PRAYAS JAN VIKAS BHANDOL (MF) COULD BE MAP

SHG formation & Development Process Page-1

DATE: 16.7.2007

Description	As per baseline survey, Unit manager with Credit officer visit & select the urban areas or Village for the PJVB. Try to meet local leaders and plan for program introduction meeting.	Credit officer & cluster coordinator meet to local leaders of the areas/ villages. Discuss about PJVB program and PRAYAS. If, local leaders agreed, prepare list of potential clients of the areas.	Cluster Coordinator (CC) meets potential clients, introduces him/her self, organization and purpose of visit. Finalise meeting date, time & common place. On decided meeting date, CC brief about PRAYAS and PJVB program to available potential clients in the meeting and tells them the benefits of forming an SHG and getting related with the project. CC asks them to form SHG’s. Potential clients decide to form SHG & finalise the first SHG meeting date, time & place CC tells them about the documents required for opening of account. First meeting done in presence of CC. Finalise SHG leaders, norms, saving amount & resolution to open bank account in nearby bank. Finalise date to open bank account & open account by leaders. Second SHG meeting done in presence of CC and orient about inter loaning process.
Risks	Multiple visits required to meet local leaders. Selection of areas may be not properly judged.	Local leaders may not agree for PJVB or may give relatives name for potential clients list. Local leaders may give a biased view of the village because of some vested interest. Some past experience with the financial operators in the area may cause dissent among the local leaders	Time taking to form group & finalise leadership due to dynamics in urban areas. Presence of all members in the meeting will be difficult.
Mitigation	Inform the local leaders/ elderly people (opinion makers) before hand so that they can be present for the introduction meeting Meet them before and build rapport with them so that they are convinced about the program Selection of areas may be in contiguous areas so as to be cost effective program and the success of the program in the nearby areas can be replicated.	MFI may restrict kins from being members of the same group so as to avoid the polarization. Convincing the local leaders about the program and giving relevant examples from the nearby areas where MFI operates to build trust Instead of getting list of prospective clients from the local leaders, MFI should hold some general introduction in the village or slum area addressing general people.	CC has to play the lead role in gathering the prospective clients, forming a group and then finalizing the leadership, for this experienced staff who can handle the dynamics should be recruited. Meeting time and date should be fixed only after discussion with all the members. It should be made clear that presence of all the members is absolutely necessary in every meeting.

SHG formation & Development Process Page-2

Description	Group orientation training to be done for all members of SHG by Credit officer. Orient about SHG objective, vision, leadership, norms for sustainability.	Third SHG meeting attended by CC. Follow up action on orientation training. Discuss on importance of internal loaning in group members.	Leadership training will be done for the SHG leaders. Orientation on role of leader in SHG	Fourth SHG meeting attended by CC. Discuss about leadership training. Inter loaning will be started in the group.	Credit officer provide Record keeping training to SHG leaders & literate SHG member who can keep record.	Unit manager visit to SHG & do Group recognition test. If, test is ok then link it to cluster and enter SHG information in MIS
Risks	Presence of all members of SHG not possible due to daily wage work.	No trusts amongst members for inter loaning. Not enough funds for inter loaning to take place.	Set suitable date & time for all new SHG leaders is difficult	Amount is not enough to meet member’s need	Difficult to generate record keeping skill in short time.	May not get the real picture if all members are not present.
Mitigation	Evening/Morning hours can be utilized for the training. Fast track training courses can be developed so as to orient the clients in a limited time frame.	Rationale behind inter lending should be explained well in advance during the group training itself. If the trust factor amongst the group members is missing then the cohesiveness of the group is doubtful. In this case motivating the group members regarding the benefits of group should be explained by the CC and also the group should be convinced of help from PJVB in case of any members not repaying the internal loan	Leadership training can be scheduled to a set day in a week so that all the CCs are well informed about the day and they can send the leaders for training	Groups can be convinced that initially this would be a very small amount for inter lending but as the savings grow they can have enough for inter lending purposes.	Identifying the SHG Members who can keep record and then providing focussed training on record keeping for such members of different groups on a same day. Subsequently the CC can monitor whether the records are being kept properly or not	GRT to be conducted with the SHG. Presence of all members is compulsory for the group to be eligible for further loans etc.

Loan Disbursement Process- page-1

Description	Individual Loan demand came in fifth meeting. SHG loan application & resolution prepared by help of CC. Need Assessment of each member will be done. All documents submitted to Unit office.	Credit officer visit to individual applicant members and SHG leaders and verifies documents. If found ok, then submits to Unit office for loan approval by the loan approval committee.	In credit committee meeting discussion on each loan case, verification of documents. If, required, unit leader will visit the SHG. In cases of first loan the visits may be necessary.
Risks	Consensus on loan amount, purpose.	Visit to each individual applicant house / shop on same day may not possible due to time constraint.	Increased amount of loan verification of cases may lead to improper loan approval
Mitigation	Thorough checks of the loan amount applied by the individual member by cross questioning other members regarding the loan required and repayment capacity. Strict Loan Utilization checks to verify the usage of the loan by the individual and if any deviations found, strict action to curb such practices	Thorough prior loan assessment to be done by the CO so as to ensure that the loan is given to clients who are willing to utilize it for Income Generation only and have ability to repay back Lowering down the case loads per credit officer so that the assessment is proper.	Periodic loan approval committee meetings so as to lower down the cases to be approved at a go and thus decrease the chances of improper approvals

Loan Disbursement Process- page-2

Description	Unit Manager send approved loan papers to Finance department. Unit manager inform CC to call SHG leaders to come with stamp paper & take loan amount from Finance department.	Finance officer receives the cash security amount, LPF & agreement paper from SHG leaders. Finance officer give cheque of approved loan amount to SHG leaders with loan card. FO update the Accounts & MIS
Risks	Only SHG leaders taking the loan on behalf of SHG can call for a risk of money being embezzled by the leader. Group declines to take responsibility of the loan given to SHG leader.
Mitigation	SHG leader with 2 SHG representatives should be called upon for the loan disbursement

Loan Repayment Process

Description	In SHG meeting, leader collects the instalment & enters data in SHG records.	CO & CC start cluster meeting with DCS. SHG leaders come to Cluster meeting with loan card & instalment cash. Agenda of meeting decides. CO discusses points as per agenda. Receive the cash and update loan card & give back to leaders. Cash with cash submission sheet give to finance officer at Unit office.	Finance officer updates accounts & MIS. Deposits cash to Bank.
Risks	Instalment money may be misused between SHG meeting & cluster meeting dates by SHG leaders. Grace period for members to submit instalment up to cluster meeting.	No Cash receipt given by the CO	Daily balance of cash received with the amount mentioned in the receipt should match
Mitigation	Instalment to be collected one day prior to the cluster meeting. SHG Meetings can be scheduled in the same order so as to avoid two meeting. This will also eliminate the grace period factor. Repayment collection to be done in presence of CC or credit officer.	Cash receipt properly date stamped and signed along with the amount received to be provided by the CO and subsequently amount to be entered in the loan card.	FO to check at the end of the day