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Credit for 1 million women
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Microcredit Foundation of India (MFI), in partnership with ICICI Bank, has launched the largest run microcredit programme in India. MFI's goal is building up of vibrant village communities in over 3,000 villages in Tamil Nadu, and to provide Rs 1,250 crore in credit to Self-Help Groups (SHGs) by March 2008.
Dr K M Thiagarajan, chairman, MFI, said, the organisation has a current membership of 3,08,000 women and a credit portfolio of Rs 150 crore. By March 2008, it is projected that there will be 97,000 groups, which will train and provide credit to one million women. The credit will then exceed Rs 1,250
crore.
Furthermore, the objective is to empower people to manage their resources on their own and build sustainable livelihoods. Development of local indigenous skills and vocational training to foster employment opportunities is an integral part of the plan, he said.
The SHG concept mobilises the energies of poor, often uneducated, village women to form seamless communities across conventional barriers. The economic and social empowerment of village women through microcredit encourages these groups to initiate joint social action - eventually, one hopes, to bring about enlightened development, Thiagarajan added.
The three unique features of MFI programme that contribute to its scalability and low cost of expansion, in delivering microcredit are
Village women from SHGs who show leadership qualities are selected, given intensive training and empowered to start new groups. And 1,000 group promoters are linked to performance. In other words, MFI doesn't merely hire qualified people but trains its own SHG members to let the cream rise to the top.
Unlike many micro credit institutions, which spread themselves thin, MFI's activities are focused on Tamil Nadu. As a policy, as many groups as possible are formed in one village and then fanned out to nearby villages, thus forming large clusters. This makes administration both easy and economical.
Being financially self-sufficient, MFI is independent of the government or any funding agency, Indian or foreign. This makes it a truly not-for-profit company. In keeping with the principles of sustainable development, staff and personnel are hired from local work forces. Retired bank employees drawn from local communities, rich in experience and committed to the cause of rural development, are deployed at minimum cost, Thiagarajan added.
The partnership between the bank, which provides the credit, and MFI, which runs the programme for a fee paid by the bank, further brings down costs, assures credit flow and makes sure that costs are clearly identified.
Livelihood and income generation
MFI has a parallel project to take the microcredit movement to its logical next step by using the credit fruitfully. More than three lakh members of the SHGs, trained in the basic concepts of savings, mutual lending and basic entrepreneurial activities, are looking to acquire new skills and livelihood - without leaving their homes or villages - which will bring them a regular income of between Rs 2,000 and Rs 3,000 per month.
These SHGs, newly empowered by microcredit and its resultant high social status in the community, are highly motivated and eager to be trained to acquire vocational skills. They also have the capacity and means to network with one another, form large communities across the state and become powerful rural marketing channels for their own goods and services.
With this in mind, MFI is conducting an extensive survey among the SHG members, across 23 districts of the state, to identify local skills, resources and livelihood opportunities. Once this is completed, MFI will impart training in about 20 or 30 of the most promising options. The organisation is already running pilot programmes in agarbathi manufacture, tailoring and kadai breeding in different locations in the state.
A village tourism project will also be launched shortly where the SHGs will offer traditional accommodation and hospitality services for a fee.
Eventually, MFI hopes every SHG member will become a village entrepreneur, in a small way for certain, and some of them in big ways as well.
The Village Mission
It is a widespread belief among rural communities that the government or some outside benefactor should take responsibility for their development, Thiagarajan said, adding MFI believes that this misconception is the cause of rural poverty. Therefore, inculcating the concepts of self-help, self-reliance, citizenship and joint social action for mutual benefit forms the bedrock of the MFI Village Mission.
It aims to create a replicable and sustainable model for the integrated development of villages through a 5-point programme.
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To promote income generating activities
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Improve the quality of education at the anganwadi and the government primary school to bring them to the standard of good schools in the urban areas
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Provide access to primary health care and improvement
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Improve health and hygiene: toilet facilities, safe drinking water, increased nutrition.
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Improve physical and social infrastructure
Three locations in Tamil Nadu have been identified where this programme of integrated and sustainable development has already begun.
MFI personnel function as trainers and facilitators of change - rather than as benefactors. The intent is to encourage the process of community introspection and evaluation, then offer training in each of the development projects, test alternative solutions in tandem with the communities; in other words, build on local initiative to form good partnerships.
MFI believes that the success of the Village Mission will ultimately lie in development that continues undiminished and vibrant, after the external stimulus moves out, in this case MFI, Thiagarajan pointed out.
Thiagarajan said the ICICI Bank was being persuaded to lower the rate of interest to the SHGs from the present rate of 18 per cent, especially considering that the repayment rate was 99.65 per cent.
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