ASSOCIATION OF AFC WITH MICRO FINANCE

Over the years AFC has been carrying out an increasing number of assignments in the area of micro finance and micro enterprise development as well as other related areas such as Women’s Development and Empowerment, Poverty Alleviation and Indigenous People’s Development. Some of the important assignments handled by AFC on Micro Finance and other related areas are briefly given below:

(I) Impact Assesment Study of SIDBI’s Micro Finance Programme (2005 – Ongoing)

The Small Industries Development Bank of India (SIDBI) through its Division – The SIDBI Foundation for Micro Credit (SFMC) is implementing the National Micro Finance Support Project (NMFSP) supported by DFID, UK and IFAD, Rome. The overall goal of the project is to support poverty alleviation and reduce vulnerability amongst the users of micro finance services, especially women.

In order to assess the impact of this micro finance programme at the beneficiary level, a two-stage longitudinal research study has been undertaken by SFMC through independent agencies. The First stage of the study was carried out during 2001-2004 which covered, besides, pre-testing of research design, a study of 20 Micro Finance Institutions (MFIs) and Baseline Survey (BLS) of 5500 sample households, including non-client households selected for comparison purpose.

The Second Stage of this longitudinal study is being carried out by Agricultural Finance Corporation to provide the following services:

	1.	Complete longitudinal study of at least 4000 households out of the 5500 odd households surveyed in the First Stage.
	2.	Document impact of SFMC intervention at the end user (beneficiary) level, dealing with issues of attribution as accurately as possible.
	3.	Provide recommendations on MFI level inputs for focusing on poor and providing cost-effective and sustainable micro finance services to clients.
	4.	Provide detailed recommendations on the policy level inputs required in the micro finance sector for improving delivery processes and financial products offered to end users.

The study is divided into four phases: Phase 1: Baseline survey of 5 new MFIs; Phase II: Impact Assessment of 10 MFIs covered in Stage - I; Phase III: Impact Assessment of the remaining 10 MFIs covered in Stage -I; and Phase IV: Impact Assessment of 5 new MFIs covered in Stage –II.

AFC has completed Phase–I and Phase-II of the study and the report for the remaining two phases is under preparation.

The findings of the survey so far carried out indicate overall positive impact of SIDBI’s Micro Finance Programe on various aspects such as access, enterprise activity, income related effects and vulnerability. There are mixed findings regarding women empowerment with access to loans for women going up but ownership of assets in the name of women going down. Further, there is a need for improvement in aspects such as opportunities for savings through micro finance and provisions of insurance support to clients. The impact on aspects such as reduction in casual labour, ability to educate children, reduction in migration, improvement in food consumption pattern, dealing with illness in the family cannot be attributed to the efforts of MFIs alone.

Some of the suggestions for improvement in services by micro finance sector are as follows:

	i)	Interest:The interest burden needs to be decreased and interest should be charged on declining basis instead of flat rates
	ii)	Loans: In addition to loans for income generating activities, additional loans may be provided for educational purposes. The sector specific clients desire flexibility in loan usage as per enterprise needs to purchase fishing assets of different types.
	iii)	Savings: Saving products be made more flexible in terms of aspects such as withdrawals, frequency of deposits and interest paid on deposit amounts. The clients desire to have flexibility in compulsory savings to vary savings amounts at times and part withdrawal in case of emergency. They also desire transparency in interest rate payment on deposit amounts. Grameen model clients desired restarting of voluntary savings which has been stopped by some of the Grameen MFIs.
	iv)	Insurance: Insurance is relatively a new area for MFIs and awareness about insurance needs to be created among clients. Insurance services for assets and health need to be introduced. However, imposition of compulsory insurance cover is resented by some of the clients.
	v)	Business Development Support: Although MFIs provide credit to various enterprise activities, clients desire to have enterprise support services in terms of training in income generating activities and marketing of products in various areas.
	vi)	Group development: It is necessary to identify and develop group leaders who can take responsibilities in rotation for leading the groups and also take part in training and skill development.
	vii)	Other developments: Sector specific model clients desire provision of support to defunct groups/societies and provision of modern safety fishing equipments.

This study is in progress and likely to be completed by March 2007.

(II) Baseline Survey, Concurrent Evaluation & Impact Evaluation of The World Bank - IFAD assisted National Women’s Development & Empowerment Project (NWDEP) 1999/2005

The World Bank and IFAD have entered into an agreement jointly to finance Rural Women Development and Empowerment Project (RWDEP), now known as ‘Swashakti’, in 9 States of India viz., Bihar, Chhattisgarh, Jharkhand, Gujarat, Haryana, Karnataka, Madhya Pradesh, Uttar Pradesh and Uttaranchal. AFC was associated by IFAD at the time of identification of RWDEP based on the experience gained in the Tamil Nadu Women’s Development Project. The project is being implemented in nine states and is based on the principles of participatory approach and self help, micro credit support through women SHGs and convergence of the various socio-economic programmes. AFC was assigned the tasks of: i) Baseline Survey; ii) Setting up of MIS at the National and State levels; iii) Concurrent monitoring & process evaluation; and iv) Impact evaluation of the project and v) conduct of special studies. The key instrument for women’s development under the programme is formation of about 7000 Self Help Groups through involvement of a number of agencies. The Baseline Survey covered 35 districts in nine states. The total sample size being covered for this Baseline Survey consists of 102 blocks, 200 panchayats and 14000 households. The objective of the survey was to provide socio-economic analysis of pre-project characteristics of districts, target villages and beneficiaries.

