MARKET DEVELOPMENT AND CAPACITY BUILDING ROLE OF RMK

MARKET DEVELOPMENT AND CAPACITY BUILDING ROLE OF RMK

Sustainability and RMK's IEC scheme
Main features of Nodal scheme
Concept and features of Self Help Groups (SHGs)

Sustainability and RMK’s Information- Education- Communication (IEC) Scheme

ac2s1.jpg (62478 bytes) Sometimes, the financial intermediation role may be in conflict with the market development role of an apex micro-finance organisation. The objective of funding agencies and donors is often rapid disbursement of funds due to pressure of targets or policy goals. However, there is a constant danger that such target oriented short sighted disbursement pressures may (a) lower standards of credit worthiness (b) reduce the incentive for IMO improvement and (c) conspire against the market development role. In other words, the short term interests of rapid disbursement can swamp the long term sustainability of the apex organisation.

To avoid this, the National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK) was set up as an independent organisation, governed by its Board of Governors, to protect it from undue pressures from donors and IMOs.

From the start, RMK has been concerned with its own sustainability. Its policies have been carefully developed accordingly. There is no subsidy element in its interest rate. There are strict criteria for selection of IMOs. There is a strict system of pre-sanction and post-sanction studies of the IMOs and the Self Help Groups (SHGs) before sanctions and releases are made. The stability of SHGs is a basic criterion which is looked into before loans are extended. RMK has adopted a demand driven rather than a target oriented approach to its loaning activities.

RMK gives as much importance to its market development and advocacy roles as to its wholesaling role. RMK’s Information-Education-Communication (IEC) activities, therefore, are a vital component of its programme - RMK is spending upto 5% of total loan sanctioned on its IEC activities. This creates more awareness of the micro finance concept in general and RMK schemes in particular. Institution building protects the quality of RMK work and increases its outreach.

RMK’s IEC Scheme includes both the market development role and the advocacy role- Under the market development role, RMK is currently undertaking :

a)    training of existing and new NGOs and other intermediate level partners
b)    training of SHG leaders and borrowers
c)    training of monitors
d)    training of master trainers
e)    orientation and training of Nodal NGOs
f)    training of govt officials and workers (like ICDS/IMY staff) engaged in group dynamics,
       poverty alleviation schemes and income generating programmes
g)    awareness workshops for existing and potential intermediate organisations and women at large
h)    contacts with media and media visits
i)    exhibitions and fairs
j)    training of RMK’s own staff and officers and participation by RMK’s officers in national and
       international level conferences etc.

In the near future, RMK also plans to undetake :

a)    conducting impact studies and feasibility studies
b)    skill training of women
c)    enterprise development training of women and NGO staff
d)    product and market development
e)    development of data bases and trade related information systems
f)    acquisition of computer and institution of Information Management System

As part of its advocacy role, RMK is organising :

a)    seminars/workshops with government, banks, foreign funding institutions, apex organisations,
       intermediate organisations and women for development of policy

b)    continuous interaction with the Ministry of Women & Child Development and other Ministries
       of Government, State Governments, RBI and NABARD, etc.

RMK re-phrasing Nodal Agency Scheme in 1999-2000. (Now revised in the year 2004-2005) For all practical purposes, it is part of our IEC activities.

The aim is to bring in larger numbers of new and small intermediate organisations into the RMK fold to increase its outreach, specially in undercovered areas. This is to be done by reorientation, training, capacity building and technology transfer.

RMK delegates the following functions to well-established, tried and tested NGOs/ reputed Govt. organiations which possess the necessary infrastructure and experience in group dynamics and micro-finance : identification of potential NGOs, pre-sanction studies, training, monitoring and processing of applications upto the stage when the new intermediate organisation can be linked directly with RMK under its loan schemes and other capacity building training programmes..

Main Features of New Nodal Agency Scheme

(The Old Nodal Agency Scheme has been withdrawn, new scheme is as under:-)

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The Nodal Agency (NOA) Scheme was originally introduced by RMK in 1996-97 with the objective of taking the help of reputed and experienced organizations, which may not necessarily be borrowing partners of RMK, for identifying and assisting new NGOs to eventually link-up with RMK to extend credit facilities to women for their income generating activities in the marginally uncovered areas of the country.

Salient features of the new scheme are as under :-

A. Nomenclature :

a) The NGO / IMO implementing the Scheme would be designated as Nodal Agency (NOA)

b) The officer undertaking the work of Rashtriya Mahila Kosh in the Nodal Agency Scheme would be designated as Nodal Officer (NO)

B. Eligibility :

a) NGO/VO/VA should have Experience in Micro-Credit for minimum 5 years.

b) NGOs/VOs/VAs having availed loan of Rs. 50 lakhs and above from Rashtriya Mahila Kosh would be      considered.

c) NGOs/VOs/VAs should have adequate infrastructure & training capabilities for implementing RMK’s      various schemes.

d) Proposal for appointment as Nodal Agency of Rashtriya Mahila Kosh would not be considered from      defaulting NGOs/VOs/VAs.

e) NGOs/VOs/VAs should have resource Personnel having experience in micro-credit/social activities/      law/accounting etc.

f) Dynamic young persons having experience in micro-credit, accountancy, capacity building, preparation     of financial statements, annual report etc., sponsored by NGOs/VOs/VAs designated as Nodal Officer     (NO) for implementing RMK’s scheme & the organization represented will be accorded the Status of NOA.

g) The above eligibility criteria’s may be relaxed in deserving cases by the Executive Director.

C. Duties of Nodal Agency/Nodal Officer :

1. To market RMK’s various loan schemes in uncovered/marginally covered area of the state.

2. To identify potential NGOs & mobilize quality loan proposals from the NGOs who have already gained experience in formation/promotion of SHG, mobilization of savings, internal lending & recovery management.

