SAMRUDHI Micro Fin Society (SMS) Brief Profile

Transcription

1 SAMRUDHI Micro Fin Society (SMS) Brief Profile 1

2 The Problem Sixty percent of the population in India lives below poverty line and they suffers from high rates of hunger and malnutrition. To cope with their vulnerability, the poor take credit during crisis periods from moneylenders who charge exploitative rates of interest often as high as 72%- 350% per year. This puts the poor in a debt trap, and often results in their falling into bonded labor a system of indentured servitude in which a person sells his labor for a year in exchange for a loan thus poor falls in a vicious cycle of low income, low savings, low investment. 2

3 Poor cannot Access Financial Services Commercial Banks don t lend to the poor because of the risks and transaction cost.. High risks Due to.. Collateral free loans to poor women High Transaction Costs Due to.. A large number of very small loans to rural locations.so village loans sharks exploit the Poor's lack of access to credit charging up to 350% interest per year Source: World Bank 3

4 The solution If poor people can access low interest credit during times of crisis, they can avoid falling into debt trap. SAMRUDHI provides credit for income generating activities in an attempt to reverse the age-old vicious cycle of low income, low savings, low investment, into an expanding system of low income, injection of credit for investment, more income, more investment, more income. Access to credit helps them to overcome vulnerability. 4

5 Impact of Micro Finance services to the Poor Access to financial services Increase & diversify incomes Build assets Mitigate risk Plan for the future Make choices Increase food consumption Invest in education & health Invest in housing, water, sanitation 5

6 Demand For Financial Services for the Poor Largely Unmet X Growth Factor While there has been significant growth in access to finance in the last decade, there is still a huge unmet demand Finance accessed by poor households Total Finance needed by poor households Source: World Bank; CGPA (Occasional paper #8,

7 Two Main Approaches to Solving this Problem SHG/Bank Linkages Micro Finance Speed of out reach regional banks Top 2 MFIs in Karnataka Rs crore disbursed Rs. 300 Crores disbursed to 50 lakhs families to 1 lakhs families Loan Size Small Medium to large Avg. Loan Size is Rs Avg. Loan Size is Rs Processing Time Slow Fast up to 30 days 8 days Portfolio Quality Poor Excellent Avg. Portfolio at risk=25% Avg. Portfolio at risk=2% Waiting Period Long Short 6-12 months, savings Required 1-15 days, no savings required Sustainable NO YES Financially self-sufficient 7

8 SHG Model 8

9 Grameen Model 9

10 SHG Model Vs Grameen Model Parameters Grameen model SHG model Group Size 5 members members Federation 6-10 groups 5 SHGs. Books of account Managed by MFI. Managed on their own. Interest rate Generally decided by MFI Decided on their own or slightly higher than bank rate of interest. Repayment Weekly Fortnightly Meeting Weekly Monthly Status Training Recognized and eligible after a week training conducted by MFI Continuous group training and Group recognition test Recognized and eligible for bank finance after 6 months of operations 6 months saving and proper books of account Target client Women Men and women 10

11 SAMRUDHI s entry As developmental organization. As a livelihood opportunity provider. To serve the poor both in the rural and urban. During the period in which microfinance recognized as most powerful tool to reduce the poverty. 11

12 Legal Base SAMRUDHI Micro Fin Society is a registered non profit organization under Karnataka Societies Registration Act SAMRUDHI Micro Fin Society will collaborate with banks & provide savings services to clients 12

13 Mission Our mission is to empower the poor and underprivileged to become economically self-reliant by providing cost effective and need based financial services in a financially sustainable manner 13

14 Vision Our vision is to provide financial services to 200,000 poor households in India by 2012 and to become most preferred livelihood service provider in its operational area 14

15 Culture &Core Values Core values set the norms of behaviour for everybody in the organisation. The following Core Values are the basis of competitive advantage, but not the reason for just following them. Thus they need to be deeply held beliefs and are meant to be expressed through day-to-day behaviours of all Professional (in management), Proactive (positive & down to the business) & Prosperous (self-sustainable flourishing organisation) Realistic (practical & down to earth), Receptive (open for new ideas & innovations) & Responsible (for what we do) Strategic (in every action), Simple (uncomplicated operations) & Speedy action Transparent (in every action we perform), Trustworthy (to all the stakeholders) & Technology Savvy Cooperative (with all the stakeholders), Competitive (in terms of products and services) & Customer oriented (to achieve satisfaction and delight) Innovative (in products and processes), Instrumental (in implementation of objectives) & Influential (in policies) 15

16 Key Objectives To offer cost-effective livelihood based financial services to the rural and urban poor households. To organize rural poor, Dalits, tribal women and underprivileged groups for their development and empowerment through community participation and to create opportunities for socially disadvantaged, distressed and economically poor to get livelihood support. To become most preferred livelihood opportunity provider in the operational area by establishing SAMRUDHI Micro Fin Society as a highly professional & suitable service organization. 16

17 Organization Structure SAMRUDHI Board Chief Executive Officer Chief Manager-Operation Chief Manager-Accounts/ Finance Chief Manager-HR & Admin Chief Manager-MIS Chief Manager-Internal Audit Micro Finance, Micro Finance, Accounts, Legal Administration, Recruitment & Database Management, Back Insurance, Micro Savings, Affairs, Treasury Management, Training, Compensation, office Management Business Development, Pilot Fund Raising Fund Performance Assessment, Testing and Extension Management Employee Relation Management Internal Audit, Risk Management, Manager-operation Area Manager Manages Portfolio of a Region Manages Portfolio of Branches Support Staff for each Dept at various level Unit/Cluster Manager Manages Portfolio of 4-5 Branches Branch Manager Manages Portfolio of Members 17

