Indiamicrofinance.com I I4D Magazine I June09 Microfinance India

The fi rst monthly magazine on ICT4DVol. VII No. 6 June 2009

ISSN

097

2 -

804X

ICTs

an

d M

icro

fi n

ance

Information for development

w w w . i 4 d o n l i n e . n e t

Microfi nance: Leveraging ICTsICTs for Microfi nance

One billion opportunities Banking the Unbanked Globally

Microfi nancing GhanaMicrofi nance Sector in Ghana

knowledge for change

Microfi nance : The Road to Self-suffi ciency

Contents Vol. VII No. 6 June 2009

FeaturesMail box

6

5

The i4d magazine is an extremely useful resource for those of us who are practitioners in the fi eld of ICT for D. It is well produced, and has informative and enlightening content which is very helpful for us to keep up with changes and developments in the fi eld. Manycongratulations to the team!

Prashant SharmaDeputy Executive Secretary and

Communications ManagerMountain Forum Secretariat, ICIMOD,

[email protected]

I have been reading the two previous issues of your magazine and found them really very informative. I would like to thank your team for such a valuable magazine on ICT4D.

Mahendranath BusgopaulInternet Child Safety Foundation, Mauritius

[email protected]

I take this opportunity to thank for the whole i4d team for the wonderful edition of the community multimedia Gender and ICTs.

Hara PadhyUNESCO, Paris

[email protected]

I have been very regularly getting i4d issues. Thanks for the efforts put by i4d team. I got an invitation to write an article in the magazine International Federation for Information Processing (IFIP). They have made a mention that they are writing to me after reading my article on Network community services in rural India in i4d. Thanks for introducing me to the network!!!

Dr. N.S. VasanthiProfessor and Head,

Department of Biotechnology, Bannari Amman of Institute of Technology,

Tamil Nadu, India,[email protected]

[email protected]

www.i4donline.net/feedback.asp

EditorialFueling the growth

ICTs for Microfi nance Microfi nance: Leveraging ICTsSabyasachi Kashyap

Banking the Unbanked Globally One billion opportunitiesGautam Bandyopadhyay

Microfi nance in IndiaMicrofi nance: A bigger pictureRitu Srivastava

Microfi nance Sector in GhanaMicrofi nancing GhanaVeronica Agodoa Kitti

Accounting System in Orissa Panchayats e-Cashbook in Orissa panchayatsShreemanta Kumar Samal,Sanjay Prakash Sahoo

Microfi nance and Gender Equity Money for women by womenRitu Srivastava

ZERO MASS Foundation Development initiatives Loknath Panda

Best Microfi nance Institutions Forbes magazine’s top 50 MFIs

FAO-GTZ Microbanking System Technology for microfi nancing

National Bank for Agriculture and Rural Development (NABARD), India Banking for All

Please continue to send us your valuable feedback to help us

serve you better.

12

19

25-27 August 2009, Hyderabad, India

www.eINDIA.net.in

26Columns

What’s on

In FactMicrofacts about microfi nance

4546

NewsSearch ICT4D news by date in the sectors of governance, health, education, agriculture and so on.

E-mailSubscribe to daily, weekly, monthly newsletters online or send request to [email protected]

Print editionThe past issues of the magazine are available onlinewww.i4d.csdms.in/archive/archive.htm

i4donline.net

New!Knowledge bank

of

books on ICT4dwww.i4d.csdms.in/floss/introduction.asp

Rendezvous

16

29

32

34

40

Global Conference on Financing the Poor: Moving Beyond Inclusion, 29 December, 2009, New Delhi, India Exploring the impact of microfi nance Dinoj Kumar Upadhyay

43

Snapshots of microfinance

solutions

41

Interview

10 Rita Soni, Senior Vice-President, YES BANKInclusion through innovation

Microfi nance News

India News

World News

3839

23

[email protected]

4 i4d | June 2009

Information for developmentw w w . i 4 d o n l i n e . n e t

I/We would like to subscribe for 1 2 3 years.

(circle as applicable)

First name............................................................................................ Last name ..........................................................................

Designation/profession ........................................................................ Organisation ......................................................................

Mailing address ................................................................................... City ....................................................................................

State ................................................... Country ................................ Postal code .........................................................................

Tel (o) ................................................... Tel (r)................................................................. Fax ..........................................................

Email ................................................... Website .............................................................................................................................

Payments for mailed subscriptions are only accepted via cheque or demand draft. Cash payments may be made in person.

(tick one and fi ll as applicable)

Please fi nd enclosed my/our cheque/demand draft numbered dated ......................... for Rs......................................... in

favour of CSDMS a/c payable at New Delhi.

I am submitting this form in person and paying by cash

Please use photocopies of this form as required.

i4d, G-4 Sector 39, Noida 201 301, India

Tel +91 120 250 2180 to 85 Fax +91 120 250 0060

Email [email protected]

i4d contains articles, case studies and essays on the theme of ‘ICT for development’ and related issues. Authors are requested to follow the guidelines while sending their articles to i4d. Please also consult the editorial calendar to choose the theme of your interest. We also accept soft or hard copy submissions of your contributions. We encourage you to share your original research with our readers.

The Editor’s decision to select, accept, modify or adjust your write-ups due to space constraints will be final. Editorial guidelines are available at http://www.i4donline.net/Editorial/Editorial_Guidelines.asp

All correspondence should be addressed to:

The Editor-in-chief, i4dG-4, Sector-39, Noida, IndiaTel +91-120-2502180 to 85Fax +91-120-2500060Email [email protected]

Duration Issues News stand Subscription Saving Subscription

(Year) Price Rs. Rs. US$

1 12 2400 2160 10% (Rs. 240) US$ 200

2 24 4800 4080 15% (Rs. 720) US$ 320

3 36 7200 5040 30% (Rs. 2160) US$ 400

www.i4donline.net

Subscription Form

SUBSCRIBE TODAY!

EDITORIAL GUIDELINES

i4d newsNow

available

in daily,

weekly,

and monthly

email newsletters!

Subscribe at

CSDMS team

i4d Editorial Calendar 2009Month Theme

January Rural BPOs

Feburary e-Agriculture

March ICT in Climate Change

April ePanchayat

May ICTs in Elections

June ICTs and Microfinance

July Agriculture

August Mobiles for Development

Now

subscribe

online!

5June 2009 | www.i4donline.net

Fueling the growth

Now that it has been widely accepted that microfi nancing does not have to be an enterprise that runs on a not-for-profit basis, the challenge that faces us today is to make microfinance more accessible, customised, and effective while ensuring sustainable growth of the sector as a whole.

It has been rightly said that sound microfi nancing strategies have the potential to alleviate global poverty. But to do so, we have to fi nd ways to reach the millions of unbanked and under-banked households

who desperately need this support to get out of poverty and stay above the poverty line.

Several questions need to be answered and a similar number of challenges have to be overcome to reach our goals. With the aid of modern ICT tools it is possible to reach the last mile and also serve the population living in remote areas. But technology is just one of the components of this intervention with connectivity taking the lead among the related loops that need to be closed, apart from the capacity building needs for the population to be served.

Equally important is the creation of enabling policies that allow and, if required, incentivize the setting up of Microfi nance Institutions (MFIs). Also imperative is strong regulation and monitoring of these MFIs to curb the incidences of MFI operators running away with the savings of their victims. Since the target demography has probably never been exposed to banking services, they also require fi nancial education.

None of these issues can be taken in isolation and have to go hand in hand to provide succour from poverty to the disadvantaged citizens of the world.

In this issue, we have tried to bring to you varied perspectives of how different countries, organisations and government agencies are combating poverty through fi nancial inclusion with an eye on gender equity. We hope you fi nd this issue informative and thought provoking enabling us all to fi nd new ways to meet the challenges that lie ahead.

Dr Ravi [email protected]

Advisory Board

Dr M P Narayanan, Chairman, i4d

Chin Saik YoonSouthbound Publications, Malaysia

Karl HarmsenUnited Nations University

Kenneth KenistonMassachusetts Institute of Technology, USA

Nagy Hanna

e-Leadership Academy, University of Maryland, USA

Richard FuchsIDRC, Singapore

Walter Fust

Global Humanitarian Forum, Switzerland

Wijayananda JayaweeraUNESCO, France

EDITORIAL BOARD

Akhtar Badshah, Frederick Noronha

EDITORIAL TEAM

Editor-in-Chief Dr Ravi Gupta

Assistant Editor Sandeep Budki

Research Assistant Subir Dey

Sr. Graphic Designer Bishwajeet Kumar Singh

Graphic Designers Om Prakash Thakur, Shyam Kishore

Web Programmer Zia Salahuddin

i4d

G-4 Sector 39, NOIDA, UP, 201 301, IndiaPhone +91 120 250 2181-85 Fax +91 120 250 0060 Email [email protected] Web www.i4donline.net

Printed at R P Printers, Noida, India

i4d is a monthly publication. It is intended for those interested and involved in the use of Information and Commnication Technologies for development of underserved communities. It is hoped that it will serve to foster a growing network by keeping the community up to date on many activities in this wide and exciting field.

i4d does not necessarily subscribe to the views expressed in this publication. All views expressed in this magazine are those of the contributors. i4d is not responsible or accountable for any loss incurred directly or indirectly as a result of the information provided.

Centre for Science, Development and Media Studies, 2008

Except where otherwise noted, this work is licensed under a Creative Commons Attribution 2.5 License

Editorial

i4d is supported by:

6 i4d | June 2009

Microfinance: Leveraging ICTs

ICTS FOR MICROFINANCE

Over the last decade or so, the world seemed to have woken up to the reality that to empower the rural marginalised communities and to alleviate the poverty scenario in the world, they need to be given opportunities to save, borrow and repay loans. Till a few years back, banking institutions, for the purpose of offering banking services to the marginalised, experimented with subsidised credit which affected the overall performance of the banks and contributed to the rise in Non-Performing Assets (NPA). Thus subsidised credit as an option gradually lost its popularity among banks. Moreover more than the cost of credit, it was access to credit which was considered as the major barrier for the poor. With little or no means to afford the collaterals/mortgages, the poorer section of the society had to resort to unscrupulous moneylenders for loans which pushed them further into the vicious cycle of indebtedness. The reason behind this was access or the lack of it and not interest rate.

Microfi nance has come to be recognised as the most viable, effi cient and result-oriented mode of fi nancially empowering the poor. For Robinson “Microfinance refers to small scale financial services for both credits and deposits – that are provided to people who farm or fi sh or herd; operate small or microenterprises where goods are produced, recycled, repaired, or traded; provide services; work for wages or commissions; gain income from renting out small amounts of lands; vehicles, draft animals, or machinery and tools; and to other individuals and local groups in developing countries, in both rural and urban areas”.1 Microfinance also entails the condition of sustainably delivering the services and is not merely confined to credit (microcredit) but encompasses in its range savings, insurance,

and fund transfers. In the last few years of its existence, many organisations have jumped onto the microfi nance bandwagon which includes not-for profi t NGOs, development professionals, corporates, commercial banks, international donor agencies, etc. The reasons for the enthusiasm varies from the belief that microfi nance offers a good developmental alternative to the belief, especially among the commercial banks, who have opened microfi nance branches for their microfinance operations, that microfi nance offers a good, sound banking option. The government has also routed various developmental schemes through microfinance. Microfinance leaders are gaining prominence and it is said that some of the leaders, particularly women, have been taking a more active role in other social spheres, including contesting elections for the panchayat and so on2.

The microfinance sector has grown exponentially over the past few years and the World Bank estimates that there are now over 7000 Microfi nance Institutions (MFIs), serving some 16 million poor people in developing countries. The total cash turnover of MFIs worldwide is estimated at US$2.5 billion and the potential for new growth is outstanding. It is estimated that worldwide, there are 13 million microcredit borrowers, with USD 7 billion in outstanding loans, and generating repayment rates of 97 percent. It has been growing at a rate of 30 percent annual growth3.

However, several issues and impediments to the success of microfinance as an industry have cropped up, the primary of them being: scalability and sustainiblity of MFIs, and outreach and impact of the microfinance initiatives. Thousands of MFIs around the globe are realising that the solution for the scaling up, and ensuring maximum outreach and sustainability of

This article suggests the ways through which the existing ICT tools and technologies can bring the poorer section of the society in the ambit of the microfi nance services

Sabyasachi [email protected]


MFIs lies in leveraging the benefi ts of technology, more specifi cally information and communication technologies (ICTs). ICTs have opened new window of opportunities for the MFIs to reach out to more people, controlling the risks making the business sustainable, and bringing down the costs of operation. With new softwares specially designed to cater to the needs of the MFIs, mobile phones, effi cient Management Information Systems, among others, technology can and will in the near future bring about a paradigm shift in the domain of microfi nance.

ICT usage for MFIsThe current discourse on and practice of microfinance has inevitably redirected itself through the ICT route for maximising outreach and ensuring sustainability. Adoption of ICTs also brings about business processes re-engineering because they povice effi cient, transparent and cost-effective mechanisms to run the business of MFIs. MFIs have readily adopted ICTs for they have been looking for a change agent that will harness the benefi ts of ICT tools for best possible management and reduce costs, time and efforts.

Management Information Systems (MIS)To monitor the quality, sustainability, and effi ciency of the loan portfolio, to measure its development impact, and properly manage the administration tasks of an MFI, computerised Management Information Systems comes in very handy. MIS are the most fundamental aspect of an MFI’s hi-tech infrastructure and it is diffi cult for an MFI to upscale signifi cantly and maintain the accuracy and transparency of its loan portfolio without an MIS that can grow with the institution. There is no denying the fact that an appropriate backoffi ce MIS is the backbone of ICT innovation for the delivery of microfi nance services.

However, for MIS to really contribute to the effi ciency of the MFI, it has to be accurate, and up to date. MFIs fi nd it diffi cult to maintain updated records as they have their offi ces in remote locations which rely on manual data-entry and paper based transaction records. ICT innovations like mobile computing applications and palmtops at the hands of the loan offi cers who can directly record the transaction into the MIS can make this system more effi cient and up to date. The data entered into the

palmtop computers is typically uploaded to the MIS at the end of the day, either directly in the branch offi ce or via a remote communications link. Furthermore, the roll-out of wireless broadband infrastructure will enable these systems to be always online resulting in true real-time data collection and monitoring of the loan portfolio at branch and institutional levels.

Correspondent bankingOne of the key challenges for MFIs is providing financial services to clients in remote areas including rural areas where the population density is low, the market is smaller and providing service entails high costs. Correspondent Banking – whereby a bank links itself with third party merchants located in remote areas – has emerged as a solution for this problem of outreach. Correspondents manage transactions on behalf of the partner institution and are remunerated on a fee-for-service basis. Bank Correspondents are expected to be having long-term businesses, and should be respected and trusted in their communities. The Bank Correspondents should also be ‘ICT-enabled’; generally equipped with equipments such as an Electronic Funds Transfer at Point of Sale (EFTPOS) device, barcode readers and/or keypads, a personal computer, etc. They are linked to the partner institution’s servers using a telephone line, cable or satellite link. Post offi ces, supermarkets, general stores, grocery stores, telecentres, etc, are good examples of Banking Correspondents. In India, commercial banking entities like State Bank of India, HDFC, have tied up with the respective Service Centre Agencies(SCAs) in the states under the framework of National eGovernance Plan (NeGP) to provide Banking Correspondent status to the Common Service Centres (CSCs) equipped with ICT infrastructure and provide microfi nance services through them.

Credit cards, and ATMsIn today’s world of banking, consumer credit cards are an indispensable part of the bouquet of services offered by a fi nancial institution. Some of the advantages of consumer credit cards are reduced costs associated with small transaction lending, unsecured credit, small transactions, and pre-defined credit limits. Other salient features of credit cards include on-demand borrowing, re-draw facility, and repayment fl exibility within pre-defi ned guidelines. Since these services address the needs of small borrowers also due to their potential to relieve them from their dependency on moneylenders for the same set of services that are not provided by MFIs. Due to this utility of credit cards the concept of Microcredit Cards have emerged and with more opportunities. A credit card enabled MFI can implement microfinance tuned credit-scoring alogrithm which ensures that clients who have proved their credit worthiness over time through successful business transactions with MFIs can have their credit limit increased and be given access to additional sources of credit. Smart cards have an embedded computer chip that can store client and transaction data, as well as process information. Smart cards function as electronic passbooks, thereby reducing reliance on printed receipts. However, the introduction of card based services would demand setting up of EFTPOS functionality and/or Automatic Teller Machines (ATMs). Because all relevant client data is stored on the card,

Photo Credit: CARE India

8 i4d | June 2009

MFIs can utilise EFTPOS systems and ATMs that do not need to be always online. This is a signifi cant advantage in areas where telecommunication services are unreliable and/or expensive. One more value addition to the services of MFIs are the use of biometric technology (such as fi ngerprint scanners) which ensure client identifi cation as well as privacy and data security.

Internet bankingInternet Banking, in many ways, has revolutionised the banking scenario as it provides clients with real-time information about their accounts, and the ability to transfer funds between their accounts. It has become an integral part of the banking operations and by giving clients the liberty of using their own convenient time to bank, and that too without having to visit the bank, it has become an empowering tool. MFIs, however, face the challenge of limited or more often than not no access to Internet services of their clients. The rural telecentre network, being rolled out across the developing world, could come in handy here too, by providing access to the clients.

Mobile bankingCellular phones, especially with GSM backbone, due to its accessibility and affordability are becoming an indispensable communication tool for the poor in the developing countries. As per the World GSM Association report, during the year 2003-2006, more than 800 million mobile phones were sold in developing countries. Mobile phones in today’s scenario have become the only option for communication from being one of

the options because of the ubiquity of its use and popularity even among the poorer section of the society. It is estimated there will be three billion mobile subscribers in the world by 2010. World GSM Association, further adds that mobile phone is the fi rst and only communication technology to have more users in developing countries than in developed countries. Mobile phones have become mobile wallets by facilitating electronic payments in exchange for goods and services. m-Commerce has assumed tremendous signifi cance under the circumstances and this development in m-commerce has positively affected the microfi nance industry also with usages like facilitating savings deposits, loan repayments and other funds transfers. For the cost of sending an SMS message, the phone user/microfi nance client uses an application stored on his mobile phone to initiate a transfer from his mobile phone account to his bank account.

Microfinance softwaresIn tune with the emergence of service delivery technologies, various softwares have also been developed by technology innovators helping the microfi nance industry to tackle challenges associated with effi ciency, transparency, outreach and sustainability. The softwares and tools like, FINO (Financial Information Network and Operations), SafalFin, etc., vary in their nature and function. However, their utility to the smooth functioning of the operations are subject to speculation as some of the softwares come with high investments which a startup MFI may not be in a position to afford. However, low cost solutions like Computer Munshi System developed by an Indian NGO named Pradaan has promised to address this issue of affordability for MFIs. Built at low cost, this software aims to improve book keeping of the Self Help Groups (SHGs) as also to improve transparency, equity and longevity of its groups. The model basically aims to improve the accounting and book keeping of the SHGs.4

ConclusionIn a nutshell, various experiments for integrating microfi nance and ICT have been undertaken and even more numbers are going to come in the future. The issue however, is to enable the MFIs to meet their goals by helping them have maximum outreach, be sustainable and be transparent in their business and processes. ICT can only be an enabler, and not the driver, and the real success of MFIs has to be measured vis-a-vis their social performance and not by their ICT/technology readiness and preparedness.

