Transcript Document

Optimizing SHGs
Sustainability
1
Who Maintains Books
Office bearer
Paid book-keeper
SHPA staff
Unpaid non-member
AP
Kar
Or
Raj
0%
20%
40%
60%
80%
100%
•
In AP, the books are maintained by Office Bearer –
paid or unpaid. In other three states by SHPA staff or
paid bookkeeper.
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Depends on who maintains the records- SHPA staff
do best, unpaid non-members do the worst
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BOOK-KEEPING
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54% of the SHGs have reasonably good records (15%
good and 39% moderate)
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40% have weak records- over half the sample in AP; 1/3rd in
the other 3 states.
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Over half of the Govt. promoted SHGs have weak records;
36% of both NGO and bank promoted groups
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72% of the SHGs have up-to-date passbooks
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73% of the SHGs kept their records at leader’s house
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RECORD QUALITY
No schooling
Some schooling - some members
% SHGs by schooling of
members
50%
45%
34%
46%
35%
18%
13%
8%
3%
0%
Good
Moderate
Weak
None available
Quality of records
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83% SHPAs have some internal verification systems,
computerization and external audit
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Quality of records is better where SHPAs focus is more on
microfinance than MF+
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Lesser the distance to main road better the quality of books
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Group Records
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Overall, the quality of group records require considerable
improvement.
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A system need to be in place to verify the maintenance of
books on a regular basis and to support the bookkeepers.
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The book keeping system seems to be complex: the
number of records and the workload to record transactions.
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Bookkeeping still seems to be a “dark” area. The “light” is
that where the book keepers are paid & supported, they
maintain the books well.
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SHG Federations could supervise & support bookkeeping.
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EQUITY
65,600
70,000
57,400
70,000
56,100
40,300
0
41,800
Median (Rs)
Median (Rs)
45,000
34,500
31,000
0
VP+P [79]
BL+NP [63]
Mixed [21]
Sam ple SHGs by m ain w ealth rank of m em bers
SC [44]
ST [33]
BC [51]
OC [26]
Mixed [9]
Sample SHGs by main caste of members
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the average portfolio size is Rs. 69,100, ranging from Rs.
27,400 in Orissa to nearly Rs. 1 lakh in Karnataka.
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Loan portfolio of SHGs by wealth rank and caste - smaller
for poorer groups, and the largest for BC groups
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Incidence of non-borrowers is 5% in South and 8% in North
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The groups with non-borrowers 25% in South 38% in North
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ACCESS TO LOAN
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Average no. of loans per member is 2.2 in south (last one
year) and 3.8 in the North since group formation
Average of Rs. 9,500 borrowed as loan by each member in
the South (in the last one year) which is almost the same
as borrowed in the entire period of SHG in the North.
Degree of inequality- 68% of the SHGs overall have low
std dev. Value of less than Rs. 5,000; 10% of the SHGs
have more than Rs. 10,000
Std. dev.-’0’- equally distributed among all group members.
16% in the South and 5% in the North
Equal distribution of external loans to avoid conflicts
among the group members and to simplify procedures and
record keeping.
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Loan Access: Leaders and Members
AP
Karn
Orissa
Raj
Members (excl. leaders)
1.6
2.7
2.5
4.8
6,570
12,500
5,240
12,660
5,700
11,300
5,900
11,400
1.9
3.4
3.6
5.8
7,970
16,390
7,070
17,820
6,100
13,900
7,100
20,000
No. of loans [3/1]
1.20
1.25
1.41
1.21
Loan amount [4/2]
1.21
1.31
1.35
1.41
1. Average number of loans
2. Average loan amount (Rs.)
Std dev
Leaders
3. Average number of loans
4. Average loan amount (Rs.)
Std dev
Leaders: other members
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LENDING TO NON-MEMBERS
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18% of the SHGs have lent to people outside the group.
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It is high in AP-23% and Orissa-22%; and Govt. promoted
SHGs-24%
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Interest charged to non-members is always higher.
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The lending to non-members is often not recorded in the
books
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At times, the members borrow and lend to non-members.
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Issues in lending to non-members: i) default by the nonmembers and ii) new form of money lending
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Equity Within Groups
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SHGs practice need-based lending.
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The analysis reveals a high degree of equity among
members.
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The leaders in the Northern sample borrowed
significantly high amounts compared to South.
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Lending to non-members either by SHGs or
individual members reflects supply-driven credit
distribution.
