Rajasthan Microfinance Report 2011

1. Rajasthan Microfinance Report 2011 Jaipal Singh Executive Director Center for Microfinance

2. Background Centre for microFinance publishes the Rajasthan Micro Finance Report annually since 2009 The report attempts to build complete picture of microFinance for policy makers and practitioners In cases where reliable data is unavailable, quick surveys and realistic estimations are done to paint the larger picture

3. Structure • Chapter 1- Rajasthan Context • Chapter 2- Demand of microFinance • Chapter 3- Status of community based micro Finance in state • Chapter 4- Status of MFIs • Chapter 5- Human Resource – estimation • Chapter 6- Way forward- recommendations

4. Rajasthan, economy and poverty Large State – Challenging climate- low and erratic rainfall- frequent droughts; Good land holding but productivity low Still huge scope of enhancing livelihoods through agriculture and animal husbandry; particularly horticulture, dairy, goats etc. Migration to cities within and outside state – urban poverty – largely unaddressed Large number of families around BPL line – can fall in anytime

5. Key trends in microfinance in Rajasthan

7. Major trends/ Issues • ‘Wages’ as prime occupation of small and marginal farmers- erratic rainfall and ‘No access to Finance’ are primary reasons. • Non availability of credit –loss of opportunity • Many groups are formed and forgotten (especially groups formed under ‘schemes’/ projects) – SHGs need support

8. Major trends/ Issues • Defaults in SHGs (especially SGSY) has increased • Banks are still impounding saving of SHGs while providing credit • Very high impact of SHGs observed on confidence, decision making, income, girl child education etc. • SHG movement weak in most backward districts

9. Major trends/ Issues • New schemes encourage breaking of old groups • State Government has set up Rajasthan Grameen Aajeevika Vikas Parishad and Mission Gramya Shakti- two societies to strengthen SHG movement • CmF and Government of Rajasthan have developed web portal to address database and MIS issues • Over 50,000 youth are needed at various levels in next 5 years in the state for implementing livelihoods initiatives (NRLM, RRLP, MPOWER)

10. Demand of microfinance in Rajasthan • Huge demand for savings - in rural Rs. 15500 crore- urban Rs. 644 crore annually • Annual credit demand in rural areas is Rs. 11000 crore; in urban is Rs. 360 crore • Insurance – high need but low demand, very low awareness

11. Key recommendations and way forward • Around 60 percent of SHGs are of average or above average quality- can be supported by new programs like NRLM, RRLP and MPOWER. • Care should be taken that SHGs do not disintegrate due to low % BPL composition • All SHGs, irrespective of their pedigree, should have uniform systems, processes, operations, book-keeping, record-keeping, grading, auditing and quality standards.

12. Key recommendations and way forward • More impetus to federating the SHGs and to develop an appropriate legal environment for facilitating the community owned and community controlled federations • Apart from promoting SHG-bank linkage with vigor, piloting of a ’bridge financing’ vehicle, targeted at regions where bank branch network is thin or low on bandwidth

13. Key recommendations and way forward • A special purpose vehicle to bridge the fund for livelihood activities – fund to be provided to community based organizations against their financially viable proposals • Development of cadre of Community Resource Persons - as barefoot professionals or ‘service providers’ in the state • Creation of community led health mutual for poor communities

14. THANK YOU