Way to Cashlite Economy

Market and State are principal agent of development. The welfare prone Indian state is now promoting the digital financial inclusion and cashlite economy.The demonetization narrative and data has been diverted towards digital and cashlite economy. The state appears to have vision of going cashless, notably like South Korea, Denmark, Sweden, and Norway. The cashless economy is an utopia but cashlite economy will happen till 2050. The digital ecosystem in India is demonstrated in the diagram below (Thanks Microsave) :



The issues in move towards cash-lite economy has been discussed in detail here -:

1. Policy Level: RBI has drafted policies (in its Payment System Draft Vision Document) to accelerate the shift towards electronic transactions. This policy will require an integration with National e Governance and Digital India plan for having a significant outreach and affect. The 'Committee on Digital Payments', headed by Ratan P Watal deployed by Ministry of Finance has already delivered report on digital payments. They have suggested fiscal incentives to promote digital transactions and a separate regulator to deal with issues concerning payment. Payments and Settlement Act, 2007 will need revision under fast changing digital ecosystem. Unified Payment Interface (UPI) acting as gamechanger has enabled all bank account holders to send and receive money from their smartphones without the need to enter bank account information or net banking userid/ password. RuPay has gained more than 1/3rd market share in total cards outstanding and 18% share in terms of volume of debit card transactions. RuPay is pioneering step as it has lower integration fee with banks and reduce the outflow of precious forex. There is need for incentivizing and strategizing the consumers to use digital accounts. Digidhan is an initiative for promotion of digital payments with lucky draws for consumer and business entity. Beneficiary of government user will receive DBT, scholarship, pension, social transfers and price subsidies from the state as well as central government.

2. Internet Connectivity: The first question to be asked by marketers on digital India: Is the quality of Internet connectivity good enough to go for consumption online? Current internet penetration in India is 34.8 % of the total population. (source). Connectivity issues and the power scenario in the country often impact transactions in India. The Cost, Speed and Reach are three major factors influencing spread to tier 2 and 3 cities in India. The introduction of 4G in the Indian markets is expected to be the next game changer but the prices of broadband connections as well as data charges for 3G/4G are quite high. Unless 3G/4G comes at par with 2G rates, one can't expect digital initiatives like these scaling up. Also, the failure of digital transactions is highest with 2G connectivity. With improvements in connectivity and reduction in cost, the market is set to explode with innovation.

3. Role of Banks: 24*7 and 365 days banking will come through the change in financial services in India. Promotion of (e-KYC) information previously captured during enrolment for Aadhaar, and available electronically to banks or enrolling institutions will reduce a lot of paperwork and time for the banks. A waiver on debit card fees having no credit risk must be promoted among customers. Instead of Surcharge fees and Convenience fees, promotional discount and incentive on current account with some interests will promote people to move towards digital footprint. The presence of multiple players and increase in e-commerce volumes has helped rationalize payment gateway charges to 2.5-3.0% that used to hover around 4-7%.  Saral Mukherjee on Livemint has correctly argued : Benchmark for the merchant discount rate (MDR) for debit cards should be the NEFT/RTGS/IMPS fees rather than credit card fees. If the IMPS charge for transferring up to Rs1 lakh is Rs5, why should debit card use cost 1% of transaction value? Card-based transactions also leave an audit trail. Since MDR on debit cards is a cap and not a floor, banks could have proactively reduced MDR to spur adoption.

4.  Role of Market: The old existing business models for the merchants must be molded such that digital transaction will reduce their time and cost of conducting business. The move to cashless transaction can originate from the retail consumer but needs to involve wholesalers, distributors and manufacturers in the supply chain. E-commerce firms are doing 70% of business through cash on delivery in India. Cash transaction increases another level of risk to the supply chain in the form of cash handling and higher rates of return of products. There is need to have push for digital payment infrastructure. With easier availability of capital through online lending will be a catalyst for MFIs to digital payments, both as a way to repay the loan, and accept consumer money. The future of rural banking and microfinance is sachet sized cashless transactions! This will reduce costs, minimize ticket sizes and volumes will go up!

5. Last Mile Connectivity:The network of Banking Correspondent agents will be utilized in the cash-lite economy. Agents are working on low profitability due to the low levels of transactions and high operational expenditure. Agent dormancy, or inability to deliver service, has a corrosive effect on trust, which is the bedrock for any system of digital financial services. Any initiative in digital services must pay attention to the business size and frequency that will come through use of micro ATMs, mobile money and mPOS terminals. There is a report by microsave on long road ahead for digital economy for all. The agent must be well prepared to handle behavioural traits like habit of using cash with compelling value proposition, offers and anti-fraud procedures in explaining the digital services to the rural customer.