References:Robinson, Marguerite S, ‘Microfi nance: the Paradigm Shift from Credit Delivery

to Sustainable Financial Intermediation’, in Mwangi S Kimenyi, Robert C

Wieland and J D Von Pischke (eds), 1998, Strategic Issues in Microfi nance,

Ashgate Publishing: Aldershot

Microfi nance: An Introduction by R Srinivaan and M S Sriram in Round Table,

IIMB Management Review, June 2003, (Pg-52-53)

Hari Srinivas, The Global Development Research Centre (GDRC),http://www.

gdrc.org/icm/data/d-snapshot.html accessed on 29-05-2009

Report of the Steering Committee on Microfi nance and Poverty Alleviation, The

Eleventh Five Year Plan, (2007-08 - 2011-12), Development Policy Division,

Planning Commission, New Delhi, May - 2007, Pg-28

1.

2.

3.

4.

Do you work on any of these areas ?Do you have a project that should be covered ?

Are you an expert on any of the themes ?Are you interested to collaborate ?

Another year of i4d is here. A host of issues are to be talked about.

Write to us at: [email protected]

I

CTsu

t

in Gender Bdge ing

Mand ainstreaming

hen

T Ope Mmove ent

Environmental Concerns:

eWaste

Internet Governance

ICTs and Food Security

ICTs for MSMEs

HIV/AIDS

The Fuel Crisis and

Climate Change

Web 2 0 tools .

for Communit y

Empow rmente

Community Radio

Disaster

Management

n usi g ICTs

ICT Statistics

G v ng Voicesi i a sse tive R h s

nd A r ig t :Sexual and

eproduct v ightR i e R s

iSoc al tw

kNe

or s inI t n n er et

pO positional/Civic

Politics and ICTs

Security and

yb r C crimee

New

Le rn ng a i

ayWs

ICT and peace

Initiatives

Safe Drinking Water

and Sanitation

Learning for

Grassroots Innovations

10 i4d | June 2009

Inclusion through innovation

INTERVIEW: RITA SONI, SENIOR VICE PRESIDENT AND COUNTRY HEAD - RESPONSIBLE BANKING, YES BANK,

As per the latest census, almost one fourth of the population in India lives Below Poverty Line. What role do you see banking institutions like YES BANK playing here?At YES BANK, we are working towards sustainable solutions to poverty through fi nancial interventions by mainstream banking activities. Utilising sustainable and mainstream approaches allows us to reach the scale which is necessary to reach the 800 million Indians living on less than US$2 per day. In our young bank, we have chosen to focus on ‘Responsible Banking’, promoting fi nancial inclusion and business solutions to social issues. Where does fi nancial inclusion fi t into YES BANK’s scheme of “Responsible Banking”?YES BANK is committed to creating equal fi nancial opportunities and enabling fi nancial inclusion, but it is our emphasis on innovation which is making the real impact. For instance, in microfi nance the vision is to go beyond offering plain vanilla banking to providing the industry access to the mainstream capital markets. This approach helps MFIs achieve scale at a lower cost of funds, thereby resulting in affordable fi nancial products for the Base of the Pyramid (BOP). YES BANK has a two-pronged microfi nance strategy to provide easy access to suitable fi nancial

products and services to un-banked/under-banked, low-income communities across urban and rural India.

As of March 2009, Wholesale Lending stood at USD 60 million with 16 MFIs, covering an estimated 500,000 clients in over 1000+ villages. YES BANK offers a comprehensive package of banking and advisory services, dovetailed with the expertise of relevant business units within the Bank to use structured capital market products to help MFIs leverage access to cost-effective funds from a broader pool of sophisticated investors. The Bank works as a holistic fi nancial solutions provider working with different stakeholders, i.e., mainstream investors, rating agencies, policymakers and technology vendors resulting in an aggregation of services, cutting-edge innovation and thought leadership required to create a conducive environment for growth of the industry.

YES BANK also stands out for its focus on urban poverty using individual lending methodology in a market that has largely executed group lending to rural women. One of the ground breaking features of our model is the fact that in setting up the fi rst institutionally sponsored direct intervention model for microfi nance, the Bank has created a benchmark institution that

www.yesbank.in

In an interview with Sabyasachi Kashyap from CSDMS, Rita Soni talks about YES BANK’s foray into financial inclusion by banking and microfinancing through the Internet, ATMs, debit cards and mobile channels.

Rita SoniSenior Vice President and Country Head-Responsible Banking, YES BANK


becomes the reference point for what our wholesale practice strives for in terms of helping transform partner MFIs into commercially viable fi nancial services providers for the BOP. Direct Lending is accomplished through YES SAMPANN (Hindi for fulfi llment), currently in its pilot phase with a portfolio of 2000+ micro-entrepreneurs. The business is projected to reach a client base of a 1,000,000 with a portfolio size in excess of USD 100 million in 5 years offering products such as micro loans for working capital, insurance and savings schemes.

Across the world, there is widespread recognition that information and communication technologies (ICTs) have tremendous potential in facilitating the inclusion of the underserved/un-banked population into the banking network. Can you share your views about this?Bridging the technology gap between the urban and rural population through ICT is undeniably a step in the right direction, however YES BANK feels that unless discrepancies in the content, standards and delivery of basic, primary/secondary education and vocational training programmes are proactively addressed, the effectiveness of ICT led initiatives will be greatly hindered. This opinion and mode of thinking has spurred YES BANK to begin forging working relationships with NGOs and social businesses currently working in the education and ICT space to develop effective educational content, especially in the realms of fi nancial literacy, in order to enhance the national curriculum and skills development programmes in rural and urban India.

What are YES BANK’s initiatives in providing banking facilities to the underserved population in the rural areas?In addition to the microfi nance initiatives already mentioned, YES BANK also has a dedicated focus in the area of ‘Farmer Financing’. The Agri-Business, Rural and Social Banking (ARSB) team develops innovative fi nancial models, which leverage the outreach of various stakeholders in the Agri Value Chain to address ‘last mile’ issues. In the last year, the Bank has disbursed approximately INR 700 crores in direct farmer financing, impacting approximately 140,000 farmers. ARSB works closely with Swiss Re and Agriculture Insurance Company of India (AIC) to facilitate the development and distribution of need-based insurance products for the agriculture sector, such as weather insurance for grapes in the Nashik region.

As an example, YES BANK recently announced its partnership with Zameen Organic, a farmer-owned producer company aimed at closer collaboration between farmers and companies to fortify inclusive and sustainable growth while building a transparent supply chain. This alliance intends to create equal opportunities for producers and workers who have been economically marginalised because of the conventional trading system. The business model empowers 6500 farmers to have effective and end-to-end control on the ‘Fair Trade Organic Cotton’ supply chain which has resulted in improved economic condition of farmers from the Adilabad (Andhra Pradesh) and Vidharbha (Maharashtra) region.

Could you elaborate a bit more about your experiences in the rural areas?Within the Responsible Banking framework, YES BANK has

a vision to address issues of rural India through the previously mentioned innovative fi nancial interventions, complemented with expert advisory services and thought leadership. These practices in microfi nance, ARSB, advisory and thought leadership go beyond the banking sector regulator, Reserve Bank of India’s (RBI) directed credit policy mandated through its Priority Sector Lending (PSL) requirement, and adopts the spirit of addressing poverty to the core. Below are specifi c examples where this combination approach has yielded results:

In 2008, YES BANK worked with Jain Irrigation Systems Ltd. (JISL) to reach nearly 50,000 small and marginal farmers across India. As a testament to this ‘business solution to social issue’, the BANK conducted a comprehensive sustainability report for JISL, outlining both the manner in which they operate as well as specifi c social and environmental initiatives.

Another important rural client is Buldana Urban Credit Cooperative Society. The fi nancing from YES BANK reaches approximately 8,000 rural households across western Maharashtra. The Cooperative has a unique approach of ‘social banking’ which has built the institution and met the needs of its members. In addition to these fi nancial services, the Bank conducted a detailed study of the approach, uncovering a gamut of best practices that can be applied by urban and rural banks.

The Bank also plays the role of thought leader in several areas including poverty issues. As an example, YES BANK and the American India Foundation jointly wrote a report highlighting the social and economic issues surrounding rural to urban migration in the country. A key feature of the report ‘Managing the Exodus’ is ways to provide rural populations employment opportunities and social services through the public private partnership model in a bid to mitigate their migration to urban areas.

In addition to fi nancing Shriram Transport Finance Company Ltd. (STFCL), YES BANK facilitated an HIV/AIDS awareness programme for their trucker clients. This programme brought the Bank forward to form knowledge partnerships and synergies with the Clinton HIV/AIDS Initiative (CHAI) and the Red Cross. The programme has reached out to 14 locations, 10 states and over 10,000 truckers who have been sensitized since this project began in October 2007.

Are the branches operating in the rural areas providing ‘anytime anywhere banking’ facilities? If yes, could you share your experiences with this? A standard feature in all our branches, urban and rural, we offer ‘Anytime Anywhere Banking’ through the Internet, ATM, Debit Card and Mobile Channels. Customers can also transfer funds at their convenience, from home or offi ce, to over 53,000 bank branches across the country using the NEFT and RTGS facility. They are also given complimentary multi-city payable at par cheque books for ease of payments. Under the aegis of the ‘One Branch’ model, customers can access their account from any of the 117 state-of-the-art YES BANK branches, at no extra charge. We were also one of the fi rst few banks to offer complimentary access to over 32,000 ATMs in the country. Our technology edge imparts ‘reach and easy’ access to our rural branches and our ‘anytime anywhere’ facilities have received encouraging response in rural areas.

12 i4d | June 2009

One billion opportunities

BANKING THE UNBANKED GLOBALLY

IntroductionLook and you’ll see an exciting landscape emerging in the banking arena. One where there is a billion-strong market actively seeking financial services but remains largely unattended to. These globally distributed prospective customers represent enormous earning potential for banks, but constitute the unbanked.

The unbanked are those who do not utilise banking services and have limited banking needs. The unbanked are not the poorest of the poor. However, they certainly include those whom banks need to serve but cannot do so profi tably in the existing banking environment. Though these consumers need access to banking for savings, loans and microfi nance, they do not have bank accounts. The reasons for this are compelling.

Lack of steady and substantial income leading to a fear of insuffi cient funds for an accountLimited access to banks, especially in remote areasLack of formal employment that precludes a fi nancial historyPoor fi nancial literacy Psychological factors such as mistrust of fi nancial institutions

This unbanked billion is not outside the banking sector by choice. An important reason for their predicament is that banks do not offer them suitable products tailored to their needs. In effect, they have been excluded by the banks’ inability to understand their requirements and the unwillingness to adopt innovative models to serve them.

However, this billion also constitutes an enormous opportunity – if banks are willing to accept the challenge of including them with an eye on the bigger picture. This paper provides a regional perspective to this issue and examines

•

•

•

••

what banks can do to capitalise on this opportunity.

How to bank the unbankedIn China and India only about a third of the population participates in the formal banking sector. In Africa the number is just 25 percent. India has the second-highest number of fi nancially excluded households in the world – 135 million – after China’s 263 million. Africa as a whole has 230 million unbanked households, and Central and Eastern Europe and Latin America have 19 million and 42 million, respectively.

But irrespective of where in the world they might be, this unbanked section of society has similar needs for fi nancial services. Apart from the obvious requirements of savings, loans, transactions, and investments, the unbanked have certain special needs, which are:

Flexibility in savings and repayment schedules owing to a lack of steady income

•

Simplicity and speed in processingSmall product sizes when it comes to loans and low-balance savings accountsProximity and ease of accessBas i c f inanc ia l educat ion or information since the unbanked may not understand even elementary concepts of banking

Most banks fi nd it diffi cult to meet these needs because of the high economic cost of servicing these demands. However, a little out-of-the box thinking in devising products that are simple and accessible can help ensure inclusive growth.

Some of these measures could include tying up with an NGO or with a retailer and using village residents and empowerment groups as representatives. These can lower customer acquisition costs and increase customer base, thus helping banks overcome the high cost challenge. Such groups also help banks mitigate risks associated with dealing with the unbanked. An estimated 2.6 million self-help groups in India are linked to banks, giving fi nancial institutions access to 40 million households.

It is important that the products are downsized without being downgraded to match the unbanked population’s smaller requirements by offering low installments and flexible repayment options. Banks also require performance metrics and regulatory conditions that are more suited to including the unbanked in the fi nancial mainstream.

Some banks are using inter-industry partnerships to increase fi nancial inclusion. For example, banks in Brazil have added 100,000 point-of-sale locations to distribute products by tying up with retailers. Not only are these channels cheaper for banks but they are also more convenient for consumers.

••

••

This paper aims to educate the banking

sector to reach out to the unbanked masses

around the world by giving examples

from across the globe about initiatives of some enterprising banking entities


Banks must realise – and they are seeing the light – that since the unbanked have remained unaddressed by traditional fi nancial institutions, they will not hesitate to choose newer players for basic banking services such as payment and deposit transactions. Collaborating with telecom players, adding a mobile channel, and utilising cross-selling opportunities will go a long way in meeting the needs of the unbanked.

In many emerging economies, mobile consumers are growing at a much faster rate than bank customers. Mobile banking is taking off because it is convenient, fast, simple, and secure. Moreover, it is a cost-effective option for banks. Gartner has estimated that there will be 33 million mobile payment users worldwide in 2008, with the Asia Pacifi c taking the lead. Gartner expects this number to triple to 103.9 million users in 2011.

Other forms of branchless banking and e-payment gateways such as payment cards and the Internet can also help banks increase their outreach. Banks need to experiment and include the next billion consumers not merely for the socio-economic assistance they will gain. The step will also have a strong business imperative for banks. Not only will a bank increase its customer base, but it will also ensure increasing numbers of future customers as incomes increase.

Let us examine how banks are reaching the unbanked in various parts of the world, namely, India, China, Eastern Europe, parts of Africa, and Latin America.

IndiaThe Indian banking market is zooming, with assets expected to reach $1 trillion by 2010. An expanding economy, a growing middle class, and technological innovations are contributory factors, according to a Celent report, ‘Overview of Indian Banking Market’.

The industry is focusing on the retail side of the market, with a Compound Annual Growth Rate (CAGR) of 23 percent in the past fi ve years. However, despite this thrust on retail banking, banks will have to come up with creative and simple solutions to make money in India. This is because India has a huge unbanked population and unless this is included, neither will banks prosper, nor the country.

Banks have also realised the potential of this market and have come up with innovative means of reaching it. They are going back to rural pockets for fi nancial inclusion. State Bank of India is drawing up plans to reach out to 100,000 villages. In September 2007, ABN Amro Bank announced its microfi nance division had provided basic fi nancial support to some 500,000 underprivileged households.

Building more branches in the countryside may not always be cost-effective. So banks need to explore other options by developing a better understanding of what rural households need and offer new products and distribution networks to suit them.

Providing banking services through ‘Banking Correspondents’ represented by self-help groups, NGOs and other approved organisations is one branchless banking mechanism. Touch-points may be set up by such organisations at places commonly visited by the unbanked, such as the village markets or schools. This may be supplemented by outreach teams equipped with hand-held devices on which simple banking transactions can be performed.

Mobile banking is another way of reaching out to such customers and is also a huge opportunity for banks in India. According to a TRAI report, the total number of mobile subscribers by March 31, 2008 was 261.08 million as against last year’s 165.09 million (an increase of 58.14 percent). This fi gure shows that in just three years, the number of mobile subscribers has grown over 4.5 times. India is adding more subscribers per month than any other country. According to the GSM Association (Global Association for GSM Providers), the next billion subscribers will come from the BOP (Bottom of the Pyramid) market, of which India will have the largest share. The growth of mobile phone subscribers is outpacing the growth of banking customers as also PC and Internet users in India.

In 2006, banks were allowed to take the help of NGOs and microfinance institutions as intermediaries in offering banking services through the use of correspondents. This was perhaps a factor for many banks that opened six million no frills accounts with low or zero minimum balances between March 2006 and 2007.

ICICI Bank, HDFC Bank and Citibank have launched their own microfinance programmes. HDFC Bank thus has tied up with NGOs in Andhra Pradesh and Tamil Nadu to make fi nancial services accessible to the rural poor. Citibank has linked up with NGOs. Standard Chartered plans to lend $100 million for micro-fi nancing by 2008, up from current commitments of $40 million.

Banks are looking at technology to provide banking services at low cost – and this includes rural banking too. Citi has set up a bio-metric ATM as a part of its ‘no frills’ Pragati account for the under-banked. The ATM recognises the customer through their thumb impression and can interact in regional languages.

ChinaEstimates about the numbers of unbanked Chinese vary. The People’s Bank of China (PBC) estimates that only 36 percent of Chinese rural households have access to fi nancial services. As one indicator of demand, the informal fi nance market has been estimated at anywhere between CNY 1 trillion ($132 billion) to CNY 2 or 3 trillion.

But the bigger Chinese banks have for many years now been moving out of rural areas, goaded by commercialisation and competitive pressures. According to the State Council Development Research Centre (DRC), the four big state banks have reduced their presence in rural areas by over 43 percent in ten years, closing 30,000 branches in the last fi ve years alone.

The Chinese government has launched several initiatives to test out new forms of rural financial service providers. Among them:

The People’s Bank of China in December 2005 launched a pilot initiative to establish Microcredit Companies using commercial licensingThe China Banking Regulatory Commission in December 2006 introduced their own pilot, creating new types of licenses for rural fi nancial institutions

McKinsey believes that given the reliance on cash in rural China and that additional ATMs do not appear to be the answer,

•

•

14 i4d | June 2009

the existing mobile Short Message Service network could quickly and cheaply provide an SMS-based payment system in rural areas. Since the most expensive parts of the infrastructure — the network and phones — are in place, this solution would be relatively low in cost, between $40 million and $60 million. By forming a partnership, banks, network operators and merchants could unlock spending.

The Chinese largely rely on cash payments, thus increasing the importance of the cash-based e-payment channel. Some leading third-party payment providers are adding cash-based and non-bank based payment options to their offerings. These include:

Cash remittance: Alipay is a third-party payment provider, allowing users to top up accounts with cash through China’s postal service. This service was launched in March 2007 in selected China Post branches throughout China. Mobile toll stations: Smartpay, China’s leading mobile top-up company, has formed a network of approximately 30,000 dealers. Smartpay dealers allow users with bank accounts to easily use Smartpay’s services, which in turn gives Smartpay access to a much wider range of potential users.Targeting the unbanked with pre-paid cards: e-payment player IPS uses mobile and telephone prepaid cards in order to reach unbanked users. This service takes advantage of the popularity of prepaid top-up cards used for phone bills, online games, and virtual currencies in China. The cards are usually purchased with cash at newspaper kiosks, small shops, and internet cafes. IPS operates a service called Ipay.

Eastern Europe In Poland, only 50 percent of the country’s population has a bank account, according to ING Group. Banking penetration was 69 percent in Hungary at the end of 2003.

Many East European (EE) residents avoid setting up bank accounts because they lack confi dence in the banking system. This mindset is gradually changing as governments encourage salary payments directly into bank accounts.

