts & Payment Account of Grants 11 0 -Receipts & Payment Account of Project Activities 12Significant Accounting Policies & Notes to Accounts 13



Income & Expenditure Account

(Amounts in Rs.)



Sd/- Sd/- Sd/-


Sd/-



AS AT MARCH 31, 2010 2009

INCOME SCH

Grants and Contributions Received 8 24,316,241 14,747,005Interest Income 4,961,487 2,573,336Participation and Training Fee 865,500 632,125Membership and Subscription Fee 981,505 636,000Net Income on Consulting Services 122,734 566,266

Reversal of Provision for Decline in value ofInvestment provided in FY 07-08 1,419,973

TOTAL 32,667,440 19,154,732

EXPENDITURE

PROGRAMME EXPENDITURE:Direct Programme Expenses 9 13,608,924 17,232,323Personnel Cost 10,337,906 8,800,236Rent, Electricity and Water 1,107,302 945,685Other Support Expenses 10 1,480,943 26,535,075 1,084,950 28,063,194

Provision for Tax Liability 37,925 165,281Depreciation 197,444 181,994Transferred to Capital Assets Fund 197,444 - 181,994 -

EXCESS OF INCOME OVER EXPENDITURE 6,094,441 (9,073,743)

TOTAL 32,667,440 19,154,732

Receipts & Payment Account of Grants 11Receipts & Payment Account of Project Activities 12Significant Accounting Policies & Notes to Accounts 13



Schedules to Accounts

(Amounts in Rs.)



Sd/- Sd/- Sd/-


Sd/-



AS AT MARCH 31, 2010 2009

SCHEDULE 1: CORPUS FUND

The Ford Foundation - Opening Balance 22,952,160 22,952,160 22,952,160 22,952,160

Corpus from Omidyar Networks 21,895,000 21,895,000Corpus from Members 1,899,000 335,000Sa-Dhan's Contribution to Corpus Fund 1,121,000 1,121,000 1,121,000

TOTAL 47,867,160 46,303,160

SCHEDULE 2: GRANT & OTHER PROJECT SUPPORT FUND

Grants Funds 20,513,181 14,637,152Committed Project Funds 146,803 20,659,984 1,767,905 16,405,057

SCHEDULE 3: CAPITAL ASSETS FUND

Opening Balance 1,071,684 68,584Additions during the year (net) 217,777 1,185,094Less: Amount utilised during the year transferredfrom Income and Expenditure Account 197,444 1,092,016 181,994 1,071,684

TOTAL 69,619,161 63,779,901



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(Amounts in Rs.)



Sd/- Sd/- Sd/-(D.S. RAWAT) (VIVEKANAND SALIMATH) (JAYSHREE VYAS)

Partner Treasurer Chairperson

Sd/-(MATHEW TITUS)

Place : New Delhi Executive DirectorAugust 25, 2010

AS AT MARCH 31, 2010 2009

SCHEDULE 5: INVESTMENTSIn Long term Fixed Deposits with Banks & Financial Institutions 40,960,679 29,986,727In Mutual FundsSundaram BNP Paribas Rural India Fund 300,000 300,000HDFC Prudence Fund 5,500,000 5,500,000HDFC Equity Fund 2,700,000 2,700,000SBI Magnum Global India Funds 2,200,000 2,200,000Franklin Templeton Mutual Funds 11,200,000Sundaram Capex Opp. Fund 5,200,000 15,900,000 5,200,000 27,100,000

(Market value as on 31/03/2010: Rs 1,82,54,678) 56,860,679 57,086,727Provision for Decline in value of Investments - 1,419,973

TOTAL 56,860,679 55,666,754

SCHEDULE 6: CURRENT ASSETS, LOANS & ADVANCES

Current AssetsCash in hand 81,682 209,750Bank Balances

In Savings and Current Accounts 7,903,528 6,370,548Fixed Deposit ( Including Interest Accrued) 2,729,566 10,633,094 1,689,170 8,059,718

Loans and AdvancesTelephone Deposit 6,500 10,500Staff Loans 91,643 187,094Security Deposits 211,700 211,700Work Advances to staff 135,915 133,521Amounts Recoverables 4,431,478TDS Recoverable 1,103,246 1,192,961

5,980,481 1,735,776 -

TOTAL 16,695,258 10,005,244

SCHEDULE 7: CURRENT LIABILITIESExpenses Payable 4,133,392 2,963,782Amounts Payable to FICCI 895,400

TOTAL 5,028,792 2,963,782




(Amounts in Rs.)AS AT MARCH 31, 2010 2009

SCHEDULE 8: GRANTS AND CONTRIBUTIONS RECEIVED

Foreign Contributions 24,316,241 14,747,005

TOTAL 24,316,241 14,747,005

SCHEDULE 9: DIRECT PROGRAMME EXPENSES

Traveling and Conveyance 6,170,373 7,272,428Consultancy Fee 4,261,074 5,004,125Meeting, Seminars and Workshop Expenses 1,954,150 3,712,202Books, Periodicals, Printing and Stationery 1,223,327 1,243,568

TOTAL 13,608,924 17,232,323

SCHEDULE 10: OTHER SUPPORT EXPENSES

Communication Expenses 496,921 549,779Repair & Maintenance 373,601 140,441Audit Fees 180,039 320,547Miscellaneous Expenses 430,382 74,183

TOTAL 1,480,943 1,084,950



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2



Schedules to Accounts for the year ended March 31, 2010

SCHEDULE 13: SIGNIFICANTACCOUNTING POLICIES ANDNOTES ON ACCOUNTS

1) Note on Society Activities

a) Sa-Dhan, a member based Associationof Community Development FinanceInstitutions, is a not-for-profitorganization engaged in Research,Development, training and Informationdissemination on Micro Finance. It isworking with Government, NGOs andFinancial Institutions in facilitating theorderly and appropriate growth of theCommunity Development FinanceInstitutions in India. This is done bypotentially contributing in developing asustainable micro credit policy andupgrading of management, accountingand reporting systems within the microcredit sector through the PolicyAdvocacy, Standards, Capacity Building,Research and documentation sub-groupsof Sa-Dhan.