6. Consumer Protection: More secured online payment systems is the primary concern of the consumer. The failure rates of transfer/payment, grievance settlement, fraud management, integration support and lead time are the evolving areas required for consumer protection in digital economy. Ease of use, honest pricing, individual data protection and cyber security are all required for customized end product and fintech providers will have chance for innovative solution. The financial service providers must be transparent in process of customer recourse, complaint management and dispute resolution.

7. Digital Financial literacy: Digital financial literacy program needs push from government in creating awareness and customer protection. The conception of financial literacy is packed with stereotypes of the poor as ignorant and in need of moral lessons on savings, consumption and credit. The attention must be paid for entertainment and engagement rather than learning module in design of mobile app, advertising and training material. There is need of persona or mascot for digital product that can target the early adopters.

8. Convergence: A digital ecosystem will prosper with the amalgamating schemes and campaigns. According to the EY report, penetration of POS terminals is only 693 per million of India’s population, compared to similar emerging countries such as Brazil, which has 32,995 terminals per million people and China and Russia, each of which has around 4000 terminals per million people. India’s POS landscape is characterized by a large skew in favor of urban locations-more than 70% of the POS terminals are installed in the top 15 cities contributing to over 75% of the total volumes at POS.There is 12.5% excise duty and 4% special excise duty on swipe machine imported from two manufacturers--Ingenico and Verifone. Manufacturing of Swipe machine must be linked with Make in India campaign. This can be done by promoting India an electronics manufacturing hub. This is what economist Atul Kohli called state-directed development, not simply private sector expansion. There is need for integration with Smart City for piloting schemes such as online payments for home utilities (electricity, water, gas and taxes) and municipal taxes.

9. Role of Development Sector- The development sector is least prepared for the change with digital India. They need to tap into informal sector through pilot scheme and CSR activities. Example, a pilot can be done by altering the flow of wage accounts in the informal sector from cash to digital through community mobilization and focusing on migrant workers. NGO as partner can increase outreach and capacity building of SHGs can be better done through their medium.

According to a 2014 study by Tufts University, The Cost Of Cash In India, cash operations cost the Reserve Bank of India (RBI) and commercial banks about Rs 21,000 crore annually. This shows India as cash intensive, even for a developing country. Internet usage and penetrations, smartphone penetration, e-commerce growth, GST implementation, new banking licenses, tax reforms and the evolving cashless payments landscape will take India towards cash-lite economy. Given the evolutionary stage of the digital market, both old and new business will be bound to make mistakes and business models are likely to evolve. The future lies in identifying business models and incentives for transitioning merchants and consumers to go digital.

Inclusive Finance India Summit 2015

ACCESS has hosted the Inclusive Finance India Summit from December 8th to 9th, 2015 at in New Delhi, India. The summit has gained recognition and the Inclusive Finance India Report has been quoted extensively in the Malegam Committee, and working report for the Microfinance Bill. The Summit has facilitated discourse on issues like-policy environment, data analytics in financial inclusion, mobile wallets, BC model, customer protection, impact of JAM, and innovations in the sector. I attended the summit as the delegate of ACCESS team.

The Summit began with release of the Sector report 2015 was followed by several sessions on microfinance and financial inclusion in the country. The buzz of the sessions were around Mudra bank, Payment banks, cash less economy and Small Finance Banks. Eight out of 10 Small Finance Banks which have been given in-principle nod by RBI are microfinance institution (MFIs).  Sector experts are hopeful that Small Finance Banks  fill the "missing middle" in reaching the bottom of the pyramid.

India is an interesting scenario as there is rapid updates in telecom infrastructure, IT services and progressive government spending on digital infrastructure. I was really impressed from a particular session  on use of data in digital financial services.  The main issues were  hurdles faced in data sharing and cashless transactions.  Big Data, Small Credit is a good report quoted by a speaker on the impact of the digital revolution on the emerging markets.  I was impressed with a start up company - Lenddo. They use users online social connections to build their creditworthiness and access local financial services. 

Also, one act in a stupid way while confronting a hero. I was glad to have seat next to Prof Malcolm Harper and was literally at the loss of the words required for having a meaningful dialogue. I am already looking forward to next year’s conference with the hope I can attend again. After coming home from the summit  put on by ACCESS, I am feeling renewed, and energized. 