Austria’s Erste Bank has the largest network in the region and intends to target the unbanked in Hungary, the Czech Republic, Croatia, Serbia and Romania. Western banks in EE are focusing on meeting the needs of the younger population. In Poland, only 49 percent of people over the age of 15 have a bank account, according to Polish research company Pentor.

Almost 40 percent of Poles who participated in a recent banking survey attributed the low level of banking penetration to their lack of savings. Only 5 percent of Polish people use Internet banking, against an average of 24 percent in Europe as a whole; 4 percent of Poles use telephone banking services compared with 7 percent in Europe, according to Forrester Research.

To make it easier for Poles to access banking products, ING Bank Slaski, the Polish operation of ING Group, has simplifi ed some products. The new offerings include a savings account which offers one fl at interest rate and a low-interest credit card.

Plastic card technology is expected to present the banking industry with an important means of tapping the unbanked market. Moreover, according to Global Insight, electronic payments are expected to grow from $3.8 billion in 1999 to $25.8 billion in 2009, thus indicating greater use of non-traditional

1.

2.

3.

banking options. This also offers banks a channel for growth. Similarly, post offices, which constitute more than 50

percent of the physical infrastructure for access to the fi nancial sector, could provide an innovative POS alternative to reach out to the unbanked.

According to the August 2003 Datamonitor report, banks in the region are looking to move beyond branch-centric distribution. This includes extending ATM networks and looking at online and phone banking. The highest growth in IT spending was expected to come from Romania and Bulgaria.

AfricaAccording to the IMF, African countries are enjoying their best period of sustained economic expansion since attaining independence. Real GDP growth is expected to rise from 5.7 percent in 2006 to 6.8 percent in 2008. Still, only 20 percent of families in Africa have bank accounts.

Ethopia has less than one bank branch per 100,000 people – a developed nation like Spain has an average of 96 branches. Even in South Africa, where the sector is more sophisticated, only 40 percent of adults have bank accounts. But there is a huge demand for bank services. Finding this demand unfulfi lled, millions of Africans turn to informal services or invest in cattle.

But banks are increasingly adopting innovative methods. South Africa has physically taken branches to the unbanked, either as prefabricated units, or in vans that make visits to under-served areas. In remote areas, machines have been installed in shops where customers print out a slip and present it to the shopkeeper, who provides the cash. Some rural branches and ATMs rely on solar energy and satellite phone.

The ‘Big Four’ banks of South Africa (ABSA, First National Bank, Nedbank Group and Standard Bank) and the government developed the innovative Mzansi account in 2003 which is a low-cost transaction account. It enables banks to cover at least 70 percent of the unbanked market in a relatively short time. The government provided a small subsidy to cover the cost. It is targeted at people who earn less than R2,000 (US$264) a month. It now has more than 4 million subscribers.

Studies conducted by Genesis Analytics for the Finmark Trust in 2004 have suggested that point-of-sale (POS) facilities can play

Katimba market, Central Kampala, Uganda. Credit sln.org.uk


an increasingly important role in providing the unbanked access to basic fi nancial services in South Africa.

West African financial services biggies Zenith Bank and Ecobank and multinationals Citibank and the International Finance Corporation have set up the Acción Microfi nance Bank in Nigeria. It aims to provide low income earners and entrepreneurs with credit facilities and fi nance.

Mobile banking seems to be the most promising option in Africa. Few Africans may have bank accounts, but many have mobile phones. Wizzit (a financial services provider), First National Bank (FNB) and MTN Banking (a joint venture between Standard Bank and a mobile-phone network), are targeting the 14 million unbanked South Africans.

In Kenya and Botswana, 17 percent of the unbanked own a mobile phone, according to the FinMark Trust. In Kenya, Vodafone and Safaricom, Kenya’s leading mobile operator, launched an m-commerce payment service, M-PESA, aimed at the unbanked in March 2006. Within three months, it had 150,000 customers, with 2,500 new users signing up each day.

First Bank linked-up with Nigeria’s second biggest mobile operator, Globacom. The partners introduced the GloFirst card in conjunction with the switching company Interswitch. GloFirst can be used to withdraw money, check card balance, print mini statements, change the Personal Identifi cation Number (PIN) and transfer money to another cash card or bank account.

Latin AmericaChile reports the highest penetration and the lowest percentage of its population living below the poverty level. It is followed by Brazil, where the majority of households have checking accounts because most payrolls in the formal economy are disbursed electronically. Until recently, 40 million Brazilians had no access to banking services. Nonetheless, access to consumer credit in Brazil is mostly limited to the middle and upper class, and even foreign banks target primarily customers with an annual income of at least $20,000.

In Mexico, the formal banking sector has targeted only the top 15 percent of the population, while the other 85 percent is considered too risky and unprofi table. Now, however, more foreign banks in the sector have begun to pay closer attention to the retail credit card business and other remittance-linked products. In Colombia, where 55 percent of the population lives under poverty level, access to bank credit is low at 23 percent.

Therefore, Latin America’s huge unbanked population offers an enormous opportunity for banks recognising their potential. To serve the banking needs of a relatively low-income economy with low penetration requires innovative and imaginative non-branch solutions. Microfi nance and IT are enabling banks to serve the excluded at relatively lower costs. Banks are also helping create fi nancial literacy with the help of community leaders.

Bancomer, one of Mexico’s nationalised banks, is reaching out to the lower-income segment by offering simplifi ed and more accessible products, such as pre-paid credit cards or cards with fi xed monthly payments. To cultivate a culture of savings in Mexico, Bancomer has made available a savings account-debit card combo for a minimum deposit of about $70.

Santander Banespa, a Spanish-backed bank in Brazil, manages

about 5.1 million customers and 1800 branches. It has grown steadily in recent years by concentrating on personal lending, car fi nancing, insurance, and investment funds. It helps that local interest rates are dropping and that Brazil’s government has introduced incentives to increase credit. For example, payroll loans, whereby installments are debited from paychecks are now permitted.

In Brazil, banks are using nonbanking outlets, such as kiosks and even supermarkets, to reach customers. However, the central bank’s efforts in the way of promoting community representatives or agents and microfi nance efforts are slowly bringing more of the unbanked into the mainstream.

However, obstacles remain: agent-handled accounts are subject to transaction limitations, interest rate caps render microcredit unprofi table and credit information is scanty.

Electronic payments in Latin America are slowly taking off, but are hampered by factors such as low income and lack of banking penetration. Banks are trying to keep the reform momentum going. For example, Mexico has launched a three-year public-private initiative to expand the number of chip-enabled point of sale terminals. The goal is to divert the use of cash taken from ATMs to POS debit-card transactions in its continuing battle to suppress the informal economy.

ConclusionThe numbers involved in meeting the needs of the unbanked may seem daunting, but in reality they represent a billion-strong opportunity for banks. By paying greater attention to their wants and developing sensitivity to their needs, banks will be able to develop customised products and include the unbanked in their scheme of things.

Banks may do well to remember that they have a business imperative in converting the periphery into the mainstream.

Gautam Bandyopadhyay Principal Consultant at Infosys Technologies

References:Research by Boston Consulting GroupResearch by CelentMcKinsey QuarterlyThe EconomistThe Financial Express

El Alto Market. Credit fellowsblog.kiva.org

16 i4d | June 2009

Microfinance: A bigger picture

MICROFINANCE IN INDIA

The term, ‘Microfinance’ refers to the provision of a broad range of fi nancial services to low-income households and their microenterprises. Financial services generally include microsavings, microcredit, money transfer vehicles and microinsurance. Microfinance services are generally provided by formal institutions, such as rural banks and cooperatives, semiformal institutions such as non-government organisations; and informal sources like money lenders and shopkeepers.

Need of microfinance in India Statistics from the World Bank estimates that more than 87 percent of India’s poor can not access credit from formal sources and therefore have to depend on money lenders who charge them exorbitant interest rates ranging from 48% to 120% per annum or even higher. This shows that the potential market of small money lenders, who can lend money according to the demand for fi nancial services for this section of the society. The provision of such services, if implemented correctly, could have a significant impact on the poor. Releasing this fact, under the Reserve Bank of India Act, 1934, RBI undertook regulation and supervision of all the banks promoting and doing microfi nance.

Regulatory framework of microfinance in India In early 1990s, there have been many signifi cant state initiatives in the institutional and policy spheres to enable the poor access financial

services. Some major initiatives include the bank linkage programme under the guidance and supervision of the National Bank for Agriculture and Rural Development (NABARD) in 1992, the setting of the Rashtriya Mahila Kosh to re-fi nance microfi nance activities of NGOs in 1993 and the establishment of Small Industries Development Bank of India (SIDBI) Foundation for Micro-Credit (SFMC) as a fi nancier of Microfi nance Institutions (MFIs). On the policy front, RBI has come out with directives on various aspects of microfi nance provision. Releasing the fact that Self-Help Groups (SHGs) and NGOs are a priority sector, RBI engaged them in microfinance business by registering them as Non-Banking Financial Companies (NBFCs). As a result, commercial banks, regional rural banks (RRBs) and cooperative banks have also emerged as important channels of microfi nance provision.

Through the RBI (Amendment) Act, 1997, RBI made it obligatory for NBFCs to apply to RBI for certifi cate of registration. One of the conditions for application was

that the NFBC must have a minimum US$ 46,511.6 Net Owned Funds (NOF) that will make it eligible to accept public deposits. RBI introduced a new regulatory framework for the NBFCs in 1998, focused on NFBC accepting public deposits with a view to safeguarding the interests of the depositors. RBI also established a Micro Credit Special Cell in 1999-2000 to suggest measures for augmenting fl ow of microcredit. In the same year, NABARD established the Task Force on Supportive Policy and Regulatory Framework for Micro Credit. Based on the recommendations of the Advisory Committee on Flow of Credit to Agriculture and Related Activities from the Banking System, in its Annual Policy Statement for the year 2004-05, RBI stated, in view of the need to protect the interests of depositors, MFIs would not be permitted to accept public deposits unless they complied with the extant regulatory framework of the Reserve Bank.

T h e Mi c r o Fi n a n c i a l S e c t o r (Development and Regulation) Bill, 2007, was introduced in March 2007 which applies only to three categories of

Source: Poverty Estimates for 2004-05, PIB, Government of India, New Delhi, March, 2007

Table 1: Growth of linked SHG’s in the regions

Region

North

NorthEast

East

Central

West

South

All India

March 2004

52,396

12278

158237

127009

54815

674356

1079091

March 2005

86018

34238

265628

197365

96266

939941

1618456

March 2006

133097

62517

394351

267915

166254

1214431

2238565

%increase between

2005-06

6%

3%

18%

12%

7%

54%

100%

March 2007

182018

91754

525881

332729

270447

1522144

2924973

%increase between

2006-07

6%

3%

18%

11%

9%

52%

100%

Share ofpopulation

13%

4%

22%

25%

15%

21%

100%

Share of BPLpopulation

7%

3%

29%

32%

14%

15%

100%

Benefi ciaries


not-for-profi t MFIs: societies, trusts and cooperatives. These are collectively referred to in the bill as Micro Finance Organisations (MFOs).

Progress under the SHG Bank Linkage Programme (SBLP)India has seen an average annual growth rate of 82 percent in providing microfi nance services through SHGs in the period from March 1993 to March 2006, in relation to a 110 percent growth rate in terms of credit amount. SHG Bank Linkage Programme has proved to be the major supplementary credit delivery system with wide acceptance by banks, NGOs and various government departments. During the financial year 2005-2006, around 620,109 SHGs were linked under the SHG Bank Linkage Programme, it incorporates more than nine million households into the fi nancial sector.

According to the NABARD Annual Report 2007, the western region of India has experienced 63 percent of growth in its entire region. Table 1 shows that the growth rate in eastern region was 33 percent and in central region, the growth rate was 24 percent. The fi gures also show that the southern region is leading in the programme. During the fi nancial year 2005-2006, Andhra Pradesh had further consolidated its role as the leading state in the size of SHG movement by holding 279 households participating in SHGs for every 1,000 households. During this period, the number of new loans in Andhra Pradesh, remained about the same but the number of repeat loans increased by 31 percent/year. Himachal Pradesh, Kerala, Assam, Rajasthan, West Bengal and Maharashtra formed an intermediate group with 94, 85, 82, 65, 61 and 56 households participating in SHGs for every 1,000 households, respectively. In Uttaranchal and Jharkhand there were less than thirty-two households participating in SHGs for every 1,000. In Jammu and Kashmir, Haryana, Punjab and Arunachal Pradesh there were less than ten households participating in SHGs for every 1,000 of the total households.

MFI performance: Efficiency with growth The MFI model in India is characterised by a diversity of institutional and legal forms. The fi rst and most well known MFI, SEWA, was incorporated as an urban cooperative bank in 1974 and demonstrated that poor people were bankable. In the 1980s, a number of registered societies and trusts commenced group-based savings and credit activities on the basis of grant funds from donors. MFIs of all legal forms have their own funds or are built up mainly from; (i) donor grants in the case of societies and trusts, (ii) equity investments and promoters’ capital in the case of companies, (iii) shareholdings in the case of cooperatives, as well as (iv) retained earnings in the case of all three categories, the main source of funds is debt, borrowed from the banks and apex fi nancial institutions.

In the last decade, the MFI model has seen a series of critical developments in the Indian MFI sector. According to the estimates of 2006 Annual Report by Microfi nance India, joint effort of Care, Ford Foundation and Swiss Agency for Development and Cooperation (SDC), Large MFIs are more effi cient in the disbursal of funds with 81 percent of total assets held as loans, as against 75 percent in the case of medium and small MFIs.

Table 2 shows that growth is concentrated in two regions, the South and East, which already account for about 95 percent of membership. The 31 percent growth was recorded in the West, on an extremely small base, while only 11 percent growth was registered in the North, among a larger base. With fi nancial support from government for SHG programmes the establishment of a large number of MFIs following the SHG model has been registered.

From the perspective of the legal framework (Fig 1), the proposed new microfi nance law does not cover nearly 80% of these clients since 73% are served by NBFCs or MFIs on the verge of transformation to NBFCs and another 6% by Section 25 (not for profi t) companies. Such institutions fall outside the ambit of the proposed law.

Progress under social performance MFIs and those who work for MFIs like banks, investors, and donors are social enterprise. For any MFI, fi nancial sustainability is important. An MFI that can cover its costs - has good fi nancial performance - can grow to serve more clients in more areas. Social performance in microfi nance is defi ned as “the translation of mission into practice in line with accepted social goals”: These social goals relate to:

Reaching the poor or excluded clientsImproving the quality and appropriateness of financial

••

Table 2: Region-wise growth in outreach in 2003-04 and 2004-05

MFIs byregional

distribution

East

West

North

South

Total

No. ofMFIs

18

2

3

45

68

Outreach - FY2005

332476

6,738

91317

1710323

2140854

Annual Growth(%) in outreach

FY 2005

61.12

31.4

11.34

67.5

62.86

Annual Growth(%) in outreach

FY 2004

32.68

42.15

19.5

51.73

45.94



18 i4d | June 2009

servicesContributing to employment and enterprise growthImproving the economic and social conditions of clients and their householdsEnsuring social responsibility to clients, to staff and to the communities they operate in

In 2006, M-CRIL (Micro-Credit Ratings International Limited) conducted social ratings among MFIs in India with support from the Friends of Women’s World Banking (FWWB) and the Ford Foundation. In its rating, twelve MFIs, eight from the south, four from the north, are providing microfi nance services as one aspect of their social performance. Out of these twelve, fi ve follow the Grameen model, three the SHG model, three are Cooperatives (MACS) and one follows the individual model.

Progress through commercial banking Most MFIs usually devote their energies in dealing with the uncertainty of loans. The rapid expansion of the MFI model in the last decade has been driven by private commercial banks. Initially the private banks were motivated by priority sector obligations since they did not have any rural branch networks. But after seeing perfect repayment rates the banks have realised that investment in MFIs is a profi table activity.

••

•

The estimates from the 2006 Annual Report of NABARD, show that commercial bank lending for the MFI sector has doubled every year for the last three years. Most of the banks have dedicated microfi nance units. Lending has been concentrated in the South but since the agrarian crisis in Andhra Pradesh most banks are expediting their efforts to expand to other locations too. According to these estimates, about 60 percent of ICICI Bank’s microfi nance lending consists of loans to MFIs under the partnership MFI model. Under the partnership MFI model, major banks like ICICI Bank are leading the way by partnering with SHARE and Basix that enabled MFIs to expand lending the same amount. Banks like Axis, ABN AMRO, ING Vysya, Standard Chartered and HSBC have supported 40, 19, 19, 12 and 8 MFIs, respectively. Citibank is providing core funding for the Indian School of Microfi nance, which is part of the SEWA family of institutions in Ahmedabad, and ICICI bank is supporting training and incubation initiatives by Basix, CASHE-CARE, and MicroSave.

ConclusionThough the government proposed the Microfi nance Bill in 2005 but there are two important areas of reform that would have a more immediate impact on fi nancial inclusion, at least with respect to credit services. MFIs most often are subject to misunderstanding by the public, suspicion by local politicians, and destructive and ill-informed rumours from competing MFIs. It becomes critical to understand the reputation of MFIs among various stakeholders, to what extent this reputation is negative, and why these reputations are formed. It is also critical that MFIs improve transparency, streamline their operations and develop their communications skills to develop a sound reputation and protect themselves against defamation and misinformation. As the sector grows and competition increases, over-indebtedness of clients becomes a concern. There is a need to fi nd out the extent and patterns of competition, the extent of multiple borrowing, and whether this is bad or not. There is also a need to think of ways to manage competition so that competition affects clients positively.

Ritu Srivastava

The Bil l and Melinda Gates Foundation is giving $20 million to the World Bank for a programme to provide fi nancial services in developing countries. The World Bank will use the Gates funding to establish what it calls the Agriculture Finance Support Facility.

The programme’s mission is to increase access to financial services, such as savings, credit, payments and insurance, in rural areas in developing countries as profi table business lines.

It will make grants to banks and other institutions. The global economic crisis means access to financial services has become even more difficult for small farmers and rural entrepreneurs.

In microfi nance, the World Bank Group’s biggest investor is the IFC, a profit-oriented financial institution. The IFC had a microfi nance portfolio of $498 million in 2007 and planned to double its investment to $1.2 billion by fiscal year 2010, which would

make IFC the largest investor in the microfi nance industry.

The World Bank said its data shows that 69 percent of small farmers in India did not have credit with formal financial institutions. In Honduras, Nicaragua and Peru nearly 40 percent of agricultural producers are “credit-constrained,” and less than 1 percent of farmers in Zambia and less than 2 percent of the rural population in Nigeria have access to credit from formal institutions.

