1. Community Investment Fund & CBOs In Andhra Pradesh. An Impact Study Sponsored by Society for Elimination of Rural Poverty Government of Andhra Pradesh Conducted by Centre For Organizational Excellence Hyderabad

2. PURPOSE OF THE STUDY To assess The impact of CIF in capitalisation of CBOs and better financial management. The role of CIF in enabling the Poorest of the poor and poor SHG members to access adequate credit to improve their economic condition. To focus on the trickle down effect of CIF on socio-economic empowerment of the members.

3. HYPOTHESES Impact of CIF on CBOs CIF as a major contributing factor for capitalization in CBOs, capitalization is the result of better management of CIF CIF is instrumental in leveraging bank funds and achieving self-sufficiency for CBOs CIF has a great role in institution building CIF as a catalyst New micro finance interventions could not have been possible without CIF Impact of CIF on Members. POP and poor women members of SHGs are made credit worthy Micro Credit Plans have helped in accessing funds for the livelihoods of the POP and Poor at lower rates of interest CIF and bank linkages have resulted in increasing incomes of POP and poor CIF is effective as catalyst for poverty reduction initiatives for POP and poor

4. HYPOTHESES The Study also aimed at exploring: Common use/purposes of loans by members Similarities and critical differences in the utilisation of loans with specific reference to source of funds Changes in the process of administration of CIF

5. STRATEGY & PROCESS FOR IMPACT ASSESSMENT In order to validate the hypotheses,4 level sample study involving - Individual Members-SHGs- VOs and MSs in three districts is undertaken. Individual members from SHGs are called treated members and non-members are called control members. Two treated members from each SHG; Four SHGs from each VO; Four VOs from each Mandal; Two mandals from each of three districts constituted the sample size

6. Administration of Specially prepared questionnaires for each of the samples. Specially trained study team visited the individual members at their residences; enquired with them, administered the tools and recorded their observations In CBOs data was collected from the books of accounts, and available information besides enquiry and observation. STRATEGY & PROCESS FOR IMPACT ASSESSMENT (Contd.)

7. DETAILS OF SAMPLE Districts covered are - Ananthapur, Nellore, Warangal No. of treated members - 205 No. of Control samples - 129 No. of SHGs - 94 No. of VOs - 24 No. of Mandal Samakhyas - 6

8. CIF & THE MEMBERS OF SHG - IMPACT In order to study the hypothesis that poorest of the poor and poor members are made credit worthy, the study covered a population of members of SHGs called treated group and another population of non members called control group. To validate set hypotheses, examination in the following aspects was done. Access to group loans by the members The quantum of loan accessed The quantum of loan accessed for IGA purposes The quantum of loan accessed for Consumption purposes The quantum of loan accessed through Micro Credit Plans The loan accessed for IGA purposes by POP, poor and non-poor The loan accessed for IGA purposes by illiterates and literates The change in external debt of members and non-members The change in income of the members both treated and control The change in assets of the members both treated and control

9. TREATED MEMBERS –MAJOR CHARACTERISTIC FEATURES Majority of the treated members are aged between 26 to 35years. About 63 per cent are illiterates. 44 per cent belong to SC and 10 per cent to ST communities. The unmarried and the divorced constitute 1% each and widows constitute 8% of the population 79% are nuclear (non-joint) families. 48% are POP and 2 per cent non-poor. 4% are with disability. 88% own houses. 35% are leaders of Self Help Groups.

10. TREATED MEMBERS - LIVELIHOODS

12. DURATION OF MEMBERSHIP IN SHG

13. TREATED MEMBERS - ACCESS TO CREDIT

14. TREATED MEMBERS – ACCESS TO CREDIT All treated members accessed credit. 84 %of population availed loans for Income Generating Activities also. Average Amount of loan availed by members is Rs.24068. Average Amount of loan for IGA Rs. 16500. Average Amount of loan for consumption Rs.10225.( is 62% of the average IGA amount or 38% lower than for IGA) Average Amount of loan accessed for IGA by POP and Poor are Rs.10997 & Rs.15829 respectively. Average IGA loan accessed through MCP by POP and Poor Rs.13499 & Rs.19888.

15. TREATED MEMBER – AVERAGE AMOUNT OF LOAN VS LENGTH OF MEMBERSHIP

16. INCOME FROM SPECIFIC IG ACTIVITY.

17. TREATED MEMBERS – OUTSTANDING LOANS OVER TWO YEARS The members of SHGs also access loans from other sources Outstanding loans from SHGs registered 229% increase while the external debt also increased by 28% which signals remarkable improvement in creditworthiness of the members.

18. TREATED MEMBERS – SOURCES OF EXTERNAL DEBT.

19. TREATED MEMBERS IMPACT ON INCOME & ASSETS

20. VALIDATION OF HYPOTHESES- MEMBERS OF SHG Foregoing slides from 14 to18 validate the hypotheses that POP and POOR members of SHG are made creditworthy and accessed credit including CIF chiefly from SHG In a span of two years they increased their incomes and assets also by accessing loans for IGAs through a process called MCP

21. CONTROL MEMBERS – CHARACTERISTIC FEATURES. Majority of the control members are below 35 years of age (71 %) About 71% illiterates. 60% belong to SC and 10% to ST communities. The unmarried and the divorced constitute 1% and 2% respectively. 86% are nuclear families. 62% are POP,27% are Poor and 1% per cent non-poor. 5% are with physical disability. 79% own a house.

22. CONTROL MEMBERS - LIVELIHOODS

24. CONTROL MEMBERS – EXTERNAL DEBT While presently 99 have outstanding borrowings,only 42 members borrowed loans two years before. Average external debt is Rs. 18054.