Funding Mechanism for Farmer Producer Organizations

Progressing with the previous discussion of FPO: Public Policy & Value Chain Development, we are looking into credit accessibility of Farmer Producer Organizations (FPOs). India is successful despite the government because of the entrepreneurship, energy, and ingenuity of the Indian people. Our smallholder farmers are not marginal recipients of charity but instead customer entrepreneurs. Even with the linking of small and marginal farmers to FPOs, the question of reliable and affordable sources of financing for the capital requirement of Infrastructure and operation always lingers for the farmers. There is always the issue of access to credit in the agrarian sector. There are many donor agencies like International foundations, Domestic Foundations, Business related CSR, and government schemes for financing credit to FPOs. But the search for such donors with big pockets for solving the problem is elusive and unsustainable way.

Formal financial institutions (FIs) are wary of lending to these bodies, largely due to the absence of collective land titles (for collateralization) and credit tools for customer assessment. For a nascent FPO, FIs require collateral and three-year balance sheets. That sums up the tragedy of the situation. There are proposed funds coming up for the support of FPOs. I am enlisting them as per my knowledge. But the author is not legally liable for the information provided here. This is collected through various online sources and workshops.

Grants:

1. Equity Guarantee Fund- The Equity Grant Fund enables eligible FPOs to receive a grant equivalent in amount to the equity contribution of their shareholder members in the FPO, thus enhancing the overall capital base of the FPO. The Scheme shall address eligible FPOs, which have paid up capital not exceeding Rs. 30 lahks as of the date of application. Equity Grant shall be a cash infusion equivalent to the amount of shareholder equity in the FPO subject to a cap of Rs. 10 lahks per FPO.

2. Sectoral Fund- Under NRLM, there is a provision that states agencies (SRLM) develop partnerships with major government programmes and build synergies to address different dimensions of poverty and deprivation. Every Producer Organization will receive Sectoral Fund (SF) up to Rs. 20 Lac, in two installments, to invest in value chain development for livelihood promotion. The first installment of SF will be given to the PO within two months of its formation (mini. 100 members) with minimum paperwork. This installment can be up to Rs. 5 Lac. On completion of the establishment phase, the PO will submit a Business Strategy Report to RRLP together with a requisition for release of next installment. The second installment can go up to a maximum of Rs. 15 lac.

Loan Product:

1. With Collateral- NABARD has created a dedicated corpus to provide loans to producer organizations. Yet, NABARD demands FPO to offer collateral (15%of  loan amount) at the interest rate of 10.5~ 11.5 %. There is a clear impact on collateral offered over the interest rate. Since most of the FPOs are formed by small and marginal farmers, they lack collateral.

2. Without Collateral- Interest computation on daily principal outstanding of drawn amount. Flexibility to use the funds only when required thereby leading to huge savings on interest cost of (13.5-14.5) %. The agency (mostly NBFC) will take a 1% upfront processing fee and SFAC will charge 0.85% of guarantor fees. There is NO collateral required for the loan. Through the setting up of the Credit Guarantee Fund, SFAC has enabled a few credit institutions to provide collateral-free credit to FPOs by minimizing their lending risks in respect of loans not exceeding Rs. 100.00 lakhs. The lending institution shall be bound to comply with such directions as SFAC may deem fit to issue from time to time, for facilitating recoveries of the guaranteed account or safeguarding its interest as a guarantor.

3. Warehouse Receipt Finance- This seems a feasible option when the working capital crunch is over. FPO is targeting commodities like Soya bean, Cotton (including bales), Mustard, Maize, Wheat, Sugar, Paddy, Cashew, Castor, Chilli, and Turmeric only.

All the grant and loan appraisal process is designed with various parameters depending on the policies of FIs. They all focus on the high representation of women in membership as well as in the Board of Directors(BoDs). Hence, a small step in the direction of empowerment of women is taken. Thus enabling women's participation increases the chance of wealth ownership and leadership. Structural discrimination against Women, Dalits, and Adivasis can be prevented by giving voices in such forums linking business with social change.