2) Significant Accounting Policies:

a) Basis of Accounting : The financialstatements have been prepared to comply inall material respects in respects with theaccounting standards issued by theInstitute of Chartered Accountants ofIndia (‘ICAI’), The financial statementshave been prepared under the historicalcost convention and on accrual basisexcept stated otherwise. The accountingpolicies have been consistently appliedby the society and, except for thechanges in accounting policy discussedbelow, are consistent with those used inthe previous year.

b) Revenue / Expenditure Recognition: Thesociety follows mercantile basis ofaccounting for all financial transactionsexcept for Grants and Membership Fee

for which cash basis of accounting isfollowed.

c) Format of Accounts : The Income andExpenditure has been classified basedon the Natural Head wise Income andExpenditure account, while cost ofactivities carried out by the organization,is attached separately which are formingpart of the accounts. The activity-basedcosts are identified and each expense isso classified and recorded in the booksbased on a documented processincluding detailed classification of costcenters and sub-cost centre, by theManagement.

d) Classification of Expenditure. Theclassification of expenditure as stated inthe Analysis of Activity / Program basedExpenditure (attached in the accountsas an annexure separately to the Incomeand Expenditure account) and therelated are based largely on theidentifications and estimates of theManagement.

e) Treatment of Assets: Fixed assets includeall expenditure of capital nature and arevalued at cost of acquisition and cost ofinstallation/erection as applicable.

i) In respect of assets purchased outof grants funds the assets havebeen written off in full leaving aresidual value of Rs. 1,000 towardscost in books, and the assetsacquired out of non grant basedincome depreciation is charged atstraight line method as per ratesbelow:

S.No Assets Category Rate of Depreciation

1 Professional equipment 16.21%

2 Vehicles 16.21%

3 Furniture and Fixtures 6.33%

4 Office Equipment 4.77%



f) Valuation of Investments :

All investments are held at cost and arevalued at market price or cost,whichever is lower, except long terminvestments made out of Corpus andother specified Funds. Any diminutionin value in respect of all investments,other than long term investments (whichare held to maturity or pre maturitywithdrawals), are provided in theaccounts on global basis, whileappreciation accounted for whenrealized.

g) Treatment of Restricted Funds, BudgetBased Expenditure Accorded by FundingAgencies.

i) The expenditure on projects takenup with the support of donoragencies is, as far as possible,incurred according to the plansand budgets agreed upon.However, deviations sometimesoccur at the time of projectexecution depending upon variouscircumstances, such as location,awareness among thebeneficiaries, local customs,availability of inputs, legalrestrictions, etc. Such variations,monitored regularly, are generallyintimated to the donor in advance.

ii) As per the requirement of theincome tax act which prescribesthe tax on certain income of thecharitable organizations, theprovision has been made for suchincome.

h) Employees Welfare / Provident Fund /Gratuity / Leave Encashment / MedicalBenefits / Leave Travel Benefits .

Society provides following benefits toits employees as per the term ofemployments with them namely;

i) Provident fund benefit fromsociety: Society is registered withprovident fund authorities andprovides provident fund liabilityas per applicable provident fundrules and paid on monthlyintervals.

ii) Gratuity: Society is contributingin a scheme with Life InsuranceCorporation of India and liabilityon these benefits is calculated andprovided based on actuarialcalculation provided by LifeInsurance Corporation using“Projected Unit Rate” Method.

3) Notes to Accounts:

a) Corpus Addition: During the year anamount of Rs. 18,99,000 were receivedfrom various members as corpusdonation.

b) Employees Welfare:

i) Benefit to employees on accountof group gratuity is provided forin books of accounts based onactuarial valuation provided byLife Insurance Corporation ofIndia. Amount provided duringthe year amount to Rs 5,77,842(Previous Year Rs.12,589).

c) Investments: Cost Rs 5,68,60,679 MarketValue Rs 5,92,15,357

i) Includes Long term Fixed Depositswith banks Rs, 4,09,60,679.

d) Others:

i) Membership and SubscriptionFees: As per the MembershipRegister, the membership of Sa-Dhan consists of 234 primary andassociate members as on March31st 2010 (Previous year: 229) of



which 34 members (previous year60) have not paid theirmembership as on March 31, 2010.

ii) Travel expenses includeInternational Travel Expenses ofRs.10,48,997 (previous year Rs16,67,379) and travel expenses of

Board members Rs.15,93,509(previous year Rs. 11,82,390).

e) Previous Year’s Figures:

Previous year’s figure have beenre-grouped and re-classifiedwherever considered necessary.


Sd/- Sd/- Sd/-


Sd/-



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