18 Target Population Our target population are Women:- Women have been designated as the target group both because they are the most marginalized and because women tend to use resources more productively than men do. That is, they tend to invest the majority of their income in the household and for their children, and they tend to undertake small, manageable activities rather than risky ventures that could bankrupt families. By providing credit to women, SAMRUDHI expect to see a rise in household income that will benefit the entire family. An additional benefit is that SAMRUDHI will be empowering a marginalized group by enabling women to have ownership of assets. 18

19 Geographical Coverage SAMRUDHI will cover eight district of northern Karnataka and expand into other part of the state and slowly expand its operation to the part of AP and Maharashtra & in the first two year. SAMRUDHI has initiated operations through one branch office in Gulbarga town of Karnataka. SAMRUDHI will cover eight district of northern Karnataka and expand into other part of the state and slowly expand its operation to the part of AP and Maharashtra & in the first two year. 19

20 Operational Methodology Grameen Model SAMRUDHI adapted the pioneering Grameen Bank (Bangladesh) approach to local modification. It lends to five-member groups of women and designates the group member the ultimate guarantor of each of its members. If one member does not repay, no individual in the group is eligible to receive another loan. Default member s loan has to be paid by remaining members of the group. The keys to this approach include: Social Collateral. The poorest do not have physical assets that can be used as security. Instead, borrowers organize themselves into groups that take collective responsibility for repayment of one another's loans. Doorstep Banking. Providing financial services in the villages enables the rural poor to collect that day s wages and avoid the costs of travel to mainstream banks. The illiterate poor are also unable to complete loan applications, which often require several trips. Customized Products. SAMRUDHI designs loans with small, weekly repayments corresponding to wage structures, consumption and income generating loans to prevent emergency distress sales, and small first loans to inculcate credit discipline and collective responsibility. Interest and loan repayments are made equal for easy comprehension. Focus on Women. SAMRUDHI works exclusively with women because they are the most marginalized among the poor and because they tend to invest the majority of their income into the household and for their children. Women also typically undertake small, manageable activities. 20

21 Criteria to join the Group Member.. Should be poor. Should be neighbors (Preferably). Should not be relatives ( Relatives can be there in different groups). Should trust each other. Willing to pay default member s outstanding & accept joint liability. 21

22 Inducting Members in the Program Village Survey Identifying Members (BPL, Dalits & other vulnerable Collateral-Free Doorstep Financial Delivery Providing Training for four days to Make member understand our services Process Village/Area Survey /Group formation Loan appraisal & approval Loan disbursement & Centre Meeting Loan utilization Verification 22

23 Branch Structure Branch Structure for Better Control and Monitoring On Regular Basis. Branch Branch Manager-1 Cashier-1 Loan Officer-5 Branch Manager Members-3000 Groups-800 Centres-200 Cashier Loan Officer Loan Officer Loan Officer Loan Officer Loan Officer members 23

24 Group & Centre Structure 1 center = 5 groups = 25 members Smaller the group, better the control Loan officer will be able to monitor the centre effectively 24

25 Success Stories Before joining SAMRUDHI, Tuljamma was selling biscuits on roadside & earning negligible income for her family. She joined SAMRUDHI and availed Rs. 5000/. She used the loan to start a small Kiran shop. The business experienced growth during this period and they earned Rs ($2-3) per day. She hopes to establish a bigger Kiran shop in the future. Devaki was borrowing the small amount (Rs.200) in the market to buy the vegetable & used to pay high interest to the money lender ( %) on daily basis. She took loan from SAMRUDHI to invest in her vegetable business. Now, she does not go to money lender & avoids paying exorbitant interest. She reinvests the amount in her business & earns Rs every day. Shainaz Begum s situation was tragic because her husband left her soon after marriage. Unable to manage on her own, she moved into her mother s house. There was no one to earn at her mother s house. The life was tough for her. She came to know about SAMRUDHI & its credit Program. She joined SAMRUDHI s group & availed Rs. 5000/- loan to invest in seasonable businesses, such as mango, banana & grape sales. Sindumathi was trained in tailoring few years back but did not have any employment due to lack of investment to purchase the sewing machine. SAMRUDHI s staff recognised her tailoring skills & inducted her into SAMRUDHI s credit program. SAMRUDHI gave her a loan of Rs to purchase sewing machine. Now, she earns Rs in a week. She assists her husband with her income to invest in her children s education. She owns a Sewing Machine. Gundamma is an agricultural labour & works in the field. The wages was very less & the income was not sufficient to run the family. She wanted to buy a buffalo to increase her income, but did not have sufficient money to purchase. She availed loan from SAMRUDHI & purchased a buffalo. Now, she earns Rs every week by selling the milk. 25

26 Management Information System Management Information System (MIS). SAMRUDHI deployed a SAMRUDHI Portfolio Tracker, an effective Management Information System integrated with accounting system. Each Branch will be equipped with the software and linked to the Head Office Server to get on time real data. The potential benefits of the software include Risk Control. Reduces scope for error that can result from millions of manual entries Productivity. Field staff can manage more centre meetings daily Cost Savings. Eliminates the need for an accountant at the branch level 26

27 For further details, please contact: Sanju Kumar Chief Executive Officer, SAMRUDHI Micro Fin Society, H.No.144, 2nd Cross, Behind Bus Stand, C.I.B Colony, Gulbarga Karnataka State, India. Phone: Website: 27