Gates Foundation gives $20 million to World Bank

Social Rating

South

Bullock-Cart Workers Development Association (BWDA) ASPBASIXActs Mahila Mutually Aided Coop Thrift Society (AMMACTS )SWAWS Credit Corporation India Ltd. (SWAWS)

North

CASHPOR Financial and Technical Services (CFTS)Bandhan Microfi nance

•

•••

•

•

•

Poverty Audit

ASA Model SKS Microfi nancePayakaraopeta Women’s Mutually Aided Co-operative Thrift and Credit Society (PWMACS)

Rashtriya Gramin Vikas Nidhi (RGVN)Nav Bharat Jagriti Kendra (NBJK)

•••

•

•


Microfinancing Ghana MICROFINANCE SECTOR IN GHANA

The microfi nance sector in Ghana is a fast growing industry. Financial Non Governmental Organisations (FNGOs) whose activities are mostly in rural and urban centres directed their efforts towards the productive poor. The mother organisation for FNGOs is the Association for Financia l Non-Governmenta l Organisations (ASSFIN). Some Rural Banks undertake microfi nance projects. Rural Banks are licensed and regulated by the Central Bank of Ghana through the ARB Apex Bank which is a mini Central Bank in Ghana for the Rural/Community Banks. The regulatory frameworks of the Rural Banks limit their expansion into certain geographical areas outside their catchment’s boundaries. Financial Service Companies, Savings and Loans Companies, and some Commercial Banks have made an entry into the microfi nance industry. Their microfi nance operations are mostly confined within the urban centres for commercial reasons. Credit unions also engage in microfi nance. The apex body of all Credit Unions is Credit Union Association of Ghana (CUA Ghana). Credit Unions are owned by its members or clients. Traditional Susu (daily savings) Collectors under auspices of the Susu Collectors Associations dominate the urban and rural areas. Despite tough regulation of this category of microfi nance service providers, operators often run away with the savings of their victims. The government of Ghana through the Central Bank is re-tightening the regulation of this category of microfi nance service providers. Other informal sector initiatives are Self Help Groups and Associations who undertake rotating savings and credit to their members on systematic basis.

The Government has been setting up microfinance projects in collaboration with development organisations for certain sectors and/or deprived communities for the past few years.

In Ghana, only Banks and Savings and Loans Companies can accept deposits

from the general public. Therefore, the inability to r a i s e low in te re s t liability through deposit mobilisation is a limiting factor in microfinance funding. The regulatory framework does not permit c e r t a in mic ro f inance services such as insurance for clients by the microfi nance institutions themselves. Insurance, for instance, have to be done through r e g i s t e r e d In s u r a n c e Companies. The regulatory restrictions are to forestall instability in the money market and the economy of Ghana.

The 2002 population census of Ghana indicated 20 million people in Ghana. Apart from constituting a higher proportion of the overall population (51%), women also dominate agriculture, producing 70% of the national crop output, as well as in trading where 24.7% of the 80.7% employed are females, compared to 7.4% of the 84% employed males. A higher proportion of these women are subsistence level farmers and traders. Given the background that women form a greater proportion of the population, the potential microfinance market in Ghana is dominated by women. The high unemployment rate for the (15-24) age group requires enterprise development and fi nancing package to support individuals in the category, particularly the females who are more vulnerable.

It is clear from the analysis above that a signifi cant proportion of the economically active population is engaged in agriculture and the informal sector. These enterprises lack access to institutionalised credit.

As such, Ghana has seen a significant increase in the number of MFIs attempting to provide financial services to the productive poor.

The genesis of ASA InitiativeAfter working for six years in the microfi nance sector at various positions ranging from Manager, University of Cape Coast Credit Union to Director (Microfinance), CRAN Microfinance, the author instituted ASA Initiative Microfi nance Ghana. During her eventful career, she has been succesful in the implementation of the microfinance projects for the Government of Ghana under the Economic and Social Recovery Programme (ESRP) of fi ve districts in the

Sale of Mobile phone accessories has become a business in the villages

20 i4d | June 2009

western region of the country and Social investment Projects in the Abura Aseibu Amankessie district in central Ghana. She was selected to join a team of fi ve Practitioner Institutions for a study tour of the best fi ve Microfi nance institutions in Ethiopia and Bangladesh. The purpose of the study tour was to enhance the participating organisations’ potential for effective contribution to poverty reduction through microfi nance in Ghana. As a result of the lessons learnt from the study, she returned and started ASA Initiative after analysing the research done about the operations and strategies adopted by the other institutions and adapting them to the Ghanaian milieu.

Over time she has been working with women groups, youth and the productive poor, to enhance their capacity

through microfinance with training to reduce women and youth unemployment and underemployment in the rural and urban centres.

ICTs for microfinance in GhanaIn Ghana, Rural Banks and other Microfi nance Institutions are linked to the big commercial banks. Computerisation and competition has lead to the search for effi cient ways of serving clients. Commercial banks have computerised their systems and network with their branches. This has reduced the risks associated with the transport of money over long distances. Microfi nance Institutions keep their reserve money accounts with commercial banks and rural banks in the villages. The use of Apex cheque by all rural banks in the country and the fast clearing system facilitate the institutions’ outreach to the microfi nance clients nationwide.

Rural electrifi cation project of the Ghana Government has facilitated the extension of Internet connectivity in the remotest rural areas. Access to solar power in Ghana has complemented the efforts of electrifying remote places in Ghana for effective ICT usage. This has greatly facilitated the smooth functioning of offi ces and mobile micro fi nancing in almost every part of the country.

Mobile phone networks have been extended to almost all the villages in the rural areas of Ghana. With the infl ux of foreign telecommunication companies, there is high competition among the players hence cordless home mobile phone sets, Kasapa Home and Offi ce Phones, were provided free to households as a strategy of connecting all homes and offi ces with mobile phones. Because of the free and low-cost handsets (ranging between US$4 - US$10), the use of mobile phones has helped extension of microfi nance to rural communities in Ghana. Loan offi cers communicate effectively with group members at anytime and anywhere, even in the farms. Head offi ce and branch offi ces are in contact with offi cers on the fi eld all the time through mobile phone network. For instance, communication from Tigo (a popular cellular service provider in Ghana) to Tigo network cost less than US$1 (US$ 0.7) from 6.00am to 6.00pm.

The Internet can be accessed on mobile phones and in ASA Initiative for example, all microfi nance loans for approval are confi ned in one page credit memoir report and the soft copy is sent through email to all the members within the approval committee who are based out of different offi ces and towns. Through Internet conferencing within a minimum of 5 to 30 minutes loans approvals are given and feedback sent through email for loan disbursement. This has reduced a lot of paper work, also reduced the time taken for loan approval and made the entire system faster and fl exible to reach out to many rural and urban clients within the shortest possible time.

Using ICTs to reach the unreachedIt is not always easy to connect all remote and rural areas. The advent of cost effective ICT solutions will enhance the coverage of microfinance to the underserved masses in Ghana, who mostly reside in remote rural areas. A clear manifestation of this has been seen in the case of the economical and sometimes free availability of mobile communication systems and their impact on Ghanaian microfi nance. ICT tools can be employed to collect

ChallengesThe microfi nance activity began with a loan of US$ 1,000 from her younger sister Vivian Tseyi (her lifetime susu savings) which Kitti lent to the fi rst 10 women in 2006. In the same year the company was able to source a loan of US$100,000 from a local investment company to support the microfi nance business. Timely loan repayment led to the approval of additional US$900,000 in 2007. However, the high domestic interest rate of 31% which is currently at 39% has negatively impacted the reserves of the initiative and it’s capacity in making clients’ business successful. The high domestic interest rate has, therefore, limited the ability of the initiative to expand its activities and reach the larger underserved population.

Coupled with the high interest rate is the low capitalisation on lending to the microfi nance clients. Lack of adequate funding has become a limiting factor in reaching out to the deprived communities who are still out of reach of these microfi nancing institutions. To tackle this, ASA Initiative has started to look outside of the domestic funding market to garner adequate funds. The organisation has been contacting potential low interest fund providers/fi nancers to help expand its funding capacity to reach out to many more rural and urban poor households through microfi nance to improve their livelihood opportunities.

ICT for development and computerisation of the operations for effi ciency called for heavy initial investment. This was a big challenge and through careful planning Loan Performer software was purchased in the year 2008 from Crystal Clear Software, Uganda to computerise operations. For full computerisation and branch networking to take place, a bigger offi ce building was needed where the head offi ce would be set up. The initiative was able to acquire a two storey building of which renovation would be completed in the year 2010.

Another challenge was attracting quality human resource. Initially as a young company, professionals were not attracted because of fear of job and income security. However, as the initiative began to offer remunerations slightly higher than that of the Commercial Banks, it has now attracted graduates from the universities and polytechnics, some of whom were earlier working with the Commercial Banks.


loan repayments and savings on the fi eld and all the related data entry work can be computerised to decrease the transaction entry time and costs. Even the above-mentioned change in transaction initiation and completion can go a long way in reducing staff and operational costs incurred in extending microfi nancing services to the masses. The lower operating costs will translate into the ability to serve more people.

The road aheadAn additional one hundred thousand households will be covered in each of the ten regions of Ghana with microfi nance in the near future. ASA Initiative intends to have it’s microfi nancing activities affect the whole community and the macro economy of Ghana. The organisation believes that in order to make the entire system more effective microfi nance initiatives should be linked to the positive impact and development of the clients, the communities that the poor are part of and the economy within which they live. This has a give and take effect. Positive development has a multiplier effect on the economic and social lives of the affected communities and the economy as a whole.

Establishment of Light Industrial AreaAs part of its microfi nance project, ASA Initiative is collaborating with the local Government to establish Light Industrial Area for one of its main market segments, Forum for Small Scale Business Association (FOSBA). The light industrial sector is a new community all together which is going to be developed. 153 acres of land has been acquired near a village called Mpeasem. The land has been surveyed and registered with the Local Government. The demarcation, construction of roads, extension of electricity, water, clinic and other social amenities are ongoing projects to be funded by the Central Government through the Local Government. This has been done to reduce the cost of land per client.

Further development work has been delegated to ASA Initiative. Workshops, stores, offi ce buildings and residential buildings would be constructed to economically establish the productive poor from the rural areas and poor migrants from the city centres. The very poor or the poorest of the poor would be assisted with microfi nance to own a residential house(s) to generate sustainable rent income for living. Microfi nance plus business establishment would be the focal step. ASA Initiative’s microfi nance branch would be at the centre of the site to cater to the needs of the clients. The philosophy is based on focusing on the success of the clients.

It is expected that the pilot project would be replicated in all the other nine regions of Ghana. This will positively contribute to the new community in terms of jobs, improvement of economic condition and overall well-being of the target group. The ultimate goal would be positive contribution to the GDP annually.

Cultivation of cash crops for export and domestic industryAbout 70% of the population of 20 million Ghanaians are engaged in agriculture and most are at the subsistence level and they reside in rural areas. They are under the grip of poverty and its concomitants on the livelihood of these households. The break of the poverty chain is in the mirror of developing the economic

potentials and opportunities within their settlements. The rural clients would be assisted through ASA Initiative Cash Crop Project to acquire land of sizeable dimensions to cultivate cash crops for long term sustainable income generation. Traditional and non traditional cash crops would be cultivated for export and as raw material for domestic industry.

The plan will begin with a coconut plantation project from the coastal areas of the Western, Central and Volta regions of Ghana. This initiative has been instituted in collaboration with the University of Cape Coast (Ghana) and University of Udine (Italy). Lack of adequate funding is still a hurdle here.

Investment in information capital - computerisation and networking of ASA Initiative’s branchesCurrent and future microfi nancing branches of ASA Initiative would be computerised for effective MIS and loan tracking. Growth challenges would be overcome through the establishment of robust MIS therefore the quality and the base of information capital would be expanded for effective, effi cient and economical microfi nance delivery to cover the ten Regions of Ghana.

Quality management and human capital developmentProactive development of human capital base of the initiative is crucial to achieving professionalism. ASA Initiative is committed to continue with the strategy of attracting, maintaining and motivating quality human calibre to combine with other corporate resources in achieving maximum economy of scale for the benefi t of clients and other stakeholders.

Pension plan for microfi nance clientsLiaising with investment companies to establish pension savings for clients is next on the agenda of the Initiative. Discussions have been ongoing with Data Bank Group, a large investment company in Ghana, to establish a quasi long-term mutual investment fund for microfi nance clients into which small monthly savings/investments, as a security for their old age would be contributed into. This initiative would begin during the last quarter of 2009 to cushion clients living during the time of their life when they have retired from active business.

Future of the microfinance sector in GhanaA majority of productive Ghanaian women have meagre incomes and live in abject poverty, ignorance and struggle for one square meal a day, lack clothing, shelter and other basic necessities. Even though it is expensive for fi nancial institutions to maintain electronic accounts for them, they are bankable provided an effective methodology is employed. However, these poor productive households normally rely on the mercy of local money lenders who charge exorbitant interest rates ranging between 10% to 100% per month. The resultant effect is the perpetuation of debt burden which fi nally erodes their businesses and thereby increasing the poverty burden on the households.

Microfi nance has now become a household word in Ghana. Every household is talking about microfi nance as a means of achieving sustainable livelihood. Hence, it is clear to see that there exists a large market for microfi nance which is yet to be reached.

22 i4d | June 2009

Reserve Bank of India (RBI) plans to engage self help groups (SHGs) and primary agriculture credit societies (PACs) as business correspondents (BCs) to ensure greater banking penetration in the country’s interior rural belt. The banking regulator has decided to make use of the banking correspondent model extensively to provide banking facility to some 1 lakh unbanked villages of population in excess of 2,000.

RBI Deputy Governor Usha Thorat recently said the central bank would have like banks to achieve the target by 2011. Besides trying to fulfi l the target in time, RBI said the focus would also be kept on maintaining quality of banking services.

Banking penetration doesn’t mean merely opening of bank accounts. Banks need to ensure that account holders use their bank accounts purposefully. We would also like banks to offer credit facility, insurance cover and remittance facility to rural account holders, Ms Thorat has recently said.

Incidentally, although PACs are in principal allowed to work as business correspondents, they are not being used for this purpose. Concerted efforts may be made for using PACS as BCs where such PACS are functioning

reasonably well, the RBI has recently said in its draft report on lead bank scheme. Likewise, the report observed that SHGs which have been successfully linked to

the banks have proven their ability to manage accounts and handle money. The local fl avour of the

SHGs and their intimate knowledge of the areas in which they operate as also their association with banks make them a good choice to act as business correspondents, the report said, adding that RBI might consider allowing banks to use mature SHG group leaders as BCs

with IT solutions in place to ensure requisite safeguards.

At present, banks are treading with caution in using business correspondents widely. Some quarters have voiced concerns over the safety features and possible misuse of this model.

In this light, the banking regulator in its annual policy review of 2009-10 has announced that it would form a group to review the eligibility of persons who can act as BCs. It has underscored the need to take into account the experience of a few large BCs, the need to facilitate recycling of cash, apart from the regulatory and consumer protection perspectives.

RBI goes rural with SHGs

The Government of Ghana has identifi ed microfi nance as one of the main tools for poverty reduction, in promoting Small and Micro Enterprises and private entrepreneurs into middle income level by the year 2020. The Government has therefore been creating enabling legal and regulatory framework to enhance future operation of microfi nance activities in the country. This would augment ASA Initiative’s activities in poverty alleviation and economic development.

As part of its vision 2020 and poverty alleviation strategies the Government often collaborates with local microfinance institutions, mostly FNGO’s and Rural Banks to implement Government initiated microfi nance activities for some sections of the deprived populace. Some of these projects include Microfi nance and Small Loans Centre (MASLOC), Emergency Social Relief Programme (ESRP), Poverty Alleviation Fund, Local Initiative Fund etc. The goodwill of the Government of Ghana in embracing microfi nance as major tool for poverty reduction has mirrored a very bright future for the industry. The industry is a fast growing one with large numbers of people underserved due to low capital base of the players of the industry.

The umbrella organisation of microfi nance, Ghana Micro-fi nance Institutions Network (GHAMFIN), has been undertaking structural reorganisation to effectively oversee the activities of

member organisations. GHAMFIN has set up a sub-unit ASSFIN as part of it’s effort to gradually improving its capacity to support the member micro-fi nance institutions effectively. This came up as a result of commercial fi nancial service providers such as Financial Service Companies, Savings and Loans Companies and some Rural Banks entering into the microfi nance arena. An effective leadership is crucial to the future of microfi nance in Ghana.

With the introduction of microfinance as a diploma and degree courses at the University of Cape Coast, Ghana, more research work would be undertaken in microfi nance in the near future which aim to serve as a basis of industry growth and improvement. Integration of ICTs in microfinance is envisaged to boost the future growth of microfi nance initiatives as a whole.

Veronica Agodoa Kitti

Managing Director

ASA Initiative

Ghana

[email protected]


Farm credit likely to be enhanced in India With inclusive growth as the buzzword, the Government of India is likely to enhance farm credit by nearly Rs 50,000 crore, enlarging the scope of subsidised credit to over 5 crore farmers across the country.

During a meeting of Finance Minister Pranab Mukherjee with heads of public sector banks, the former emphasised that banks should increase spending on labour-intensive sectors such as agriculture to boost the purchasing power of people.

Though the Minister remained tight-lipped on sectoral targets for banks, sources said farm credit would go up by more than 16% this year bringing under its cover an additional 50,000 people from 4.5 crore earlier. In the 2008-09 fi scal ending March 31, total farm credit was Rs 2.80 lakh crore which is expected to go beyond Rs 3.25 lakh crore this year. It is believed that the Congress-led UPA government would bring down the existing rate of interest for agriculture credit hovering around 9%. Even after a 2% government subsidy, the rate is still at a high of 7%.

RBI asks banks to review MSME lending policySpeaking at the one-day conference on ‘Learning from recession, saving an economy: Towards an MSME agenda’, Usha Thorat, deputy governor, RBI, asked the banks to review their credit policy towards micro, small and medium enterprises (MSMEs).

Acknowledging the importance of sector, she said, “About 12.8 million MSMEs provide jobs to over 300 million people and account for 39 per cent of the manufacturing sector output and 33 per cent of exports.” Thorat reasoned that MSMEs have been badly hit by economic

downturn. “MSMEs are facing a slump in demand for exports and services, besides a build-up of large inventory, delayed payments and slowdown in remittances. She also pointed that MSMEs are the “worst sufferers” when a disaster strikes. Hence, these sectors must be provided relief on the lines of the National Equity Fund as recommended by the Chakraborty Committee.

Indicating the government’s initiatives towards the same, Usha said, “RBI had taken unprecedented’ measures to ensure liquidity and credit fl ow to MSMEs to help the sector during the recessionary period now and a special refi nance facility under Section 17 (3B) has also been extended to them.” Thorat also indicated that the regulator has granted in-principle approval for setting up to four credit information agencies to ensure better credit disbursal and monitoring.

As per RBI guidelines, it is mandatory for domestic commercial banks (public and private sector) to provide 40 percent of Adjusted Net Bank Credit (ANBC) to priority sector, which includes agriculture and micro, small and medium enterprises. A recent fi nding revealed that major banks failed in achieving agri-advance targets until November 2009. The list includes major banks - Bank of Baroda, Oriental Bank of Commerce, United Bank of India, Corporation Bank, Union Bank, Punjab and Sind Bank and Syndicate Bank.

New government bringing in new hope for MSMEsThe MSME sector in the country might get fi scal aid from the government soon. The newly formed government, led by the United Progressive Alliance (UPA), is focused on addressing the credit requirements of this cash-strapped sector.