It is the right time for financial institutions to come up with innovative financial products targeted at FPOs. On banking parameters, if not adopted, FPO policy can't be scaled up. The transformation of FPO can only happen in phases from Grants, Soft loans, and then linkage to mainstream banking institutions. Banking institutions and the rural community have a lot of ground to cover for implementing FPO policy on the ground. Even with so much of changing policies, the FPO model deserves tax holidays in the initial years to build surplus and reserves. The taxation policy of FPO (30%), insurance, and, license issues are more complex topics to be discussed in upcoming blog posts.

Sources ---

1) Equity Grant and Credit Guarantee Fund Scheme For Farmer Producer Companies

2) Financing and supporting Producer Organisations

3) Project Implementation Plan(PIP) Manual of Rajasthan Grameen Ajeevika Vikas Parishad (RGAVP)

SHG Bank Linkage

There is a lot of talk about inclusive growth through financial inclusion. The competition between banks has never brought credit to the poor; it only took new financial products to richer people. RBI policy has forced banks for priority sector lending and the opening of branches in rural areas. SHG Bank linkage model was developed by NABARD under the strategy to reach the poor in a sustainable way. I have written on this issue in a previous post.

SHGs are linked to the formal banking system or microfinance institutions for accessing credit. Self-help groups minimize the bank's transaction costs and generate an attractive volume of deposits. While bankers have to handle only a single SHG account instead of a large number of small-sized individual accounts, borrowers as part of an SHG cut down expenses on travel (to & from the branch and other places) for completing paperwork and on the loss of workdays in canvassing for loans. There are many practical issues in this scheme faced by all three stakeholders: SHG, Banks, and Government.

Bank readily opens the account of SHG but treats them as an extra workload on the employees. One major reason cited for this is the staff shortage at the bank level as well as liquidity crunch at rural branches, leading to delays in cash transfers to SHGs. Transaction time and Cheque clearance time at RRB can be very long. Any new and non-routine applications of SHG bank account take a lot of time but the returns in the Bank portfolio are abysmally low. There have been cases where the account holder has to run repeatedly to withdraw money from her SHGs bank account!

An SHG decides to seek a loan from the bank. SHG submits the application that takes into account the activity proposed, the amount of loan required, duration of loan requirement, the purpose of the loan, and the number of installments in which the loan can be repaid. The procedural issue is that the field officer from the bank needs to check the existence, record books, and proper functioning of the SHG. This poses the problem where the field officer is often overburdened with a large amount of work. Even interaction of bank officials is limited to President and Secretary of the group hence decision-making process often escapes the rest of the members.

There is a huge rise in NPAs (non-performing assets) to poorer supervision of loans. RRBs are doing the worst in all the banks. The task of recovering money from the people is politically volatile. Hence, Banks try to even deny the loan services to the SHGs for the most arbitrary of reasons. Banks can't randomly choose genuine groups among the hundreds of the SHGs. The discrepancy in the paperwork is given reason and SHG members have to approach the bank repeatedly.

Even lending norms for SHGs are suited to poor members of SHGs. There are many issues even in this arrangement like poor members taking the loan and being used by other prosperous members. This practice is equivalent to a ghost loan. This actually prevents credit risk, but the purpose of solving poverty is lost as the actual borrowing member will not be using it. Another member using the loan may not give priority for repayment as the loan is not in their name and the group became defunct.

Political desire triumph over economic reality - That is the summary of my experience in the field of SHG loan recovery. The loan waiver scheme had become a major deterrent in repayment of any type of bank loan in Odisha. The loan waiver scheme has disincentivized those SHGs who repay on time. Such type of Government intervention changes the behavior of both rural and urban populations. Giving people (APL or BPL) handouts with no strings attached is not a panacea. Such freebies' offerings destroy the Micro-credit institution, especially in rural areas. It can be easily concluded that state aid almost always brings in its wake political favoritism and corruption.

The role of government is not only limited to loan recovery. There are targets of SHG's linkage for each public sector bank by State Level Bankers Committee (SLBC) and Panchayati Raj Department, resulting in the supply-driven approach of pushing external loans on SHGs. The amount and timing of such loans must depend on member capacities and merely the fact of repayment of a previous loan (a weak but essential indicator of future credit absorption capacity). The whole SHG Bank scheme of demand-driven credit availability becomes converted into a credit distribution exercise.

Public sector banks have been able to grow despite offering poorer customer service by simply expanding their reach. When a private bank sees a loan turning doubtful, it is able to quickly exit, even if needed by taking a haircut. Public sector banks need to engage with either NGOs or any agency that can build the capacity of SHGs. The mismatch between the expectations of the poor and the capabilities of the formal banking system still today needs to be minimized. Till then, Banker' relation with the Government and SHGs will always be strained.

