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Ô The overwhelming majority of people who earn

less than $1 a day, especially in the rural areas,
continue to have no practical access to formal
sector finance.
Ô Financial services have been identified as a
crucial tool to prevent financial distress and
implosion of the lives of the people with no
safety cushions.
Ô Money management services allow us to lessen
the curse the poverty for the millions in its grasp.
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Ô wt is a village-based financial intermediary, whose
members agree to save regularly and convert
their savings into a Common Fund known as the
  .
Ô p
s are formed by N
s,
overnment
agencies or Banks.
r 

Ô Members make small regular savings

contributions over a few months until there is
enough capital in the group to begin lending.
Ô Funds may then be lent back to the members
or to others in the village for any purpose.
Ô wn wndia, many p
s are 'linked' to banks for
the delivery of microcredit.
w 

Ô p
s are member-based microfinance

intermediaries inspired by external technical
support that lie between informal financial
market actors like moneylenders, collectors,
and RpCAs on the one hand, and formal
actors like microfinance institutions and
banks on the other. ther organizations in
this transitional zone in financial market
development include CVECAs and ApCAs.



Ô The post-nationalization period in the banking

sector, circa 1969, witnessed a substantial amount of
resources being earmarked towards meeting the
credit needs of the poor.
Ô There were several objectives for the bank
nationalization strategy including expanding the
outreach of financial services to neglected sectors.
Ô wn the early 1980s, the
ow launched the wntegrated
Rural Development Program (wRDP), a large poverty
alleviation credit program, which provided
government subsidized credit through banks to the
poor.
r 
Ô But studies showed that what the poor needed was was
better access to financial services and products, rather than
cheap subsidized credit.
Ô To answer the need for microfinance from the poor, the
past 25 years has seen a variety of microfinance programs
promoted by the government and N
s.
Ô wn 1999, the
ow merged various credit programs together,
refined them and launched a new program called
pwaranjayanti
ram pwarazagarYojana (p
pY).
Ô The mandate of p
pY is to continue to provide subsidized
credit to the poor through the banking sector to generate
self-employment through a self-help group approach
ë 

Ô The group members use collective wisdom and

peer pressure to ensure proper end-use of credit
and timely repayment.
Ô This system eliminates the need for collateral.
Ô wt is closely related to that of solidarity lending,
widely used by microfinance institutions.
Ô To make the book-keeping simple enough to be
handled by the members, flat interest rates are
used for most loan calculations.


Ô pelf-help groups have a varying emphasis on

Ǯmicrofinanceǯ or may be seen as
microfinance +ǯ.
Ô pelf-help groups are seen as instruments for a
variety of goals:
1. Empowering women by improving economic
status.
2. Developing leadership abilities among poor
people.
r 

. wncreasing school enrolments.

4. wmproving nutritional status.
5. Use of birth control measures.

Ô wt should be noted that financial intermediation is

generally seen more as an entry point to these other
goals, rather than as a primary objective.
Ô owever this can hinder their development as
sources of village capital, as well as their efforts to
aggregate locally controlled pools of capital through
federation, as was historically accomplished by
credit unions.
Ú
p 
 p 

Ô Not all states are

created equal when it
comes to p
s
Ô Maximum p
s are
found in southern
states of TN, AP,
Kerela,
Karnataka(44%)
Ô Northern states have
shown higher failure
rates.
!  Ú

Ô wn 1999, the
ow merged various credit programs together,
refined them and launched a new programme called
pwaranjayanti
ram pwarazagarYojana (p
pY).
Ô The policy environment in wndia has been extremely supportive
for the growth of the microfinance sector in wndia.
Ô Particularly during the wnternational Year of Microcredit 2005,
significant policy announcements from the
ow and RBw have
served as a shot in the arm for rapid growth.
Ô wn many wndian states, p
s are networking themselves into
federations to achieve institutional and financial sustainability.
Ô wn 2005, the
ow allowed MFws to be eligible for external
commercial borrowings which would allow MFws and private
banks to do business thereby increasing the capacity of MFws.
" 

Ô Many self-help groups, especially in wndia, under

NABARD's p
-bank-linkage program, borrow
from banks once they have accumulated a base
of their own capital and have established a track
record of regular repayments.
Ô This model has attracted attention as a possible
way of delivery microfinance services to poor
populations that have been difficult to reach
directly through banks or other institutions.
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wn Rs Crore pource:NABARD
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Ô NABARD has identified MFws as a core

strategy for expanding credit access.
Ô
ow  RBw have formulated policies keeping
this view in accordance.
Ô wt has been estimated that double the current
no. p
s, the most successful MFw model,
are needed to bridge the credit supply gap in
the next 10 years.(NABARD study).
r



Ô There is no doubt that p
s have created a

quiet revolution in the lives of millions of the
poorest people across the world.
Ô owever significant challenges remain in
terms of legal status and governance
structures left undefined.
Ô There is still considerable scope for this
model to grow and provide access to its
members to a whole slew of financial services
unavailable to them before.
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Ô This self-help chain, started on a modest scale in 1998, has grown over
the period as one of the mighty womenǯs movements in Asia with a full-
time membership of .7 million, engaged in an array of gainful activities.
Ô t was initially conceived as a community based women oriented
initiative with Neighbourhood
roups (N
) as its base.
Ô wt was conceived as a collaborative venture of the state government,
NABARD and ptate Poverty Eradication Mission.
Ô The units started small and micro enterprises  cottage industries by
pooling individual savings and with support of rural or co-operative
banks and civic bodies.
Ô wt has diversified and expanded into initiatives like catering services,
budget hotels and group farming  even wT services.
Ô Besides the social impact, the product and services of Kudumbasree
have been able to achieve a brand-like status.
Ô The N
s' number has increased within a short time exceeding 2.0
lakh with their presence in all 999 village panchayats, 5 municipalities
and 5 city corporations.
 "(