25. CONTROL MEMBERS – SOURCES OF DEBT

26. CONTROL MEMBERS – IMPACT ON INCOME & ASSETS

27. ACCESS TO CREDIT – BOTH TREATED AND CONTROL MEMBERS

28. RATES OF INTEREST ON BORROWINGS FROM OTHER THAN SHGs –BOTH TREATED AND CONTROL MEMBERS Rate of Interest TreatedControl Before two years Present position Before two years Present position (Rs. In lakhs) Up to 24%23.74 (68.65%)28.89 (79.85%)4.83 (59.26%)10.07 (59.62%) 25% to 36%10.03 (29.01%)6.95 (19.21%)2.97 (36.44%)6.28 (37.18%) Above 36%0.81 (2.34%)0.34 (0.94%)0.36 (4.42%)0.54 (3.2%) Total34.5836.188.1516.89

29. CHANGES IN FAMILY INCOME & ASSETS- BOTH TREATED AND CONTROL MEMBERS

30. CHANGES IN FAMILY INCOME & ASSETS- BOTH ( CONTD..)

31. The treated members are found better off compared to control groups both in terms of annual incomes and their asset base. The average family income of control members is about 60% that of the treated members both at present and two years ago. The amount of average movable assets of control members was just 39 per cent of treated members two years ago and the same has come down to 30% at present. The increase in average family income and movable assets of control members is just 63 per cent and 24 per cent that of treated members.

32. VALIDATION OF HYPOTHESES- MEMBERS (contd) As compared to the control group, treated group members have access to higher credit including CIF and increase in assets,incomes is far higher. Credit was accessed through MCP a systematic approach for Micro enterprises which is possible because of their being n the SHGs

33. VALIDATION OF HYPOTHESES (CBOs) –SHGs,VOs and MSs In order to test the hypotheses, financial data such as owned funds Viz.,Thrift,Share capital,profits,Reserves for two years is collected and compared. The access to CIF in the form of loans from MS to VO and VO to SHG net positions for current and previous FYs is collected. Profitability is observed for measuring capitalisation in CBOs This is evidenced by the following observations.

34. SHGs- CHANGE IN CAPITAL BASE

35. SHGs-CHANGES IN SURPLUS

36. VOs – CHANGE IN CAPITAL BASE

37. VOs -CHANGES IN SURPLUS

38. CBOs –FLOW OF CIF & CHANGES IN CAPITAL

39. STUDY OF CBOs-MANDAL SAMAKHYAS Sample size:6 1.BRSamudram 2.Talupula 3.Podalakuru 4.Vakadu 5.Dharmasagar 6.Geesugonda Share Capital : Rs.2.19lacs (in 4 MSs) Out of total corpus of Rs.682 lacs,CIF amount of Rs.602.23 lacs constitutes 88.30%. Total loan outstanding to VOs are Rs.515.04lacs as on 31.03.06 and profit is Rs.13.53lacs which is 2.63% of the loan outstanding and 2%of total funds.

40. MS (contd) CIF is received by the Mandal Samakhyas as grant from DPMU and also in the form of recoveries from VOs where Vos received CIF directly from DPMUs in yesteryears. CIF is pooled at MS level for continuous recycling and is done so through sanctioning loans to VOs on the basis of Micro Credit Plans at present. VOs in turn dispense these funds to SHGs on the basis of MCP subprojects.

41. MS-contd At each level because of the varied repayment schedules from MS to Vo;VO to SHG;and SHG to members there will be capitalisation because of float money This augmented funds access by the POP and Poor Surplus and capital base in SHGs increased by 74% and 53% respectively from previous f.y to current F.Y Surplus and capital base in VOs increased by197% and 30% during corresponding period.

42. VALIDATION OF HYPOTHESES - CBOS The study observed and found that CIF is a major contributing factor for capitalisation in CBOs Increased capital,profits and surpluses in SHG,VO and MS prove better financial management including CIF Increase in bank loans to SHGs is 58%in one year.Thus CIF a major factor in capitalisation of SHGs has also helped in leveraging Bank funds. All these go to reflect a sound Institution building in CBOs

43. CIF and OTHER Micro finance interventions Food security and marketing activities are taken up by 50% and 12.5%of 24VOs respectively from out of CIF amounts Benefits of Food security are highly acclaimed by the members as revealed by enquiry. Out of 205 treated members,51%(105members )availed RCL and 46% reported increased consumption because of the scheme. 35%availed other commodities also and 47%experienced considerable reduction in cost

44. FINDINGS- BENEFITS ACCRUED TO MEMBERS FROM SHG MOVEMENT Purchase of assets and increase in assets by 166 members (81%) Availed loans for Children’s education105 members (51%) Can contribute higher thrift amount 148 members (72%) Gained more understanding about IGAs 178 members (87%) Can handle Bank transactions 146members (71%) About 78% exhibited confidence to manage and run CBOs, 37% for leadership and 42%for financial management. ALL THESE VALIDATE THE INCREASED CAPACITY OF THE MEMBERS OF SHG AS COMPARED TO NON MEMBERS

45. VALIDATION OF ALL HYPOTHESES AT MEMBER LEVEL,AT SHG,VO AND MS LEVEL THE FOREGOING OBSERVATIONS AND FINDINGS TEND TO VALIDATE THE HYPOTHESES AT ALL LEVELS ABOUT COMMUNITY INVESTMENT FUND THAT FORM THE SUBJECT MATTER OF THE STUDY WEALTH CREATION AT HOUSEHOLDS LEVEL IS CONTRIBUTED BOTH BY CIF AND BANK LINKAGES.