microfinance experience of CCD

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Microfinance Experiences of CCD: 

Microfinance Experiences of CCD By S.Olaganathan

Covenant Center for Development: 

Covenant Center for Development Started in 1989 By a group of socially concerned development professionals To address the issue of street children phenomenon in Madurai city

Root cause..: 

Root cause.. Drought induced rural migration for employment

Secure livelihoods..: 

Secure livelihoods.. Economic development Human resource development Natural resource development

The context that existed..: 

The context that existed.. Banks were apathatical “Microfinance” was nascent and largely unknown Only the womenfolk remained in the villages

Urgent need..: 

Urgent need.. To create a common platform for women for collective action

The “informal” microfinance programme: 

The “informal” microfinance programme No long time objectives Followed the local formats No external grant support Expansion through a people-to-people process

Slide 8: 

Women savings and credit groups (Kalasm) No standard group size (7-38 members) Loans from pooled resources Interest fixing at groups discretion Loans substantially for consumption purposes

No formal systems..: 

No formal systems.. Simple accounting No receipts/ vouchers No bank a/cs

Initial developments..: 

Initial developments.. “rich” and poor groups Group disintegration Wish to divide the profits Trust issues on cash handling of office bearers Demand for larger sized production credit at reasonable interest rate

A reflective process started..: 

A reflective process started.. Institutional options Resource mobilization options Types of enterprises to be supported Credit delivery machanisms

The needs that emerged..: 

The needs that emerged.. A machanism to redeploy the surplus money within the groups A financial intermediary to access mainstream funds for on lending productive credit An agency to promote community enterprises An agency to provide both financial and nonfinancial services

Mahakalasm: 

Mahakalasm A federation of savings and credit groups A legal entity A Community Based Financial Institution

Slide 14: 

Production loans only Internal resource mobilization at market cost Indigenous plans for resource tapping Fee based services

Slide 15: 

Group lending only Structural screening in place of rating: 3 years uninterrupted existence Minimum active fund of Rs. 20,000/- Group equity of 2000/- Credit appraisal for groups

Mahakalasms: 

Mahakalasms Sevaiyur - 1996 Sooranum - 2000 Natham - 2001 Madurai - 2002 Poompuhar - 2005 Sirkazhi - 2005 Kanyakumari - 2006 Mmssk - 2007

Supportive programmes: 

Supportive programmes Experience Need assessment based on occasional research

Two modes: 

Two modes As an entry point As an add-on

Approaches..: 

Approaches.. Increasing the income Building assets Programatic measures to reduce expenditures Reducing drudgery to increase productive hours Reducing cash needs by providing non cash credit Measures to streamline market channels

Expenditure reduction measures: 

Expenditure reduction measures Kitchen Herbal Gardens (KHG) Production and sales of herbal based medicines

Increasing productive hours..: 

Increasing productive hours.. Biomass stoves Fuel efficient Dual purpose Co-created product CBO-NGO-Corporate partnership

Non-cash credit: 

Non-cash credit Aharam – credit card based supply chain for food security

Streamlining market channels: 

Streamlining market channels Elimination of traders credit Common facility centres Collective marketing and end user linkages

Transition of MF into Livelihood Finance: 

Transition of MF into Livelihood Finance Credit as a tool for enterprise promotion As a part of a package

Slide 25: 

Service provision through specialized institutions Professionalism Appropriate organizational formats Community stake holding

System development: 

System development MIS development Technology induction

Sectors for MF interventions..: 

Sectors for MF interventions.. Dryland organic farming Coastal resource based livelihoods Food processing

MF challenges for CCD..: 

MF challenges for CCD.. Promotion costs Training/follow up Mainstreaming vs NGO monitoring Portfolio quality Sustainability issues Reaching the scale