welcome in this presentation (micro-finance) - Bashu, WUPAP

1. Positive discrimination policies applied for reaching to ultra poor in micro-finance activities Arrangements at present: 25% of the total lending fund reserved for LFUGs - the poorest among the project beneficiaries 35% of the total borrowers from internal savings should be women – a mandatory provision Provision of loan to internally displaced people due to conflict 20% increment in the COs' loan ceiling those serving to the women and dalits Highest priority to the demands filed by the women and dalits

1. Positive discrimination policies applied for reaching to ultra poor in micro-finance activities Arrangements under discussions: Difference in lending rates between ultra-poor and others utilizing: DDCs' and VDCs' annual contribution to LDF Interest earned from credit capital mobilization

2. Building skills of the poor to manage savings: what works and what doesn't? Exposure through meetings, trainings and visits Vocational skills Market access opportunities Know-how on new enterprises and awareness on opportunities Cycle of Savings mobilization

3. How can micro-finance strategies be used effectively for gender empowerment? Ensuring access of women and unprivileged section of the society to newly formed savings and credit groups Establishing separate savings and credit groups of women and deprives Considering policy or legal changes to facilitate participation in new forms of savings and credit groups Including special provisions to increase access to credit and encouraging savings (Consider information, communication and training strategies, and terms that give poor women or women household heads and members of deprived communities improved access.)

3. How can micro-finance... Providing skills development training in setting up a business, product development, managing business, marketing etc Ensuring participation in project planning and design Recruiting mobilizers, trainers and facilitators from among the deprived communities Providing leadership training to the members of deprived communities so as to ensure their say on decision making

4. Challenges in linking savings groups to formal channel of credit? Problems associated with Formal Financial Institutions 4.1 Access Problem At FFI level - a paradoxical situation: i. savers do not find FFI appropriate and satisfactory for their deposits ii. small and micro-entrepreneurs do not find FFI accessible, and appropriate for their credit needs, iii. FFI do not find enough investment opportunities At borrower level - a paradoxical situation: i. banks are paying penalty for not being able to lend to the poor, ii. the poor find banks credits inaccessible

3. Challenges ....... 4.2 Fund Utilization Problem At FFI level low interest rate of FFI as compared with high interest rate of informal sector FFI lacking investment opportunities as a result, interest rate has gone down sharply and urban- centered investment schemes are opened At borrower level borrower feel lack of flexibility in terms of use and time credits are provided based on the criteria set by FFIs but not on the need of the borrower borrowers feel that rules and procedures are complex

3. Challenges ....... 4.3 The Cost Problem At FFI level to serve customers below certain scale is not profitable for FFIs unless it has a special way of dealing extending credits to micro-entrepreneurs in dispersed locations with small size of loan and a great deal of assistance and supervision incur high cost At borrower level lengthy, complex and cumbersome process to fulfill formality is very costly

4.4 Repayment Problem viability of FFIs depends on consistent and disciplined repayment of loans by borrowers selection of trustworthy borrowers, designing appropriate volume of loans and assistance in proper utilization of delivered loans are crucial for ensuring repayments all these incur extra cost

The conclusion is 'Poor are not Bankable."

The root cause of the problem From policy perspective: inappropriate legal and institutional parameters and deficiency in policy frame-work From implementation perspective: ambiguity to final destination with a poor- friendly arrangement

The major challenge in Micro-Finance From policy perspective Reframe existing legal and institutional parameters and policy frame-work From implementation perspective Define destination and craft appropriate steps and procedures of implementation to federate all savings groups at various levels so as to make them BANKABLE

in WUPAP context Destination is defined and we are in a process of articulating steps and procedures of implementation

thank you for your kind attention !!!