In the next few months, the government hopes to evolve mechanisms and structures to ease credit access to the MSME sector which is largely unorganised. It has proposed a separate fund for enterprises in the unorganised segment which the Ministry of MSME would push for in the coming months.

In a bid to help MSMEs further, the ministry would also propose a ‘Procurement Policy’. Once this policy is implemented, targets would be set for the government departments and organisations to source

their requirements from the MSME sector. The ministry is likely to hold meetings with the government in the near future to discuss various issues and problems faced by small and micro units in the country.

“About 42 million people are employed in the MSME sector in India, contributing heavily to the country’s total industrial output and exports. Evidently, the segment plays a major role in the economic growth of the country. With the government planning to take measures to provide support to the MSME sector, growth of the national economy is likely to get a boost,” says H Shivdas, proprietor of a small-scale apparel exporting firm in Trivandrum, Architha Exports.

The government is also planning to bring about reforms in the Khadi sector, which has signifi cant MSME presence. Furthermore, it intends to launch the different schemes recommended by the National Manufacturing Competitiveness Council (NMCC) to enhance productivity of MSMEs.

Sage India launches payroll software for SMEsSoftware solutions provider Sage India launched its payroll software designed for small and medium businesses to help companies with their salary-related operations. The Payroll software, ‘Sage Pocket’ comes in two versions — professional and premium — along with online modules available as add-ons.

The Sage Pocket Professional solution is confi gurable and allows the user to set statutory regulations, calculate income tax, track reimbursements and generate pay slips. Employee master details can be maintained with the option to upload all the necessary documents. Sage Pocket has been simplifi ed for Partner network of Sage to easily sell and implement it for their customers

Further, the Sage Pocket Premium solution is an advanced version for multi-user, multi-firm and for up to 1,000 employees. With a starting price of Rs 25,000, Sage Pocket is now available with all authorised partners of Sage. Meanwhile, Sage Pocket’s set of modules available online enable employees to have an online access to information relating to human resources, leaves and claims.



Microfinance News

24 i4d | June 2009

??????/ Snapshots of micro

Mahila SphurthiDeveloped by: CoOptions

A scalable product cum solution for banks, NBFCs, NGOs and private enterpreneurs who are in the space of micro-fi nance.

http://www.cooptionstech.com/Mahila%20Sphurthi.aspx

Mahakalasm MISDeveloped by: Ekgaon Technologies

The MIS will allow central tracking of the accounts, fi nancial position, loan repayment performance and related information for a community of SHGs.

http://www.ekgaon.com/MIS

Financial Accounting and Management Information System (FAMIS)Developed by: BASIX’s software partner, Sathguru Management Consultants

It was designed to be a comprehensive solution for accounting and management information needs.

http://www.sathguru.com/index.php


ofi nance solutions

BanksoftDeveloped by: Processware Systems, Bangalore

A software that enables branch automation, head office consolidation, and inter-branch reconciliation. A user-friendly software package, BankSoft provides integrity, flexibility and security to the user.

http://www.processwaresystems.com/banksoft_main.htm

MIFOSDeveloped by: Grameen Foundation’s Technology Centre

Mifos is a centralized management information system (MIS) platform featuring a user-friendly browser-based web interface running on top of a robust MySQL database. The open source framework allows microfinance institutions to select local developers to assist with the customisation, implementation and maintenance of their software

http://www.mifos.org/

Financial Information Network and Operations (FINO)Promoted by: ICICI Bank

FINO is a biometric enabled multi-function card for end users which can be part of a portable system. It will offer the advantages of a smart card, point of sales terminal advantages for the front end services, banking, software performance and reporting MIS for back-end as well as information services to all MFIs.

http://www.icicifoundation.org/cs_fi no.html

26 i4d | June 2009

e-Cashbook in Orissa panchayats

ACCOUNTING SYSTEM IN ORISSA PANCHAYATS

Computerisation has been introduced in District Rural Development Agency (DRDA) and Block Panchayat level to maintain transparency and accountability in administration and fi nance. To start with the process a small tool namely PRIAsoft (Panchayati Raj Institutions Accounting Software) was developed by National Informatics Centre, Orissa State unit. It captures the month-wise/scheme-wise accounts infl ow and outfl ow in shape of cash, bank, treasury and advance of the 3-tier Panchayati Raj Institutions i.e. Gram Panchayat, Block Panchayat and Zilla Panchayat. As a result, at the end of each month the funds fl ow statement of 3-tier PRIs is available. After the successful deployment of PRIAsoft, further need-based projects were taken up within the availability of funds for better benefi t of the rural poor.

This exercise was started during 2003-04 by computerising the Block Panchayat. Two desktops and a Computer Programmer having B.E and MCA qualifi cation were

deployed in each Block Panchayat. Usage audit of the system confi rmed that the system was prone to wrong entries by the semi-skilled Block Cashier. In order to plug the loophole in the system and to prevent incorrect entries an Enterprise-level double entry accounting package was envisaged. This application was also mandated to capture the daily fi nancial transaction and prepare the abstract report for monitoring a number of anti-poverty schemes/programmes. Therefore, it was decided to use accounting software available in the market. These accounting packages are targeted at small trading, manufacturing units. Apart from accounting, they offer features such as costing, sales and inventory management. However, there are hardly any solutions available for Non-Profi t/Government organisations like Block and DRDA. During this process, Xavier Institute of Management, Bhubaneswar offered a solution to provide an application namely PAMIS (Project Accounting and Monitoring Information System)

for Block and DRDA. PAMIS is a tool for Non-Profit organisations engaged in development work. PAMIS helps Non-Profi t Government organisations to implement their projects and programmes in a timely manner and within the available budget. PAMIS, also helps the Project Directors plan and monitor all aspects of their projects and their programmes.

Designed to manage core financial and physical aspects, PAMIS is easy to install and implement. PAMIS manages all accounting needs of an organisation effectively. All routine features of accounting are built into the software. To maintain the daily fi nancial transaction at the Block and DRDA level, PAMIS has been implemented in all the 344 block and DRDA locations and the manual Cash Book has been replaced by Computerised Cash Book.

The software can be operated in the following environment Operating environment:

Server operating system: Any operating system that supports Oracle databaseDatabase: Oracle RDBMSClient operating system: Windows 98, Me, 2000 or xpGraphic User Interface: Developer 2000 runtime

Platform:Online Web-based version deployed Offl ine batch processed Standalone version deployed

What is PAMIS?The version of PAMIS used by the Department of Panchayati Raj i s called Panchayat Accounts Monitoring Information System. It is capable of capturing daily fi nancial transaction of DRDA/Block based on the double entry

•

••

•

••

PAMIS Training Programme in Sundergarh District


accounting system. To start with PAMIS, Master Data for Accounts, Budgets and Projects are to be initialised, which was initially bundled in the software by Panchayati Raj Department, Govt. of Orissa before installation in the Blocks and DRDAs. Then daily financial transactions are entered in 3 types of vouchers designed by Panchayati Raj Department, Govt. of Orissa. These 3 types of vouchers are Receipt, Payment and Journal. For ease of use, the manual vouchers have been colour-coded, green for receipt, red for payment and yellow for journal (advance adjustment) vouchers. Block Cashier prepares the manual vouchers based on the daily fi nancial transaction and enters the data into the package. Then the software takes care of the generation of cashbook, journals, consolidated cashbook of Panchayat Samiti (Schemes) and Government (Salaries including Teachers’ salary), separate cashbook for Panchayat Samiti and Government, subsidiary cashbook for all schemes under Panchayat Samiti, advance ledger, balance sheet, receipt payment statement, income expenditure statement and so on.

Functional features of PAMIS are enumerated below:PAMIS is an accounting softwarePAMIS is a project planning softwarePAMIS fi nds true expenses for a project not it’s allocated costs.PAMIS treats a project as a complete accounting entity not merely a cost centre.PAMIS monitors project fi nancialsPAMIS monitors physical activities of projectsPAMIS ensures transparency, accountability and responsibilityPAMIS is a tool to obtain success in project planning, monitoring and execution

Modules of PAMIS are as follows:Double entry accountingProject-based accountingLocation-based accountingPhysical activity monitoringFinancial budgeting

•••

•

•••

•

•••••

Financial performance monitoringImpact analysis:Currently, PAMIS is operational in 314 Block Panchayats and 30 Zilla Panchayats in Orissa.

PAMIS generated cash-bank book is offi cial. There is no manual cashbook in Block or DRDA of the State. PAMIS generated reports are Comptroller and Auditor General compliant. Chartered Accountants, Auditors are using PAMIS-generated receipt payment statement for making audit reports of Blocks and DRDAs.It is also developed in accordance with the Panchayat Samiti Accounting Procedure Rule of the Government of Orissa.

Implementation procedureThe chief architect of PAMIS is Professor Gopal Krishna Nayak Director, IIIT (Ex-professor of XIM, Bhubaneswar) who never thought that a semi-skilled Block Cashier will implement this software by understanding the Golden Rule of Accounting

Procedure. According to him “PAMIS is a dream project for us, the challenges of getting accounts done by non-accountants, getting a transparent system accepted by block-level functionaries, usage of technology by non- technocrats are stupendous. However, when PAMIS was used by all Blocks and DRDAs in Orissa, it became

•

••

•

•

•

Panchayati Raj, Orissa Simplifi cation of Accounting Procedure in PAMIS

Accounts HeadAssetLiabilityIncomeExpenditure

Debit (Dr)Increase ( )Decrease ( )Decrease ( )Increase ( )

Credit (Cr)Decrease ( )Increase ( )Increase ( )Decrease ( )

Golden Rule of Accounting Procedure incorporated in PAMISRule 1 : Debit what comes in, Credit what goes out Rule 2 : Debit the receiver, Credit the giver Rule 3 : Debit all expenses/losses, Credit all incomes and gains

PAMIS is implemented in Phulbani Block of Kandhamal District

PAMIS Screenshot

28 i4d | June 2009

the very fi rst enterprise software that was rolled out on such a large scale in the government sector.”

He devised a simple procedure and advised all Block Cashiers to keep this procedure beneath their table glass and keep it in their mind while preparing manual vouchers before entering the data into the computer.

Gaining from his vast experience and strong willingness of high-level Administrators at the State Panchayati Raj Department, a training calendar was made and trainings were conducted at District Headquarters with separate resource persons having expertise in IT and Accounts. Cost Accountants, Chartered Accountants, IT Specialists travelled throughout the State and imparted training to offi cials starting from Project Directors, DRDA, Block Development Offi cers, Head Clerks, Computer Programmers to Cashiers. Hands-on training to generate cashbook from PAMIS was imparted to these offi cials.

Special Features of PAMIS :The PAMIS software has three dimensions i.e. Accounts, Projects and Location.

It has the capability to consolidate block-wise data to prepare district-wise accounting reports and structured MIS reports. Besides three types of transactions i.e Receipt (either Bank or Cash), Payment (either Bank or Cash), Journal, two new types of transactions were innovated. One is Receipt Mixture (RC) that captures both cash and bank receipts in one transaction. The other one being, Payment Mixture (PM), which captures the fi nancial transactions involving both bank and cash disbursement and adjustment of advances.The consolidated cashbook in PRIASoft format is generated through PAMIS at the end of each month and is transmitted to the PRIASoft portal of National Informatics Centre through fi le transfer protocol (ftp) from the stand alone desktop computers of Blocks and DRDAs.

•

•

•

Once this data is uploaded on to the PRIASoft portal, the citizen-centric reports are available in the public domain.

Once PAMIS is uploaded online for all Blocks and DRDAs, at the end of each day anybody can analyse the progress made of each block. However, on pilot basis, some blocks of Cuttack District and Kandhamal District are implementing PAMIS in online mode. After success of this pilot, the same will be rolled out for all Blocks and DRDAs. These facilities are not available in the accounting softwares available in the market.

ConclusionThis mammoth task is operating successfully at Block and DRDA level with the help of all stakeholders of Panchayati Raj Department, Government of Orissa starting from Gram Panchayat, Block Panchayat, Zilla Panchayat to State. The recognition of e-Cashbook as the official cashbook of the state of Orissa has created a desire among all stakeholders to accomplish its requirement for effi cient and desired benefi t of rural India in time.

•

atom technologies, an Indian mobile payments service provider has joined Sahayata, a Micro-fi nance Institution (MFI) headquartered in Udaipur city in Rajasthan, India, recognised for working in the area of socio-economic development of women from weak economic backgrounds. atom’s m-Collections solution model will provide Sahayata with a fully developed mobile solution for distributing loans and managing collections of loan repayments.

Sahayata provides micro loans to rural women with an aim to help

women become self-employed and operate small businesses to support their livelihood. Since these women are located in remote rural areas it often

becomes diffi cult for Sahayata to reach them for disbursal tracking and loan

repayment collection. atom’s mobile based m-Collections solution provides better reach to these geographical locations by using mobile connectivity. Sahayata’s employees carry Java MIDP 2.0 mobile handsets with m-collection application loaded in it. This application helps them to connect directly with the backend operations of Sahayata on real-time basis to fetch the customer data for providing effi cient and cost effective service. This has been possible because these remote locations are well connected with mobile coverage.

atom technologies signs up with Sahayata

Shreemanta Kumar SamalIT Specialist and MIS Nodal

Offi cer, NREGS Cell, Panchayati

Raj Department, Govt. of Orissa

Sanjay Prakash Sahoo

Vice-President (Operations)

CSM Technologies Ltd.


Money for women by women

MICROFINANCE AND GENDER EQUITY

Why target women?Traditionally, women have been facing discrimination in access to credit and other fi nancial services. Commercial banks often focus on men and formal businesses and neglect women who make up a large and growing segment of the informal economy. On the other hand, microfi nance often targets women as 85 percent of their clients are women. Therefore, targeting women borrowers makes more sense from the public policy standpoint. From a business point of view, it has been observed that women clients register higher repayment rates. They even contribute larger portions of their income to household consumption than their male counterparts.

The global scenarioThe Microcredit Summit Campaign 2006 reported that more than 14.2 million among the world’s poorest women had access to fi nancial services. Around 74 percent of the 19.3 million poorest women are served microfinance services. More than 3,300 Microfinance Institutions (MFIs) have reached 133 million clients by providing microloans in 2006. Out of these 133 million clients, 93 million were among the poorest when they took their fi rst loan and 85 percent of these poorest clients were women. According to this report, 99.3 percent female clients are using solidarity lending methodology and 51 percent female clients use individual lending from MFIs.

By December 2007, the Campaign counted 3,552 MFIs were reaching more than 154 million clients with ongoing loans. Out of these, 106 million benefi ciaries were among the poorest and 83.4 percent (88.7 million) were women.

According to the Microcredit Summit Campaign Report 2007, of the 3,316 microfinance institutions that were

covered in the report, 970 are in Sub-Saharan Africa, 1,677 are in Asia and the Pacifi c, and 579 are in Latin America and the Caribbeans.

AfricaAccording to the World Bank’s International Finance Corporation (IFC), women own about 48 per cent of all enterprises in Africa. Around 61 per cent of borrowers among the reporting MFIs in Africa are women. Unregulated MFIs serve the highest percentage of women borrowers who represent just over 50 percent of borrowers from African cooperatives, 63 percent of borrowers from regulated MFIs, and 69 percent of borrowers from unregulated MFIs. Among almost half of the reporting unregulated MFIs, more than 70 percent of the borrowers are women. One explanation for the variation is that unregulated MFIs include NGOs and projects that specifi cally target women. Most of the MFIs target clients groups that are most vulnerable such as women and or people with very low incomes.Some of the MFIs who changed the lives of women in Africa are:

Kenya Women Finance Trust (KWFT; http://www.kwft.org) In 1981, a group of women came together and formed the Kenya Women Finance Trust (KWFT), a microfinance lender dedicated to women. Initially, KWFT relied on limited donor funds and loans from commercial banks. Now it has become the largest microfi nance institution for women in East and Central Africa. In 2006 alone, KWFT disbursed $52 million in loans to its clients, managed $16 million in member savings and had more than 200,000 accounts in seven of Kenya’s eight provinces. KWFT also provides medical insurance programme for its clients and

This article looks into the role of MFIs in empowering women to get out of poverty and enable them to contribute in the nation’s development

Ritu Srivastava

30 i4d | June 2009

their families. For a yearly payment of about $60, KWFT clients get policies to cover inpatient, personal accident and funeral expenses.

Pankop Women Farmers Forum The Pankop Women Farmers Forum refl ects the new face of microfi nance in Africa. Pilda Modjadji, founder of the Pankop Women Farmers Forum, started out with the goal of growing fruits collectively and using the proceeds to supplement family diet, raise incomes and pay school tuition fees,. Today they are a group of 300 members who are determined to create an alternative source of employment in the village. The women, with agreement and support of traditional chiefs and municipal authorities, set up a fruit and vegetable dehydration plant. The group got the funds from local commercial banks because Thembani International Guarantee Fund, a South African organisation created in 1996 by the US non-profit Shared Interest and the Swiss-based Recherchés et Applications de Financements Alternatifs au Développement (RAFAD), put up $70,000 in loan guarantees. With these funds, the women plan to meet European Union health and safety standards and start exporting their produce.

Small Enterprise Foundation (SEF; http://www.sef.co.za)Founded in 1992, SEF is a not-for-profi t, pro-poor microfi nance institution based in the Limpopo province of South Africa. SEF aims to work towards the elimination of poverty and unemployment. This is accomplished through two programmes, the Microcredit Programme (MCP) and the Tšhomišano Credit Programme (TCP). MCP focuses on existing, but generally marginal micro-enterprises and provides them with microloans.

On the other hand, TCP strictly targets women who live below the poverty line. Both of SEF’s operations, MCP and TCP, utilise a methodology that has been adapted from that of the Grameen Bank of Bangladesh. As of December 2007, MCP had 15,677 active clients whereas TCP had served 30,063 clients. A vast majority of their clients have been women. Typical enterprises include hawkers of fruits and vegetables and new or used clothing, small convenience shops, and dressmakers. On average, each business employs 1.4 individuals, including the owner, on a full-time or part-time basis. By the end of March 2008, the programme had served 47,560 self-employed clients with a principal outstanding of 57 million Rands. Since inception, SEF has disbursed 437,064 loans for self-employment, to the value of 572 million Rands.

Asia and the Pacific The microfi nance structure in Asia varies signifi cantly across the countries, depending on the stage of fi nancial development; the fi nancial development and the economical development and the policy development. The International Finance Corporation (IFC) 2007 report states that the demand of fi nancial services among poor people is extensive in Asia. The microfi nance movement in Asia is more focused on women; 98% of borrowers were women in Asia in 2006, as compared to 66% in Africa and 61.8% in Latin America. It manages some of the lowest average loan balance worldwide, with a stronger social focus on the poor, presenting lower loan average values than in other regions; USD 151 in Asia in 2006, USD 183 in Africa and USD 671 in Latin America. Grameen Bank in Bangladesh, Friends of Women’s World Banking, India (FWWB-I) and Sadhan in India, Tianj in Women’s

Source:: Microcredit Summit Campaign Report 2007

Sub-Saharan

Africa Asia and

the Pacifi c Latin America

& Caribbean Middle East

& North Africa Developing

World Totals North America

& Western Europe Eastern Europe

and Central Asia Industrialised

World Totals Global Totals

Region

970

1677

579

30

3256

39

21

60

3316

7429730

96689252

4409093

1287318

109815393

55707

3390290

3445997

113261390

8411416

112714909

6755569

1722274

129604168

54466

3372280

3426746

133030913

5380680

74330516

1760405

387951

81859552

13318

76166

89484

81949036

6182812

83755659

1978145

755682

92672298

25265

225011

250276

92922574

3422825

63934812

1258668

321004

68937309

7862

47856

55718

68993027

4036017

72934477

1384338

621111

78975943

11765

142873

154638

79130581

Number of total clients

in 2005

Number ofprogrammes

reporting

Number of total clients

in 2006

Number of poorest clients

in 2005

Number of poorest clients

in 2006

Number of poorest women clients in 2005

Number of poorest women clients in 2006

Regional Breakdown of Microfi nance Data


Federation in China are some of the major MFIs initiated by women entrepreneurs.

