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Overcoming Barriers to Resource Flow to SHGs & Federations

Overcoming Barriers to Resource Flow to SHGs & Federations. There are various persons/Institutions interested in SHGs Members + Family Community and Politicians/Social activists Local/State Govt. Regulator/Business Community Suppliers/supporting Agencies

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Overcoming Barriers to Resource Flow to SHGs & Federations

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  1. Overcoming Barriers to Resource Flow to SHGs & Federations There are various persons/Institutions interested in SHGs Members + Family Community and Politicians/Social activists Local/State Govt. Regulator/Business Community Suppliers/supporting Agencies Rating Agency/CAMELSON Capital Agency, Management, Liquidity, Asset Quality Earnings, Sensitivity to market risk, compliance, out reach, sustainability Credit Information Bureaus Facilitator-Trainers/Service providers for audit & capacity building

  2. Sources of Fund • Internal savings • Bank Barrowings • Borrowing from MFIs • Although it is an informal body – while borrowing from Banks and MFIs a fair amount of formalities are required to be compiled with • Banks do due diligence test of MFIs before financing like i) Evaluation of process of Sanction by MFIs to SHGs ii) Process of KYC being done as per RBI guide line iii) system of internal audit iv) Process of recovery Cont.

  3. Sources of Fund v) Default Rate vi) Efficacy of system of credit evaluation mechanism vii) Rate of interest viii) Individual Use of Funds as per RBI guide lines for compilation of PSL ix) Asset quality- CRA Rating x) Internal rating • Provisioning 100% for NPA • Hence SHGs are the field where from all these have to be verified before finance

  4. Direct loan from Banks SHG-2-NABARD Voluntary Savings-Individual Cash credit/ Overdraft Risk mitigation system( Self rating+ Audit) Appointing NGOs as BF Building second line institution SHPI for hand holding Addressing training requirement

  5. Need good Governance both MFIs & SHGs • Well settled system & procedure • Transparency • MIS- Parameters of SHG book keeping • Utilization of funds • Image + Reputation • Client protection • Financial Literacy(Poor illiterate -Middle aged) • Fair practice • Integrating social values in operation • Above 25 Lakhs- Process as Commercial loans

  6. All parameters applicable to commercial loans are being applied for MFIs loans to be termed as PSL. • Any one’s guess where are we heading at

  7. CAMELSCOS • Capital Adequacy • Asset Quality • Management • Earnings • Liquidity Management • Sensitivity to Market risk • Compliance • Out Reach • Sustainability

  8. THANKs

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