3. To help in capacity building of NGOs/SHGs which would be extended financial assistance by RMK.

4. To act as coordinator of RMK for conducting meetings/seminars/workshops/trainings in the area of operation of the Nodal Agency.

5. To monitor/follow up loans proposal of RMK.

6. To monitor the IMOs for recovery of loans given by RMK.

D. Implementation of the Scheme :

1. Appointment of Nodal Officer :-

     i) Appointment of Nodal Officer (NO) would be done by the IMO once NOA status is conferred upon it         by RMK. The Nodal Officer (NO) would be appointed by the IMO from its own staffs having following         qualification and experience.

    ii) Graduate.

    iii) Having good knowledge of accounts.

    iv) Having experience in social sector.

    v)Experience in Micro-Credit activities like formation of SHG, mobilization of savings of the group members,         internal lending, recovery management, conducting meeting of NGOs/SHGs and group members.

    vi)RMK’s decision would be final in selecting Nodal Officer out of the names recommended to it be the NOA

2. Identification of Potential NGO :-

     The Nodal Officer (NO) of the NOA would identify approximately 15 numbers of potential NGOs to       avail loan under LPS/ MLS of RMK in each stream. NGO short-listed should fulfill all eligibility       criterion for availing loan from RMK. Some of the important eligibility criteria are as under:-

     i) The NGO identified should have completed 3 years of Registration.

     ii) Should have a minimum of 6 months experience in micro credit activities like formation of SHG, Savings         mobilization, internal lending & recovery.

    iii) The NGO/VO/VA should not have deficit in its balance sheet for the last 3 years, should have sufficient         surplus/other source to Meet 10% margin requirement for the programme proposed to be implemented         and should have sound financial background.

    iv) The NGO/VO/VA identified should have adequate trained staff & infrastructure to implement RMK’s          scheme.

          Schedule of Activities under Nodal Agency Scheme :

        •    Identification of potential NGOs by NOA for linking up with RMK and                  1½ Months
             submission of list to RMK along with pre-sanction study report

        •    Approval of the names of the short listed NGOs by RMK from the list          1½ to 2 Months
             of identified potential NGOs Received from NOA

        •    Conducting one day training of the NGOs Short listed under NOA scheme      2 to 3 Months

        •    Issuance of Sanction letter by RMK After completion of 1 day training          3 to 4 Months
             programme

        •    Submission of drawal application and execution of documents at RMK          4 to 5 Months
             office, New Delhi by the NGOs sanctioned loan

        •    Release of 1st installment by RMK                                                        5 to 6 Months

E. Other responsibilities of Nodal Agency :

1) Preparation of Annual Action Plan for the NGOs.

2) Supervise implementation of action plan for each NGO.

3) To provide awareness regarding RMK’s scheme to the NGOs working in its area of operation.

4) To act as a resource personnel in training program to NGO/SHG.

5) Collection of application & other documents from potential NGOs.

6) Verification/scrutiny of loan proposal as per RMK’s norms/terms/rules etc.

7) To conduct Pre-Sanction study & submit Pre-Sanction Study report with specific recommendation.

8) To educate NGOs/ SHGs in their activities like formation SHG, lending process, selection of activities,      recovery, thrift, conducting meetings etc.

9) Follow-up for sanction/disbursement of loan at RMK/NGO/SHG level.

10) Verification of all original documents at NGO/SHG level.

11) Help in recovery of loans.

12) To visit each NGO & their SHG at least once in a month.

13) To submit performance report every month for release of honorarium/salary to the Nodal Officer.

14) Pre sanction study would be conducted by the Nodal Officer of the nearby Nodal Agency/Officers of       Rashtriya Mahila Kosh.

15) To coordinate other activities of RMK like meetings/seminars/training camps/workshops etc. in their       areas.

16) Execution of documents would be undertaken in presence of the Chief Functionary of the Nodal Agency       at Rashtriya Mahila Kosh.

TRAINING / WORKSHOP FOR NODAL OFFICER / CHIEF FUNCTIONARY OF NODAL AGENCY

Programe	Participants	Duration	Remarks
Orientation Training Programme	Chief Functionary/ Nodal Officer of Nodal Agency, local resource personnel's & RMK representative	1 Day	To be conducted after completion of all formalities & execution of MOU.

CONCEPT AND FEATURES OF SELF HELP GROUPS (SHGs)

c2s3.jpg (55645 bytes) The National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK) has found SHGs to be very useful in generating savings, in the successful delivery of credit to individual women and in effecting recovery.

The essential features of these SHGs are :

     i) they are cohesive, homogenous and based on affinity
    ii) they are small (between 10-20 women in each group)
    iii) they are voluntary
    iv) they are stable
    v) they have a democratic mode of functioning and          decision-making
    vi) they have been given the requisite training in
         maintenance of accounts
   vii) they combine social and economic objectives
  viii) they are owned and managed by their own members - (if institutions who lend money to them or NGOs who         promote them, become too involved in their management,they will subvert the autonomy and independence         which are their main strengths - promoters and lenders must err on the side of doing too little rather than         too much)

Throughout the country, it has been found that functioning in a group gives the poor and often illiterate women more confidence - they are able to undertake decisions and activities which they would not have been able to do singly. The peer pressure is very useful for recovery and is RMK’s best collateral.

Experience also shows that groups can also be the means for members to acquire other skills they need like learning how to read and write. Since some form of group organisation is necessary for adult literacy training, the SHGs have often facilitated this. If members learn as well as save together, the group is stronger for both purposes, and achieve educational as well as economic goals.