Friends of Women’s World Banking, India (FWWB-I; http://fwwbindia.org)In 1982, Friends of Women’s World Banking, India (FWWB-I) was created as one of the fi rst few affi liates of Women’s World Banking. For the fi rst seven years of its operations from 1982 to 1989, WWB’s activities were limited to providing loan guarantees for poor women in the state of Gujarat. After modifying the byelaws in 1989, FWWB expanded its fi nancial services for poor women beyond the state of Gujarat. The scope of its activities in microfi nance, as well as its geographical coverage, increased to 91 organisations in 12 states as on March 2006. FWWB India has adopted a ‘Credit Plus’ approach and its current activities include two broad programme areas. FWWB India has a Revolving Loan Fund, which serves to refi nance partner organisations that provide fi nancial services to the poor. FWWB India also supports these partner organisations through the provision of institutional development programmes to expand their capacity to manage credit and savings activities. In addition to the above, FWWB has also been involved in micro insurance, supporting innovations in microfi nance, etc.

Tianjin Women’s Federation (http://www.tjwbi.com/english/aboutus)The Tianjin Women’s Business Incubator (TWBI), a non-profi t business incubator located in Tianjin, China, is dedicated to promoting the growth and development of women-owned businesses of all types in Tianjin. While there are over 400 business incubators in China, TWBI is the only one which is focused on employment creation and empowerment of a disadvantaged community. The core mission of the centre is to provide long-term sustainable opportunity of employment for women. TWBI believes that the best way to help women entrepreneurs and women employees to have good opportunity of employment is to provide assistance and help women enterprises that are in the infancy and development stage. In Tianjin, more than 50 laid-off women have carved out their own businesses with the centre’s help. Recently, the centre received a donation of USD 200,000 from the World Bank to equip the centre with information communication technology (ICT) tools.

Latin America and the CaribbeansBy the end of the fi nancial year 2005, microfi nance in Latin America including the Caribbeans maintained its steady pace both in terms of scale and outreach while MFIs kept their commitment to serve the lowest income sectors. In 2004 and 2005, the outreach of microfi nance institutions were increased by 20 percent of total and 5.2 million borrowers with loan worth approximately US$ 5 billion. According to the Microfi nance Information Exchange, Inc.’s (MIX) report ‘Benchmarking Latin American Microfi nance 2005’, 40 percent of women are actively participating in microfi nnace activities. In 2007, 34% Latin Americans were poor and 13% lived in extreme poverty. Pro mujer and FUNBODEM (La Fundación Boliviana para el Desarrollo de la Mujer) are two major MFIs working for women empowerment.

Pro - Mujer (https://promujer.org) Pro Mujer is an international microfinance and women’s development network, who’s mission is to provide Latin America’s poorest women with the means to build livelihoods for themselves and futures for their families through microfi nance, business training, and healthcare support. The network also links women and their families with existing resources and services in their communities. The group has its network in Argentina, Bolivia, Peru, Mexico and Nicaragua. In 2007, the group provided credit, healthcare and business training to 193,000 Latin American women and offered healthcare to approximately 965,000 children and extended family members. Pro Mujer also organises women into community banks of 20 to 30 women each who can apply for loans as a group, disburse the money to members, and collect loan payments and savings deposits.The group offers a range of loan products to meet the needs of poor women entrepreneurs.The most common are working capital loans, which range from US$50 to US$1,500 with a repayment term of four to six months. Loans start small, US$50 to $100, and those women who repay the loan on time qualify for larger loans. Pro Mujer recently developed the Star Product (Producto Estrella) in Mexico, which gives larger loans to longtime Pro Mujer borrowers, enabling them to scale up their businesses more effectively.

La Fundación Boliviana para el Desarollo de la Mujer (FUNBODEM; http://www.funbodem.org) FUNBODEM is an affi liate of Women’s World Banking and a member of the unregulated MFI association, FINRURAL. FUNBODEM is a non-governmental, non-profi t organisation that was founded on July 15, 1987 - an initiative of a group of women willing to support the provision of fi nancial services to help the low-income women of Bolivia come out of poverty. The foundation’s objective is to improve the earning capacity of women and to enhance their role in society. FUNBODEM only loans to women, and they require all clients to put their savings into guaranteed deposits.

Conclusion Realising the fact that a high percentage of women are among the poorest of the poor. Microfi nance could be one of the solutions to help them expand their horizon and offer them social recognition and empowerment. The question is not whether we should focus on women or men. Both play a vital role in generating income and managing the social economy. Their capacity for innovation stimulates general economic growth. Microfi nance programmes should be accessible to both genders and offer adequate access to fi nancial services, training and technical assistance. Short-term assistance programmes like providing credit, technology and skills enhancement training programmes, etc., will increase the productivity of women’s labour.

Which will, in turn, increase their longterm productivity and access to productive resources, creating social, technological and economical mechanisms to reduce confl icts between women’s productive and reproductive roles. An ideal microfinance programme should consider women in a broader context, as the nucleus of a family, that is vital for societal improvement and progess.

32 i4d | June 2009

Development initiatives

ZERO MASS FOUNDATION

ZERO Microfi nance and Savings Support Foundation (ZERO MASS Foundation/ZMF) has been a pioneer in the fi eld of Financial Inclusion space as a Business Correspondent (BC) to 25 Banks in India including the State Bank of India (SBI). ZMF helps banks increase their outreach in ‘Rural Unbanked India’ through its Customer Service Points (CSPs) working as village branches using the Branchless Banking technology. A.Little.World Pvt. Ltd. (ALW) is the technology provider for all the banks who have engaged ZMF as a BC. ALW provides the technology as a service to Banks under its brand “ZERO”.

ZMF creates the last mile operations network in villages, under pre-defi ned service agreements with Banks and front-ends the delivery of full-featured transactional services on behalf of Banks for Financial Inclusion on the ground. ZMF, a Section 25 Company closely affi liated to ALW provides fi eld operations for the ZERO platform. ZMF manages the fi eld force, account creation, appointment of Customer Service Points (CSPs), management of cash and other logistics at the last mile. ZMF in turn collaborates with strongly placed local organisations, district and state administration to ensure smooth deployment and operations.

As per a typical agreement between ZMF and a bank, ZMF’s scope of services include:

Enrolment of customers for no-frills zero-balance savings accounts and other account types that may be specifi ed by the Bank.Enrolling, training and equipping of Customer Service Points (CSPs) in villages to provide various kinds of transaction services including but not limited to cash deposit, cash withdrawal, transfer of money, payment of utility bills, disbursal of loans, collection of loan instalments, and cashless payments at local and remote merchant establishments.Engaging the CSPs to provide enrolment services for opening no-frills accountEngaging the CSPs to provide various kinds of transaction services including but not limited to cash deposit, cash withdrawal, transfer of money, payment of utility bills, and disbursal of loans and collection of loan installments.3rd party cash collectionCashless payments at local and remote merchant establishments.Management of cashLending activities on behalf of the Bank (as an MFI) Other service as may be advised by the Bank in writing to ZMF, and which ZMF agrees to perform

•

•

•

•

••

••

The ZERO platform is based on new generation mobile phones and Fingerprint authentication which converts new generation low-cost NFC (Near Field Communication) mobile phones with large storage capacities as a secure, self-suffi cient bank branch, with biometrics based customer ID, for customer enrollments for no-frills accounts and all types of transactions in the village with the local Customer Service Point operator acting as a Teller. Existing Mobile communications networks are used for all transaction uploads, downloads and application updates. The platform ensures that Banking facility is provided to the right people at the right time and the right amount of money is transacted. The CSPs are equipped with a mobile phone and a Fingerprint Scanner cum Receipt Printer to carry out Banking and Payment transactions (i.e. Cash Deposit, Cash Withdrawal, Account to Account Transfer, Balance Enquiry, Mini Statements, etc.) using both online connectivity to Banks and in an offl ine mode (with daily batch settlements). The main features of the ZERO platform are:

Mobile phone as core Bank branchSmart cards not needed for biometric authentication in local service areaMobile phone used for opening accounts on-the-spot by local CSPVoice prompts during enrolment and transactionsPrintout of each transaction

The platform employs biometrics based ID, RFID smart cards, and NFC (Near Field Communication) mobile phones as acceptance and enabling devices (with merchants, fi eld forces of MFIs and as cashless ATMs).

The ZERO platform can be easily deployed for the following services:

Biometric IdentityCash depositCash withdrawalsMoney transferNREGA / PensionsMicro CreditMicro InsuranceCashless PaymentUtility PaymentsSHG Utilities like Disbursals, Repayment and Record of Attendance

As evident from the platform’s applications, ZERO MASS Foundation (ZMF) also works closely with Government Departments to ensure that the exact amounts of Government

••

•

••

••••••••••


benefi ts reach in time to the rightful benef ic iar ies for Government programmes like NREGA (National Rural Employment Guarantee Act), Social Security Pensions (SSP), Scholarships, Housing Grants, etc. Bank accounts are opened for all such Government benefi ciaries by ZMF.

ZMF also helps Government departments to automate processes such as Attendance and Job Demand for NREGA using the beneficiary fingerprint authentication and by ascertaining the GPS (Global Positioning System) co-ordinates of the work sites.

ZERO Platform has been built as a cost effective method for Banks to extend all their products and services such as Savings, Loans, Recurring Deposits, etc., to customers. The platform is also built as an easy to use option of illiterate and semi-literate population in villages with features like Graphical User Interface and Voice Guidance.

ALW and ZMF have done many innovations to bring down cost of operations for banks as well as for rapid scale up of operations. Few examples of such innovations are:A. ZERO platform can be used by customers without using

expensive Smartcards

B. The CSP in a village can enroll customers using the same mobile device that is used for carrying out transactions with an easy to use graphical interfaceC. Use of both online and offline methods of transactions

ZMF has expanded its operations in 19 states with more than 8,000 CSPs covering more than 16,000 villages. About 4 million customers have been enrolled under the Financial Inclusion programme. Multiple State Governments are disbursing their NREGA wages and Social Security Pensions using the ZERO system at the CSPs of ZMF. ZMF actively works towards improving commercial viability of CSPs by offering multiple products and services through the ZERO platform.

A major hurdle in scaling up of the operations is to fi nd the right business model for commercial viability of all stakeholders in the ecosystem, e.g. Customer Service Point (CSP) operators, Banks and ZMF. ZMF is constantly working with all the partner institutions to arrive at the right commercial models in all specifi c geographies of India.

Lokanath Panda

Co-Founder and Director,

ZERO MASS Foundation and A.Little.World Pvt. Ltd.

FTK Technologies co-branded product, Magikeys, developed with FTK’s LooKeys software, is changing the face of computing in government schools. The software, co-developed with the computer education vertical, Educomp Solutions, is specifi cally oriented to the needs of Indian Government schools, allowing both Students and Teachers all across India to enjoy computing experience in their mother tongues through an intuitive and easy-to learn interface, using the technology of FTK’s fl ag ship product- LooKeys.

“We took into consideration the fact that most government schools aspire to introduce their students to the world of computers, but face obstacles due to language barrier and the familiarity and preference of the students with their mother tongue” said Rafi Palgi, FTK Executive Manager “Based on the expertise and experience of our partners in Educomp, we created a special interface that will function similarly as our comprehensive software, LooKeys, and that will enable computer-aided teaching and learning in Indian languages. Educomp, as the market leaders in computer education, along with their devotion and passion to this cause, are the most qualifi ed partner to take this revolution and implement it in the fi eld.” Feedback received from the schools using the software

indicates the direct infl uence on learning across the board. “Even teachers of subjects such as physics and science are excited now to use aids such as power point presentations, which could not used so far, as teachers were restricted to English in almost every aspect when working with computers” Palgi explains. “As this was part of our vision when creating Magikeys, it gives us immense pleasure to see how we are helping to create a new generation of young computer users, using computers in their own mother tongue. Our commitment is, and will always remain, to help bring the computing experience to the entire people of India. MagiKeys, which was specifi cally created for the next generation of users, is maybe the most important step towards achieving that goal.”

One emphasis that was implemented in Magikeys was a fully functional Offl ine interface that would enable teachers and students to use MS-OFFICE and other Unicode compliant applications in their own languages. In schools that enjoy internet connectivity students can also write mails, chat and surf the net in their own language using MagiKeys.

The product is used by Government Schools across the nation, and has proven to be a priceless tool for the next generation of computer education.

FTK Technologies implements vernacular interface in government schools

34 i4d | June 2009

Forbes magazine’s top 50 MFIs

BEST MICROFINANCE INSTITUTIONS

The fi rst-ever list of the World’s Top 50 Microfi nance Institutions selected by Forbes were chosen from a fi eld of 641 micro-credit providers in the year 2007. This list was prepared by Microfi nance Information Exchange (www.themix.org). To qualify, the institutions must have made available their audited fi nancials and must have passed a review by a Forbes panel of advisors.

The table gives the rank (out of 641) for the top institutions according to scale, which is based on the size of their gross loan portfolio; effi ciency, which considers operating expense and the cost per borrower as a percent of the gross national income per capita of their country of operation; risk, which looks at the quality of their loan portfolios, measured as the percent of the portfolio at risk greater than 30 days; and return, which is measured as a combination of return on equity and return on assets. Each category is equally weighted for an institution’s overall ranking

Rank

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Name of MFI

ASA

Bandhan

Banco do Nordeste

Fundación Mundial de la Mujer Bucaramanga

FONDEP Micro-Credit

Amhara Credit and Savings Institution

Banco Compartamos, S.A., Institución de Banca Múltiple

Association Al Amana for the Promotion of Micro-Enterprises Morocco

Fundación Mundo Mujer Popayán

Fundación WWB Colombia - Cali

Consumer Credit Union ‘Economic Partnership’

Fondation Banque Populaire pour le Micro-Credit

Microcredit Foundation of India

EKI

Saadhana Microfi n Society

Jagorani Chakra Foundation

Country

Bangladesh

India

Brazil

Colombia

Morocco

Ethiopia

Mexico

Morocco

Colombia

Colombia

Russia

Morocco

India

Bosnia andHerzegovina

India

Bangladesh

Scale

14

108

46

58

119

56

15

17

53

27

82

59

75

66

263

136

Effi ciency

83

49

27

72

26

126

24

212

181

206

300

126

142

102

79

176

Risk

56

42

213

193

196

118

295

133

141

155

19

219

7

242

73

128

Returns

40

1

25

1

1

42

11

1

1

4

1

1

185

1

1

1


Source: Forbes Magazine (http://www.forbes.com/2007/12/20/microfi nance-philanthropy-credit-biz-cz_ms_1220microfi nance_table.html)

Rank

17

18

19

20

21

22

23

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

Name of MFI

Grameen Bank

Partner

Grameen Koota

Caja Municipal de Ahorro y Crédito de Cusco

Bangladesh Rural Advancement Committee

AgroInvest

Caja Municipal de Ahorro y Crédito de Trujillo

Sharada’s Women’s Association for Weaker Section

MIKROFIN Banja Luka

Khan Bank (Agricultural Bank of Mongolia LLP)

INECO Bank

Fondation Zakoura

Dakahlya Businessmen’s Association for Community Development

Asmitha Microfi n Limited

Credi Fe Desarrollo Microempresarial S.A.

Dedebit Credit and Savings Institution

MI-BOSPO Tuzla

Fundacion Para La Promocion y el Desarrollo

Kashf Foundation

Shakti Foundation for Disadvantaged Women

enda inter-arabe

Kazakhstan Loan Fund

Integrated Development Foundation

Microcredit Organisation Sunrise

FINCA-ECU

Caja Municipal de Ahorro y Crédito de Arequipa

Crédito con Educación Rural

BESA Fund

SKS Microfi nance Private Limited

Development and Employment Fund

Programas para la Mujer – Peru

Kreditimi Rural i Kosoves LLC (formerly Rural Finance Project of Kosovo)

BURO, formerly BURO Tangail

Opportunity Bank A.D. Podgorica

Sanasa Development Bank

Country

Bangladesh

Bosnia and Herzegovina

India

Peru

Bangladesh

Serbia

Peru

India


Mongolia

Armenia

Morocco

Egypt

India

Ecuador

Ethiopia


Nicaragua

Pakistan

Bangladesh

Tunisia

Kazakhstan

Bangladesh


Ecuador

Peru

Bolivia

Albania

India

Jordan

Peru

Kosovo

Bangladesh

Serbia

Sri Lanka

Scale

8

64

209

48

10

84

20

229

60

19

96

51

200

80

28

50

128

173

123

170

198

120

300

114

125

23

135

109

61

83

292

213

137

49

86

Effi ciency

280

169

106

99

159

195

163

207

240

149

173

268

215

254

252

246

120

89

194

221

90

118

134

103

138

126

152

135

395

388

82

158

207

234

206

Risk

100

230

156

222

126

222

220

55

205

280

202

194

102

73

206

80

283

171

219

151

257

320

140

341

264

220

298

345

141

135

242

247

186

319

93

Returns

62

1

1

119

205

1

101

13

1

59

39

1

1

111

34

154

1

100

1

1

1

1

1

17

54

215

1

1

1

1

1

1

91

23

241

25 - 27 August 2009

Hyderabad International Convention Centre, India

www.eINDIA.net.in

Celebrating Innovative Initiatives and Exemplary Work in ICT!

For detailed information on eINDIA 2009 Awards, visit us at www.eINDIA.net.in/awards

Gautam Navin (+91-9818125257), [email protected], Debabrata Ray (+91-9899650692), [email protected]

Online Nominations at: www.eINDIA.net.in/awards

th5

AWARDS

eINDIA 2008 Award Winners with former Minister of Panchayati Raj and DONER, Shri Mani Shankar Aiyar, former Member of Parliament, Shri Suresh Prabhu,

Secretary, DIT, Ministry of Communications and IT, Shri R Chandrashekhar and Joint Secretary, Department of School Education and Literacy, Ministry of HRD,

Shri Subhash C Khuntia

O

nn

tin

nline omi a

os

ei o

bg n fr

m15

Jn

s

ue onward

Award Categories for Nominations in MunicipalIT

• ICT enabled Municipal Initiative of the Year

Award Categories for Nominations in e-Governance

• Government to Citizens Initiative of the Year• Government to Business Initiative of the Year• Government to Government Initiative of the Year• m--Governance Initiative of the Year• Civil Society/ Development Agency Initiative of the Year

Award Categories for Nominations in Digital Learning

• ICT Enabled School of the Year• ICT Enabled University of the Year• Government/ Policy Initiative of the year• Civil Society/ Development Agency Initiative of the Year

Award Categories for Nominations in Telecentre

• Innovative Grassroots Telecentre of the Year• Government/ Policy Initiative of the Year• Civil Society/ Development Agency Initiative of the Year

Award Categories for Nominations in e-Health

• ICT Enabled Hospital of the Year• Government/ Policy Initiative of the Year• Civil Society/ Development Agency Initiative of the Year

Award Categories for Nominations in e-Agriculture

• ICT Enabled Agricultural Initiative of the Year• Government/ Policy Initiative of the Year• Civil Society/ Development Agency Initiative of the Year

Personal details

First Name ...........................................................................................................................................