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DEFAULTERS
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Defaulters
>90days-12 m
>12m
Current borrowers
19%
5%
Avg. Loan O/S
2,700
1,700
Overall (All members) 20%
4%
Leaders
19%
1%
Members
21%
5%
39% Highest level of default is found among the very
poor borrowers compared to other wealth ranks
The period of overdues also increases with poverty
Very poor find it difficult to pay - poverty, vulnerability
and risk- an accident, illness or death in the family,
crop failure
Note : Defaulters data is only for the North sample, defaults higher in South as
the SHGs are much older and manage larger funds
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RECOVERIES
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Group norm-interest monthly and principal over the term of the
loan
8% of the borrowers were > 12 months behind in repayment.
Default at 12 months was significantly higher for very poor and
poor borrowers at 8-9% compared to borderline (4%) and non-poor
(1%) borrowers.
For repayment of bank loans the pattern is clearly specified for 1st
linkage loans: repayment period 10-12 months; often the principal
is paid in 10 equal monthly instalments and the interest is paid at
the end.
In the subsequent linkages the repayment period varies from 20-36
months, and up to 60 months.
 Quarterly/monthly repayment of principle + interest
 Seasonal approach-different times of the year, depending on ag
seasons.
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Strategies to Deal with Defaulters
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Social collateral- members making repayments on behalf of
defaulter
Exerting pressure on defaulters to pay-discussions within
the group, warnings, imposing fine, taking assets into
possession, locking her out of her house
Ensure repayment depending on defaulter’s situation,
rescheduling, willing to wait until the members can begin
repayments again
Follow-up on continuing default-visit to the members house,
and a period of waiting for about 6 months to 1 year
Low MF inputs and higher development inputs, higher rates
of default.
SHPA staff role in repayment, Recovery Committees.
Adjustment of savings by the bankers, targets and repeat
loans
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GROUP SUSTAINABILITY
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Financial statements are not being regularly prepared.
Only in 28% of the SHGs (22% in the South and 35% in the
North) income and expenditure statement available
An equal number balance sheet and portfolio information
available
Financial performance of the SHGs showing mixed findings
Around half of the groups are operating at profit with a good
return on assets of assets of 6.5%, and a return on internal
capital of 11%
Around 20% of the sample are running at a loss
Most SHGs report Zero cash in hand.
In Rajasthan, 8% of the groups with cash in hand is more
than Rs. 5000- more distance.
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COST OF BANKING
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Direct costs of banking are mainly transport
In 36% of the SHGs, a visit to the bank takes less than
an hour; for 25% a visit takes more than 3 hours
63% of the SHGs, leaders visits the bank
The costs were reported to be zero in one-third to a half
of the groups in Karnataka and the northern states. In
AP all groups incur some costs
Rs. 300 is the average annual direct cost. It is high for
Karnataka groups –Rs. 500
Opportunity costs of the time spent by SHG leaders and
members in bank transactions not included
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Portfolio At Risk
Karnat
Rajast
aka
Orissa
han
Overall
AP
172
60
50
37
25
Total portfolio
outstanding (million Rs)
11.63
4.25
4.82
0.96
1.60
With PAR =/>360 days
number
92
48
26
15
3
53%
80%
52%
41%
12%
N - SHGs with portfolio
data
% SHGs
%PAR
31%
average (Rs)/SHG at risk
40,000
55%
25%
49,000 46,000
9%
2%
5,000 11,000
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Portfolio At Risk
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53% of the overall sample (80% in AP) have defaults
more than one year past due, representing one –third
of the portfolio in the southern sample, less than 10%
of portfolio in the northern sample.
PAR in bank promoted groups is lower than for NGO
and Govt promoted groups.
Half the bank promoted groups have an average 18%
PAR at 360 days. There is not much difference
between NGO and Govt promoted groups
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DEFUNCT AND BROKEN SHGs
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8-11% of the SHGs formed are no longer functioning in
AP, Orissa and Rajasthan; but in Karnataka <2%
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3.6% of groups formed were defunct; 3.3% had broken
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Savings account is closed- group funds divided among
the members, with adjustments against outstanding
loans; account not settled- the SHG continues but is
defunct
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Reasons-no bank linkage, irregular savings, absence of
SHPA, loss of records, defaulting
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Split or reorganization of groups in three situations- New
government schemes, going independent, traditional
ROSCA
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Thank You
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