The CPM/ MIS for Swashakti project has been developed for regular and smooth upward and downward flow of information from SHGs at district level to State WDC and further to CPSU (GoI) for monitoring the progress and taking decisions for mid course corrections. The upward flow of information contain the base data of SHGs, progress of SHGs, clusters and NGOs and performance report of district and state project staff. This information flows on regular intervals. Downward flow of information contain the decisions taken at upper level.

AFC also prepared a status report of tribal population in 3 districts of Bihar and prepared a draft plan of approval of intervention for tribal women in these districts under RWDEP. The study also has discussed the role of micro credit in promoting income generating activities and modified focus of savings adopted by tribal women with a view to evolving suitable strategies.

(III) Assessment of Micro Finance Activities through SHGs - Punjab National Bank (2003) AFC reviewed the micro finance activities of Punjab National Bank in selected districts of Bihar and Punjab and assessed the capabilities of NGOs in financing and nurturing of SHGs for providing micro credit support to the rural poor. Comparative analysis of SHGs with reference to SHGs under SGSY scheme of Govt of India and Bank was also carried out. AFC also assessed the capabilities of NGOs in linking SHGs with Banks.

(IV) Performance Assessment of NGOs under Rashtriya Mahila Kosh ( 2001 - ongoing) AFC has been retained by Rashtriya Mahila Kosh (RMK) as a lead monitoring and appraisal agency for carrying out pre-sanction credit appraisal of proposals submitted by NGOs and post-sanction credit monitoring of micro finance activities of NGOs. AFC conducted pre and post sanction performance assessment of 486 NGOs spread over almost all the states of the country. AFC reviewed their micro finance activities and assessed the capabilities of NGOs in financing and nurturing of SHGs for providing micro credit support to the rural poor. AFC also assessed the capabilities of NGOs in developing SHG linkages with Banks.

(V) Credit Facilitation under Uttar Pradesh Diversified Agriculture Support Project (2001) The project aims at promoting sustainable agriculture by diversification of activities through technology dissemination involving greater private participation through SHGs. The study aimed at assessing the need and volume of finance required by the SHGs formed under the project, perception of the group members, participation in the on-going programme, dissemination of technology among the group members, linkages with the banks and income generating activities taken up by the group members. Enhanced participation by farming communities through grassroots organizations of farmers, including women, such as self help groups, commodity groups and farmers’ associations had been envisaged and provision of micro credit is expected to facilitate technology dissemination and crop diversification.

(VI) Rapid Assessment of Women Self Help Groups, UP Bhumi Sudhar Nigam (2001) The assignment was awarded by the Department of Women and Child Development, Ministry of Human Resources Development to identify capable SHGs which can be adopted for implementation of Swashakti Project. The work involved assessment of all the SHGs formed under WB and EU funded Land Reclamation projects. The work involved determining functional status of each of the groups on certain parameters. AFC reviewed their activities and assessed the capabilities of NGOs in financing and nurturing of SHGs for providing support to the rural poor. On the basis of the survey, all the groups were classified as ‘Functional’, ‘Non-functional’ and ‘Non-existent’.

(VII) Evaluation of SHGs formed by various Agencies in Uttar Pradesh (1999) AFC conducted performance assessment study of SHGs in Uttar Pradesh for the Ministry of Human Resources Development, Department of Women & Child Development, Government of India. Under the study, AFC conducted performance assessment of around 320 SHGs formed by various agencies including government department such as Agriculture department, SIDBI, Nehru Kendra, DWCRA, NABARD, Mahila Samkhyaya, U.P.Bhumi Sudhar Nigam, Mahila Kalyan Nigam, Rashtriya Mahila Kosh etc. AFC’s M & E Expert has made rapid appraisal of few SHGs and formulated a questionnaire for detailed evaluation survey of all SHGs. Accordingly the survey was conducted and constraints faced by SHGs as well as implementing agencies in micro credit delivery were identified. AFC suggested remedial measures and policy changes to improve the performance of SHGs.

(VIII) Maharashtra Rural Credit Project (1994/1999) – IFAD AFC was involved in identification, preparation and also appraisal of the project, which aimed at improving provision of financial services to the rural poor in the context of poverty alleviation and rural development. The project sought to improve the credit delivery and other support services to the rural poor by the formal institutions eliciting people’s participation through village development councils and assemblies and by promoting Self Help Groups (SHGs) of women for savings mobilisation and informal lending to the members. The project components also included support for implementing on-farm and off-farm enterprises including skill development training and support for women’s access to credit. AFC’s experts were utilised by UNOPS for their Supervision Mission of the project. AFC was also involved in Base Line Survey of Control Group Families in eleven districts and Monitoring and Evaluation of the project in two districts in Phase II of the project and completed four rounds of M & E studies.

(IX) Tamil Nadu Women’s Development Project (1987/1992/1999) – IFAD The project preparation exercise assigned to AFC by IFAD aimed at mobilizing women from poor sections in the rural areas to form savings and credit Self Held Groups (SHGs) and to involve them in various income generating activities with technical assistance provided by the relevant agencies and credit support from commercial banks. Right from the identification stage AFC’s officers were involved. Subsequently, AFC experts were also part of UNOP’s Supervision Mission for the project, which is under implementation, and is regarded as a pioneering project for socio-economic development and empowerment of rural women with credit support and other institutional linkages. The project led to considerable development and empowerment of women with excellent repayment rates above 90%. AFC was also assigned the task of Terminal Impact Evaluation of the Project as also Transaction Cost and Cost Effectiveness study.