Designation/Profession ........................................................................................................................

Organisation .......................................................................................................................................

Address ..............................................................................................................................................

City .............................................................. Postal Code ...................................................................

State ............................................................ Country .........................................................................

Tel (O) .......................................................... (R) .................................................................................

Mobile ......................................................... Fax ................................................................................

Website........................................................ Email .............................................................................

Sector:

Govt. NGO Corporate Academics/Indstitutions

My primary interest area is:

egov India Digital Learning India Indian Telecentre Forum eHealth India eAgriculture India

I am also interested in:

egov India Digital Learning India Indian Telecentre Forum eHealth India eAgriculture India

Indian Delegates: Pre Registration: INR 8000 Spot Registration: INR 11000

Foreign Delegates: Pre Registration: USD 325 Spot Registration: USD 375

*Registration fees includes taxes as applicable

Foreign Remitter should approach their banker as per the wire transfer details below:

Beneficiary name: CSDMSBank name and address: Citibank Noida Branch, India, A-6 Sector - 4, Noida, UP, India, Account number: 5-000890-288, Swift code: CITIINBXAXXX

Fee EntitlementsThe Delegate Registration entitles the individual to participate in all technical sessions, workshops, keynotes and plenary sessions and social functions for all four/any: egov India 2009, Digital Learning India 2009, Indian Telecentre Forum 2009, eHealth India 2009 conferences.

For Cancellation and Substitution Policy please refer to www.eINDIA.net.in

I would like to receive Newsletter on: egov DL i4d eHealth

Payment mode: Demand Draft Cheque Wire Transfer

Payment Details: Cheque/Demand Draft No. ................... or Transaction ID ......................................

Dated .............. Drawn on .............................. for amount INR/USD ................................. in favour of CSDMS, payable at New Delhi.

DELEGATE REGISTRATION FEES DETAILS

DELEG

AT

E

REG

IST

RA

TIO

N F

OR

M

25 - 27 August 2009Hyderabad International Convention Centre, India

India's Largest ICT Event

th5

REGISTER NOW

Onlinewww.eINDIA.net.in

[email protected]

Fax +91-120-2500060

*Photocopies of form are also acceptable


ORGANISERS

Department of Information TechnologyMinistry of Communications & IT

Government of India

CO-ORGANISER

eINDIA 2009 Secretariat Centre for Science, Development and Media Studies, G-4, Sector - 39, NOIDA-201 301, India Tel: +91-120-2502180 to 85 Fax: +91-120-2500060

Web: www.eINDIA.net.in E-mail: [email protected]

www.eINDIA.net.in

GOVERNMENT PARTNER

38 i4d | June 2009

Samsung launches solar-powered phoneSamsung launched a low-cost solar-powered mobile phone. The new handset, launched under its low-cost line of products Guru at a price of Rs 2,799, has a solar panel on the back, which can be used to charge the battery anywhere the sun is shining.

The phone, christened the Guru E1107, can provide around 5-10 minutes of talktime with one hour of solar charging when the handset is turned off and sunlight has adequate intensity. According to the Country Head, Samsung India, solar charging will give enough time to make few important calls when there is no electricity. The battery will attain full power with about 40 hours of solar charging.

The handset, will be in shops by the end of this month. The company is also planning to introduce in India its solar-powered touchscreen mobile handset, Blue Earth - unveiled at the GSMA Mobile World Congress in Barcelona, Spain early this year.

University develops wireless tech to detect landslidesStudents of Amrita Vishwa Vidyapeetham University have developed a wireless network system for landslide detection, in collaboration with European Commission and Indian Space Research Organisation (ISRO). The technological breakthrough system was developed as part of the research project called, Wireless Sensor Network with Self-Organisation Capabilities for Critical and Emergency applications (WINSOC). Wireless panels with sensor nodes to read different parameters of the soil, like moisture, vibration and movement will be embedded 15 metres beneath the

earth at different points. These sensors will be attached to a wireless transmission device, which will convert analog value into digital value and send the inputs to the base stations, which will be connected to Amrita mutt’s Kollam campus. Experts will be monitoring the inputs from the base stations in real time and any unusual behaviour or extreme value will trigger an alarm.

The fully tested model has become operational in Munnar, Kerala. The system can be deployed in any part of the country prone to landslides and snow avalanches. Besides, the application could be put to industrial use for study of gas leakages or in conservation of forests by early identification of forest fires during summer. As part of this project, representatives from various European partners like University of Rome, Selex Communications, Intracom Telecom, Czech Centre for Science and Technology have arrived at the Amrita University to learn about the fi rst-ever wireless sensor network system for landslide detection.

ICRISAT develops climate change-ready varietiesImproved crop varieties developed by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), and

its partners, are able to withstand severe droughts, tolerate higher temperatures and mature early, enabling farmers to be ready to meet the challenges of climate change by cultivating the improved crops.

According to William Dar, Director General of ICRISAT, the current research strategy at the Institute is to improve the heat-tolerance and drought-resistance qualities of ICRISAT’s mandate crops. ICRISAT’s research is focused on crops such as pearl millet, sorghum, chickpea, pigeonpea and groundnut which are important for the livelihood of the people in the dryland areas.

These crops have several natural evolutionary advantages for the global warming scenarios. Both pearl millet and sorghum have high levels of salinity tolerance, and hence are better adapted to areas that are becoming saline due to global warming.

Some of the pearl millet varieties and hybrids developed are able to fl ower and set seeds at temperatures of more than 42 degrees centigrade, in areas such as Western Rajasthan and Gujarat in India. Improved sorghum lines have also been developed that are capable of producing good yields in temperatures of 42 degrees C, and have stay-green traits that can enhance terminal drought tolerance.



India News

Nasscom wants to partner govt for ‘inclusive’ growthThe apex body representing the Indian Technology (IT) industry, the National Association of Software and Service Companies (NASSCOM) stated that it would like to work with the government to bring about an inclusive (which benefi ts all sections of society) economic growth agenda. NASSCOM President, Som Mittal stated that the industry and the government would have to join hands to accelerate IT adoption in the government sector. The IT-BPO industry has the potential to transform the country and play a major role in the development of India’s key sectors, including education, healthcare, infrastructure, citizen services and fi nancial inclusion, thereby creating signifi cant employment opportunities across India, with a consequential impact on economic growth. NASSCOM and the industry look forward to working closely with the government on this key agenda. The software body has also urged the government to extend availability of benefi ts under Sections 10A/10B for units in the Software Technology Parks of India (STPI) and Export Oriented Units (EOU) to mitigate the impact of the recession and protectionist measures being adopted globally. Another area of concern for the IT companies is the duplicity of indirect taxes for packaged software and policies for service tax refunds. Nasscom has requested the government to develop a uniform approach on transfer pricing and amend Fringe Benefi t Tax (FBT) on employee stock options or ESOPs.


ITU establishes new study group to deal with climate change International Telecommunication Union (ITU) has established a Focus Group on ICTs and Climate Change and will formalise the Focus Group’s output as ITU-T Recommendations including a methodology for evaluating the effects of ICTs on climate change both in direct terms and how ICTs can reduce emission in other industry sectors. Study Group 5 was chosen as the lead study group and will be renamed the Study Group on Environment and Climate Change to refl ect its new mandate. SG 5 remains the lead Study Group for protection against electromagnetic effects. Specifi cally SG 5 will work on documents related to:

Study of methodologies for calculat-ing the amount of greenhouse gases (GHG) emissions from ICTs, and the amount of reduction in the GHG emissions in other sectors as a result of using ICTs.Creation of a framework for energy effi ciency in the ICT fi eld, taking ac-count of WTSA Resolution 73.Study of methodologies for power feeding that effectively reduce power consumption and resource usage.Study of methodologies that reduce environmental effects for ICT facilities and equipment such as recycling.

Essentially, the group will aim to see that standards are developed in the most appropriate way and that no duplication of effort occurs. It will also provide a single point of contact for ICT and Climate Change activities in ITU-T and seek col-laboration from external bodies working in the fi eld.

1.

2.

3.

4.

World Bank commits US$50 million for ICT in NigeriaThe World Bank has agreed to commit US$50 million on ICT infrastructure development, connectivity, skills develop-ment and capacity building in Nigeria. With the help of this investment, the World Bank is hoping to achieve signifi cant transformation in the region.

With the World Bank funding the country will further consolidate its position as the hub of ICT development and the largest ICT market in Africa, which would attract investment by international telecom companies. The key intervention in Ni-geria includes connectivity, infrastructure development and the outsourcing sector. The bank has to date committed hundreds of millions of dollars for the development of ICT throughout Africa.

Brunei’s strategic plan to achieve e-GovernanceBrunei has moved a step closer towards achieving e-governance with the launch of a strategic plan that will map the way to realising the initiative over the next fi ve years. The plan encompasses strategies such as increasing human capacity in IICTs, research and development of optimising online services tailored specifically for the public and improving connectivity between ministries.

Dubbed the e-Government Strategic Plan 2009-2014, it addresses the needs of the three main stakeholders, namely the citizen, industry and government. The plan is based on fi ve key strategic priori-

ties, which have been developed based on the progress made through the e-Govern-nance initiative so far. The fi rst strategic priority focuses upon the development of capabilities and capacity. Civil servants will be trained with the relevant ICT skills to successfully implement e-government projects. Strategic Priority Two (SP2) will focus on enhancing e-Governance through reviewing, revising and developing policies and guidelines to allow for the effective delivery of e-Government projects. Under this strategic priority, the legal framework will be updated to suit the e-Government initiative. Security and Trust in e-Gover-nance will be the focus of SP3, as the neces-sary infrastructure will be put in place to ensure that electronic transactions and ex-change of information is kept confi dential and is conducted in a secure manner. ICT awareness programmes will be introduced to educate all parties of the prevalent ‘cyber risks’ and the precautions that ought to be taken to minimise these threats.

Strategic Priority Four aims to integrate the ministries under a common network, where government agencies will be able to work together more effectively. ICT tools and resources will also be standardised to ensure effi cient and cost-effective use of these resources. These criteria fall under the ambition of the realisation of a ‘one government’ network.

Lastly, Strategic Priority Five calls for a more convenient and effi cient approach to online government services for the public. Wherever applicable, the public will have 24-hour access to these e-services.



World News

NASA to grant $8 million for climate change educationNASA announced that it will grant $8 million to fund educational projects on global climate change. NASA aims to enhance students’ academic experiences and improve educators’ abilities to engage and stimulate their pupils in this fi eld. The federal agency seeks proposals for students of elementary, secondary, undergraduate and lifelong teaching and learning.

The funding opportunity supports NASA’s goal to engage students in the critical disciplines of science, technology, engineering and mathematics. NASA called for projects that improve teacher competency for global climate change education; strengthen teaching and learning about climate change using NASA Earth system data and models; and enable global climate change science research experiences for undergraduate or community college students and pre- or in-service teachers, including those in non-traditional teacher licensure programmes.

40 i4d | June 2009

Technology for microfinancing

FAO-GTZ MICROBANKING SYSTEM FOR WINDOWS (MBWIN)

The FAO-GTZ MicroBanking System is a software that is aimed at managing a fi nancial organisation’s client transactions in a comprehensive manner, maintaining it’s general ledger, and at monitoring all operations.

The system is the product of collaboration between the Food and Agriculture Organisation of the United Nations (http://www.fao.org) and Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH (http://www.gtz.de).

The FAO-GTZ M i c r o B a n k i n g System for Windows (MBWin) is the successor of the older DOS-based FAO MicroBanking System. The system has been designed and developed for a wide range of banks and fi nancial intermediaries. With

an eye on the varying needs of its prospective users, the software has been designed on a multi-tier architecture, which is scaleable and can be adapted to a variety of hardware confi gurations. It is modular in terms of applications and functionality.

Carrying over features from the earlier version of the software, MBWin has modules for current accounts, savings accounts, time deposits, share accounts and loan accounts that interface with the general ledger module (GL) and the contact information module (CIF). The centralised CIF module maintains comprehensive information on corporate and individual customers, guarantors and signatories, and it has additional features for specialised microfi nance operators that deploy group methodologies.

MBWin offers a classic user-friendly menu structure as well as a set of speed buttons for quick access to the most

common functions. An inbuilt report generator al lows users to custom-build reports to meet their requirements. T h e r e p o r t generator has been designed to meet the basic internal and external reporting

requirements of most fi nancial organisations. A product generator allows the user to setup and specify products without the need of re-p r o g r a m m i n g MBWin’s source code.

For users who are looking forward to migrating from the older version of this software, MBWin ha s a number of utilities which help with the migration of data,

translation of the system into new languages apart from assistance with the conversion of work from manual operation.

The in-built MIS System allows the user to consolidate and merge branch level MBWin databases at the head offi ce of the institution where the system has been deployed. All reports can be exported in many formats including MS Excel spreadsheets.

The full version of MBWin costs US$1500 for a single user and US$2000 for the first ten concurrent users. MBWin Light (preconfigured for a single user) is also available for US$500.

A fully functional demo version of the software can be downloaded for free from their website.

http://www.mbwin.net

Customer Information File Screen

Loans Screen

Batch Data Entry Screen

System Confi gurator Screen


Banking for All NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD), INDIA

The National Bank for Agriculture and Rural Development (NABARD) was set up as an apex Development Bank with a mandate for facilitating credit fl ow for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It is also mandated to support all other allied economic activities in rural areas, to promote integrated and sustainalbe rural development and secure prosperity of rural areas.

In order to facilitate rural prosperity, NABARD:Provides refi nance to lending institutions working in rural areasBrings about and promotes institutional developmentEvaluates, monitors and inspects the client banks and lending institutions

Apart from these functions, NABARD also acts as a co-ordinator in the operations of rural credit institutions, assists the government, the Reserve Bank of India and other organisations in matters pertaining to rural development, offers training and research facilities to banks, co-operatives, and organisations working in the realm of rural development and helps the state governments in achieving their targets of providing assistance to institutions in agriculture and rural development.

NABARD also acts as a regulator for co-operative banks and Regional Rural Banks (RRBs).

•

••

NABARD was established by an act of the Indian Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refi nance and Development Corporation (ARDC).

Some of the major activities of the bank since it’s inception are as follows:

Preparing of Potential Linked Credit Plans for identifi cation of exploitable potentials under agriculture and other activities available for development through bank credit. Refi nancing banks for extending loans for investment and production purpose in rural areas. Providing loans to State Government/NGOs/Panchayati Raj Institutions (PRIs) for developing rural infrastructure. Supporting credit innovations of NGOs and other non-formal agencies. Extending formal banking services to the unreached rural poor by evolving a supplementary credit delivery strategy in a cost effective manner by promoting Self Help Groups (SHGs). Promoting participatory watershed development for enhancing productivity and profi tability of rainfed agriculture in a sustainable manner. On-site inspection of cooperative banks and RRBs and off-site surveillance over health of cooperatives and RRBs.

NABARD and microfinanceHeadquartered in Mumbai, India, the Bank conducted a series of research studies in association with MYRADA (a leading NGO from South India) and independently during the early eighties. These studies showed that despite having a wide network of rural bank branches implementing poverty alleviation programmes and self-employment opportunities through bank credits for almost two decades, a very large number of the poorest of the poor continued to remain outside the formal banking sector. These studies indicated that the existing banking policies, systems, procedures and fi nancial products were not well suited to meet the needs of the poor. It appeared that what the poor needed was better access to these products and services and not just cheap, subsidised credit.

After these studies, a need was felt for alternative policies, systems and procedures, savings and loan instruments and new service delivery mechanisms that would fulfi ll the requirements of the target group especially the women. Therefore, the emphasis was on improving access to microfi nance instead of just micro-credit. To this end, NABARD considers the launch of its pilot phase of the SHG Bank Linkage programme in February 1992, a landmark development in banking for the poor in India. The

•

•

•

•

•

•

•

www.nabard.org

Some milestones1. Refi nance disbursement under ST-Agri & Others and MT-

Conversion/ Liquidity support aggregated INR 16952.83 crore during 2007-08.

2. Refi nance disbursement under Investment Credit to commercial banks, state cooperative banks, state cooperative agriculture and rural development banks, RRBs and other eligible fi nancial institutions during 2007-08 aggregated INR 9,046.27 crore.

3. Through the Rural Infrastructure Development Fund (RIDF) Rs.8034.93 crores were disbursed during 2007-08. With this, a cumulative amount of INR 74,073.41 crore has been sanctioned for 2,80,227 projects as on 31 March 2008 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, fl ood protection, forest management etc.

4. Under Watershed Development Fund with a corpus of INR 613.71 crore as on 31 March 2008, 416 projects in 94 districts of 14 states have benefi ted.

5. Farmers now enjoy hassle free access to credit and security through 714.68 lakh Kisan Credit Cards that have been issued through a vast rural banking network.

6. Under the Farmers’ Club Programme, a total of 28,226 clubs covering 61,789 villages in 555 districts have been formed, helping farmers get access to credit, technology and extension services.

42 i4d | June 2009

SHG-informal thrift and credit groups of the poor came to be recognised as bank clients under the pilot phase. The strategy deployed for this programme involved forming small, cohesive and participative groups of the poor and encouraging them to pool in their thrift regularly which will be used to make small interest-bearing loans to members and learning the nuances of fi nancial discipline in the process. Apart fromt his approach, NABARD also took a conscious decision to experiment with other successful models such as replicating the Grameen model, fi nancing NGO-MFIs, etc.

The Bank commenced a nationwide Pilot Project in 1992 aimed at promoting and fi nancign 500 SHGs across the coutnry. The SHG-bank linkage strategy includes fi nancing of SHGs promoted by external facilitators like NGOs, bankers, government agencies and individuals as also promotion of SHGs by banks and fonancing SHGs directlyby banks or indirectly where NGOs and similar organisations act as fi nancial intermediaries. The pilot was followed by the settign up of a Workign Group on NGOs and SHGs by the Reserve Bank of India in 1994 which gave a number of recommendations on the internalisation of the SHG concept as an intervention tool in the area of banking with the poor. Based on the pilot and the recommendations of the Working Group, NABARD, in 1998 crystallised its vision for providing access to one third of the rural poor by linking 1 million SHGs by 2007. This target was achieved in the year 2004 by massive scaling up of the training and capacity building awareness programmes by NABARD covering a large number of offi cials and staff of NGOs, banks, government agencies and rural volunteers in SHG promotion, nurturing, appraisal and fi nancing.

Developmental mandate of NABARDThe provisions of the NABARD Act, 1981 clearly indicate the nature and scope of the developmental mandate of the Bank and its role in training and capacity building with the underlying belief that the process of development cannot be accomplished by credit/refi nance alone. Section 38 of the NABARD Act provides that the Bank shall:

maintain expert staff to study all problems relating to agriculture and rural development and be available for consultation to the Central Government, the Reserve Bank, the State Governments and the other institutions engaged in the fi eld of rural development.provide facilities for training, for dissemination of information and the promotion of research including the undertaking of studies, researches, techno-economic and other surveys in the fi eld of rural banking, agriculture and rural development.provide technical, legal, financial, marketing and administrative assistance to any person engaged in agriculture and rural development activities.may provide consultancy services in the fi eld of agriculture and rural development and other related matters in or outside India, on such terms and against such remuneration, as may be agreed upon.

In this context, the role of training in NABARD and the role played by it for capacity building in client institutions, partner agencies and other developmental agencies is important. For maintaining ‘Expert Staff ’, the Bank needs to provide continuous exposure to its offi cers and staff for upscaling their knowledge and skills in core areas. In the initial years the Bank had recruited expert staff from various technical disciplines and created a separate cadre of offi cers. These offi cers were involved in formulating, appraising, monitoring and evaluating different agricultural projects implemented by different credit agencies.These offi cers, irrespective of their academic background, were imparted similar type of training as all other offi cers. Their placements and the regular job rotations helped in grooming them to take up assorted assignments, get involved in a variety of roles and functions including credit, developmental, promotional, supervisory and necessary support and information for decision making.

In pursuance of the Bank’s mandate as stated in the Act, the Bank provides training facilities for the RFIs and agencies involved in rural development through the Bankers Institute of Rural Development (BIRD), Lucknow and the two Regional Training Centres in Bolpur and Mangalore. With a view to broadbase the training and capacity building efforts, the Bank encourages the Regional Finance Institutions to set up their own training systems and provides these training institutes the necessary support to conduct meaningful and quality training. The bank continuously examines the options and avenues for strengthening the training interventions at the client level so that the human resources in these institutions are developed to take on the challenges, reckon with the competition, improve customer service, expand outreach, develop suitable products and thereby contribute to rural development.

As NABARD primarily functions through other agencies, the needs of the client institutions largely determine the knowledge and skill requirements of NABARD offi cers. The Bank endeavours to blend the experiences of client bank training with the training for NABARD officers so as to make training meaningful and relevant to their roles. Efforts are also made to blend the study fi ndings with the outcome from training to periodically measure the overall impact of the investments made in the training efforts.

•

•

•

•

Highlights of SHG bank linkage programme (as on 31 March 2006)

During the period April 2005 to March 2006, 620109 new SHGs were fi nanced by banks to the tune of Rs 44.99 billion by way of loans. Cumulatively, banks have lent Rs 113.97 billion to 2238565 SHGs.NABARD has extended a refi nance of Rs 10.68 billion to banks during 2005-06 bring the cumulative refi nance amount to Rs 41.60 billion.44362 branches of 545 banks (Commercial banks- 47; Regional Rural banks-158; & Cooperative banks - 340) situated in 583 districts in 30 states of the country are participating in the programme.About 32.98 million poor households have gained access to formal banking system through SHG bank linkage programme. Nearly 90% of the groups are women groups.

•

•

•

•

•


RENDEZVOUS: GLOBAL CONFERENCE ON FINANCING THE POOR: MOVING BEYOND INCLUSION, MICROFINANCE CONNECT, 29 DECEMBER 2009, NEW DELHI, INDIA

Exploring the Impact of Microfinance

RENDEZVOUS

As the world is in the grip of a global fi -nancial recession which has a far reaching impact on the development process across the world the poor are most vulnerable and the most affected by such crisis as they have very limited capacity to cope with the recession. Microfi nance which is an effec-tive tool of poverty eradication, capacity building, social empowerment, also seems to be affected by the fi nancial crisis as the interest rate increases and credit squeezes. Realising the signifi cance of the current sce-nario, a Global Conclave of Microfi nance Connect on 'Financing the Poor: Moving beyond Inclusion' was organised on 29th of April, 2009 at The Park Hotel, New Delhi, India. The theme of this conclave was to look at the emerging new dimensions of the microfi nance movement in the cur-rent global scenario. Traditionally, banks or Microfi nance Institutions (MFIs) had offered small lendings/credits which had been perceived as a tool for poverty allevia-tion and reduction of fi nancial exclusion - bringing the poor and unbanked in the mainstream of fi nancial services and social empowerment of the weaker sections of the society. Now, the microfi nanace sector has been transformed. It has become more diversifi ed, commercialised, and competi-tive and has grown bigger than ever before. MFIs have moved beyond credit to offer insurance and savings products. Hence, it is pertinent to address the new paradigm shifts and scale the impact and outreach of the microfi nance sector and assess the role of new actors in the changing process. The Global Microfi nance Connect Con-clave 2009 provided a platform to share the practical experiences from the fi eld on impact of microfi nance operations, pres-ent the key assessment methodologies and

processes, discuss the past attempts, issues and impediments in enhancing impact and present the concept and objectives of the Global Microfi nance Impact Alliance.

More than 150 delegates from MFIs and NGOs, banks and fi nancial institu-tions, apex bodies and networks, advocacy and support institutions and researchers and students participated in the con-clave. Representatives from the World Bank, European Commission, Grameen Foundation, Sonata Finance, Oikocredit, Unitus Capital, Plural India, Centrer for Microfi nance, Michael and Susan Dell Foundation, Infrasoft Tech, GRAMAUS Bangladesh, ASA Initiative Ghana, Sri-krishna Institute of Management were the panelists for the conclave sessions. The event was sponsored by Infrasoft Tech, a leading software company for the banking and fi nance industry. Sambodhi Research and Communications was the knowledge partner and Microfi nance Insights was the media partner.

In his welcome address, Kultar Singh, CEO, Sambodhi accentuated the need to assess impact and outreach of microfi nance on the lives of the poor and the need to think beyond the traditional aspect of the microfi nance movement. He pointed out that it only requires a small effort to reach the poor and provide livelihood to them. He also asserted that despite the current global recession, the microfi nance sector would grow exponentially and it had the potential to reach 80-82 million people by 2010-12. Hanuman Tripathi, MD, Infrasoft Tech discussed about the multiple applications of IT software in the delivery of microfi nance services and to assess its impact. From the donor point of view, IT is required for transparent and smooth fl ow

of capital. The clients require safety, trust, convenience and access of information; an MFI needs technology for cost effectiveness and process automation; Loan Offi cials need information sharing, and effi cient transaction, IT facilitates all such services. He believes that advanced technology is going to play an important role in future development of microfi nance industry as its application will bring down the trans-action cost and helps in management too. Therefore, technology is related to every as-pect of the microfi nance system and is very crucial for it’s control and regulation. He is of the opinion that advanced IT-enabled system is required for providing new kind of banking services such as mobile banking and branchless banking, etc.

In her inaugural address, Ellen Pender-sen, European Union discussed the experi-ences of the European Union in assessing impacts of microfi nance projects. She stat-ed that relevance, effi ciency, effectiveness and impact were four criteria on which a project’s performance was evaluated by the Union. Mohini Malhotra, South Asia Re-gional Coordinator, World Bank Institute, pointed out that cost effectivenes, lower interest rates and user friendly technologies hold the key for success of microfi nance movement. In the particular context of India, she stated that we had come a long way but there still is a lot to do as we have covered less than fi ve per cent of the rural households of the country. She quoted the remarkable success of Bangladesh, where around 40 per cent households have access to banking services.

Other key speakers were Geeta Goel (Michael and Susan Dell Foundation), Justin Oliver (Centre for Microfi nance, Institute for Financial Management and

44 i4d | June 2009

Research, Chennai), Chandni Ohri (Grameen Foundation), A Ramanathan (Ex-Chief General Manager, NABARD), Md Abdul Khaleque, Suvarna Rani Gandham (India Regional Manager, Oikocredit and Managing Director Maanavaveeya Holdings), Ashish Gupta (Sonata Finance), Eric Savage (Unitus Capital), N V Ramana (Ex-CEO BASIX group), Shivendra Sharma (Executive Director, Plural India) and Veronica Agodoa Kitti (Managing Director, ASA Initiative, Ghana). During the day long deliberation, all delegates shared their fi eld experiences on impact of microfi nance operations, assessment fi ndings and methodologies, issues and challenges. Chandni Ohri introduced the Grameen Foundation’s Progress out of Poverty Index (PPI), and how it can be used as both a management and a measure-ment tool. She explained that it allows MFIs to better determine their clients’ needs, which programmes are most effective, how quickly clients leave poverty, and what helps them to move out of poverty faster. Gandham suggests that a “one-time touch and go” policy is not what MFIs should aim for, a permanent access to credit is needed for development and empowerment. She argued that social impacts of microfi nance were remarkable, particularly in rural areas of India. It has changed the attitude of the men in a family towards women. The microfi nance movement is bring-ing hope, prosperity, a sense of security and progress to many of the poorest people across the world. She feels that microfi nance approaches for the poor are a necessary ingredient in poverty al-leviation, empowerment of the weaker sections of the society, and to end their fi nancial inclusion but suggests that sustainability and affordability of MFIs are quite important for their success. Ashish Gupta introduced the study report of MiRacle software which is a pilot impact assessment and rating and practitioner-friendly tool for assessing client level impact. He shared his experiences of north India, particularly Uttar Pradesh and Madhya Pradesh.

The main outcomes of the conclave were the beginning of the Global Impact Alliance that would further the agenda of moving

beyond traditional dimensions of microfi nance to a more results, outcomes and impact-focused approach, secondly, a shared un-derstanding also emerged during the meeting that there is need of methodologies for the impact assessment of microfi nance operations. Thirdly, the conclave also emerged as a platform for promotion and dissemination of knowledge and information regarding microfi nance projects and services among different societies and at various levels around the world, for instance, a 20 minutes fi lm and a photo exhibition were displayed showcas-ing impact of microfi nance of various organisations from India, Nepal, Peru, Ghana, Philippines and Cambodia.

Last but not the least the conference concluded with an award ceremony celebrating the best practices in microfi nance operations across the world. And the winner of the fi rst Global Micro Finance Impact Awards 2009 was Amhara, Credit and Saving Institution of Ethiopia, and BISWA from Orissa, India was awarded Forerunner.

Today microfi nance is not seen as a charity business. Due to it’s commercialisation and product diversifi cation it has become a profi table business venture and MFIs are transforming themselves from non-profi t organisations to profi t making organisations. We should keep in mind the fact that the prime motto of MFIs should not be profi t making but to change the fi nancial system to make it all-inclusive. To take full advantage of microfi nance, it is crucial for the industry to continue to innovate, evolve and bring more economically active poor in its ambit. To this end, interaction among intelligentsia and the practitioners for knowledge sharing and assessment of new trends are necessary. The conclave which is slated to be an annual event seems to be an appropriate forum for promotion and dissemination of knowledge and expansion of the microfi nance sector which provides economic lifeline for millions of poor across the world.

Dinoj Kumar Upadhyay

[email protected]

WNS (Holdings) Limited has been awarded the 2009 Golden Peacock Eco-Innovation Award for its Green Lean Sigma Programme by the World Environment Foundation, in association with the Institute of Directors.

WNS, a leading provider of global business process outsourcing (BPO) services, was recognized by a distinguished panel of judges for its organization wide initiative, aimed to make WNS a carbon neutral company leveraging Six Sigma, LEAN and ISO methodolo-gies. This effort was led by Shubra S Sachdev, Associate Vice President, Business Process Excellence and Transformation and Ujjwal Majumdar, Chief Quality Offi cer.

The Golden Peacock Awards (GPA) is a set of prestigious national and global awards designed to improve productivity and quality in organisations. It aims to promote business excellence by providing a Framework or Criteria for assessment that is based on similar principles as other awards throughout the world. The Golden Peacock Awards jury is chaired by Justice P N Bhagwati, former Chief Justice of India and Member, UN Hu-man Rights Commission. The jury is comprised of distinguished personalities from the business, political, regulatory and academic communities, including, among others, Right Honorable Joe Clark , Former Prime Minister of Canada; Ola Ullsten, Former Prime Minister of Sweden; Olivier Giscard d’Estaing, Founder and MD, INSEAD; James McHugh CBE, Former Chairman, British Gas; James McRitchie , Publisher Corporate Governance, California; Prof Viviane de Beaufort, Essec Business School, France; Justice M N Venkatchaliah, Former Chief Justice of India and Chairman, Institute of Directors; Gauri Kumar, Director General, NIFT; and Rakesh Bharti Mittal, Vice Chairman and Managing Director, Bharti Teletech.

WNS receives the 2009 Golden Peacock Award


Africa28-30 October 2009IDIA2009 ConferenceSouth Africahttp://www.developmentinformatics.org/conferences/

2009/3rd.html

Australia15-18 November 2009 2009 Asia Pacifi c Conference on Child Abuse and Neglect Perth, Western Australiahttp://www.napcan.org.au

20-25 March 2010 World Congress of Internal Medicine Melbourne, VIChttp://www.wcim2010.com.au/

Bangladesh 17-19 December 2009International Conference on the Developments in Renewable Energy Technology Dhakahttp://www.icdret.uiu.ac.bd

Europe31 August–4 September 2009World Climate Conference-3Geneva, Switzerlandhttp://www.wmo.int/pages/world_climate_conference/

index_en.html

31 August-3 September 2009Sustainable Energy Technology (SET) 2009 North Rhein Westfalia, Germanyhttp://www.set2009.org

22-23 October 2009Gender, Media and the Public Sphere Coimbra, Portugalhttp://mediagender.wordpress.com/

India16-18 July 200920th Skoch Summit - Banking, Financial Services and Insurance Mumbai, Maharashtrahttp://corporate.skoch.in/index.php?option=com_cont

ent&view=article&id=165&Itemid=209

13-18 July 2009Media, Democracy and Governance: Emerging Paradigms in a Digital AgeNew Delhihttp://www.amic.org.sg/new/news_n_updates/

conf2009cfp.htm

14-16 September 2009Indian Environment Summit 2009 New Delhihttp://www.iesummit.net/

9-11 September 2009National Seminar on “ICT for Agriculture and Rural Development” Pasighat, Arunachal Pradeshhttp://www.modelevillage.in

Japan 24-28 August 2009The 3rd International Symposium on the Environmental Physiology of Ectotherms and Plants Tsukubahttp://www.nias.affrc.go.jp/anhydrobiosis/isepep3/

index.html

Malaysia6-9 July 2009 6th International Conference on IT in Asia 2009 Kuching, Sarawak http://www.cita09.org

What’s on3-4 November 20094th International Conference on E-Commerce Penanghttp://ecdcconference.com

Singapore 26 August 2009International Conference on Energy and Environment (ICEE 2009)http://www.waset.org/wcset09/singapore/icee/

18-20 August 2009Map Asia 2009 Suntec Singapore International Convention & Exhibition Centre http://www.mapasia.org

14-16 September 2009Agriculture Outlook Asia 2009 Grand Hyatt http://www.terrapinn.com/2009/agriasia

Thailand4-6 October 20093rd Vaccine Global Congress Bangkokhttp://www.vaccinecongress.com

United States4-7 October 2009HighEdWeb 2009: Open. ConnectedMilwaukee, WI http://www.highedweb.org/2009

26-30 October 2009mLearn 2009 - 8th World Conference on Mobile and Contextual Learning Orlando, Floridahttp://mlearn2009.org

28-30 October 2009International Conference on Information Technology (ICIT 2009)Chicagohttp://www.waset.org/wcset09/chicago/icit/

United Kingdom29-30 June 2009European Conference on e-Government Londonhttp://academic-conferences.org/eceg/eceg2009/eceg09-

home.htm

28-29 September 2009Energy From Waste Londonhttp://www.smi-online.co.uk/events/overview.

asp?is=5&ref=3142

25 - 27 August 2009 Hyderabad, India

http://www.eINDIA.net.in/2009/


46 i4d | June 2009

Microfacts about microfinance

IN-FACT

In Africa, women account for more than 60 per cent of the rural labour force and contribute up to 80 per cent of food production, yet receive less than 10 per cent of credit provided to farmers. The World Bank estimates at there are now over 7000 microfi nance institutions, serving some 16 million poor people in developing countries. The total cash turnover of MFIs worldwide is estimated at US$2.5 billion and the potential for new growth is outstanding. There is concern that offi cial assistance will be diverted from vital primary care aid programmes such as health, water projects and education into MFIs, owing to their popularity among donors. Though women appear to benefi t most, studies indicate that many loans awarded to and paid back by women are in fact used by men. The widely-imitated Grameen Bank in Bangladesh aims to provide credit to those in extreme poverty. Some 94 per cent of those who meet the bank’s criteria and take up loans are women. Grameen borrowers keep up repayments at a rate of around 98 per cent. The Bank lends US$30 million a month to 1.8 million needy borrowers. Savings are important both as a vital safety net for the poor and as a source of funding that does not rely on external sources. Many strong MFIs, notably in Africa, recycle the savings of needy clients as a principal source of loan funds for their customers. The Microcredit Summit estimates that US$21.6 billion is needed to provide microfi nance to 100 million of the world’s poorest families. The Summit planners say it should be possible to raise US$2 billion from borrowers’ savings alone. The fi nal fi gure may be even higher.Studies have shown that during an eight year period, among the poorest in Bangladesh with no credit service of any type, only 4 percent pulled themselves above the poverty line. But

•

•

•

•

•

•

•

•

with individuals and families with credit from Grameen Bank, more than 48% rose above the poverty line.It is estimated that worldwide, there are 13 million microcredit borrowers, with USD 7 billion in outstanding loans, and generating repayment rates of 97 percent. It has been growing at a rate of 30 percent annual growth. Fewer than 2 per cent of poor people have access to fi nancial services (credit or savings) from sources other than money lenders. Under 10 million of the 500 million people who run micro and small enterprises have access to fi nancial support for their businesses. There is a potential demand for microcredit services from seven million borrowers.There is a potential demand for microsavings services from 19 million savers.The world’s seven richest men could wipe out global poverty. Their combined wealth is more than enough to provide the basic needs of the poorest quarter of the world’s people.

•

•

•

•

•

•

Source: Hari Srinivas, The Global Development Research Centre (GDRC), http://www.gdrc.org/icm/data/d-snapshot.html

i4d invites feature articles on 'mobiles 4 development'The August 2009 issue of i4d magazine focuses on 'mobiles 4 development'. We encourage a wide variety of submissions on the topic areas outlined below:

! Rural connectivity! Financial inclusion through mobile phones! Education through mobile phones! Assisting farmers through mobile technologies! m-Health: Healthcare through mobiles

An ideal feature article (two-pager) should be between 1400-1600 words. Case studies should be between 1600-2200 words. Graphs, charts, tables and pictures should be sent separately in high-resolution (300 dpi or more) .jpeg, .tif or .bmp format. Along with the manuscript, authors/contributors should submit their brief profile and photograph.

e-mail all submissions to [email protected] deadline is 10 July 2009.

www.i4donline.net

Indiamicrofinance.com I I4D Magazine I June09 Microfinance India

News & Politics

Transcript of Indiamicrofinance.com I I4D Magazine I June09 Microfinance India