SHG Model and Financial Inclusion

SHG Model in India : “The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.” ~ Malcolm Gladwell.

This statement might have been just said on SHG (Self Help Group) movement in India. The rural landscape of India has mushrooming with SHGs. Formal credit system has, over the years failed to deliver in rural India. The transaction costs of the rural credit systems are very high and the system is plagued by non-performing assets. SHG were started as a pilot project of 500 SHGs, by Nabard in 1992, they grew slowly. SHG  are viewed today as an entry point in rural landscape for NGO, Bankers, government and even MNCs.

Self Help Groups (SHGs) are informal associations of up to 20 women (their average size is 14) who meet regularly, usually once a month, to save small amounts (typically Rs 10 to 50) a month. Majority of SHGs are single-caste groups based on basis of neighbourhood and affinity groups concept. Prof. Malcolm Harper notes three aspects with regard to using SHG groups  [Source]:

1) Groups take time, lots of it, and we have always said that poor women are very busy.
2) Groups tend to exclude individualist (sometimes they are called as entrepreneurs) who dare to be different, to do mad things like starting new types of businesses, which may even create jobs for others.
3) Men are generally bad at working in groups, and they take bigger risk and are less reliable than women, but when they do succeed they tend to create more jobs than women do, for the vast majority who prefer to employed than to be self-employed.'

Financial Inclusion (FI) in India [Source] -  Typically speaking, the scope of financial inclusion (FI) in India involves the following and related services (not exhaustive):

Access to accounts: a) Savings (No frills etc); and b) Current accounts.

Access to deposits: a) Fixed deposits; and b) Recurring deposits

Access to transaction banking: a) Use of cheques, demand drafts and other such instruments; b) Receiving of social security (NREGA and other) payments through bank accounts; c) Transfer of money through RTGS or NEFT and remittance services; d) Debit cards and ATM usage; e) Credit cards including KCC and GCC; f) Bill payments through technology banking - mobile banking, internet banking etc

Access to credit facilities: a) Typical priority sector loans for agriculture and allied areas etc; b) Post harvest, post production loans; c) Loans for marketing of agricultural and other produce etc; d) Traditional working capital limits; e) Traditional MFI loans under priority sector; f) Traditional SHG bank linkage program loans; g) Loans from specialised credit and other cooperatives; h) Traditional MSME loans backed by credit guarantee from Government of India; i) Housing/mortgage loans; and j) Various kinds of overdraft facilities and so on;

Access to risk management services: a) Life insurance; b) Health insurance; c) Asset insurance; d) Crop and weather insurance; e) Livestock insurance; f) Other such products such as credit insurance; and g) Micro-pensions

Access to other Services: a) Deposit insurance; b) business facilitators (BF) and business correspondents (BC); c) financial literacy services and credit counseling (FLCC) centers; d) grievance redressal, ombudsman and legal aid services; e) credit bureau; and f) Other services

The above services can be acquired through various institutions such as (but not limited to) the following: Commercial Banks, Regional Rural Banks (RRBs), Cooperative Banks, Local Area Banks (LABs), Post Offices, State Cooperatives, Mutually Aided Cooperatives, Multi-State Cooperatives, Investment Grade NBFCs, NBFC MFIs, BCs/BFs, Other MFIs, SHGs and so on.

SHG Model and Financial Inclusion in India

Government has been pushing banks to step up their financial inclusion (FI). Most of the financial inclusion has been limited to opening of No-Frill Accounts. Due to lack of financial literacy, program is not achieving the vision. Banks are fulfilling targets through intermediaries such as business correspondents (BCs). The limited amount of the BC works revolves around disbursement of government funds, small-value credit; recovery of principal / collection of interest; collection of small-value deposits and sale of micro insurance. Facilitating access to microfinance through SHG-supported bank linkages is one of the most critical aspects of our Financial Inclusion program. More on SHG Bank Linkages will be coming on the blog pretty soon.

SHG Model under TRIPTI Scheme - 2

SITUATIONAL ANALYSIS:- The social inclusion process will include two steps; first to identify the left out poor, those who are not a part of any SHG/ other CBOs, and second to ensure their participation in different community-based organizations [SHGs, GPLF, etc.] at the village/ Gram Panchayat level. In this process, the project also needs to identify the extremely poor and vulnerable groups (EPVG) in the community that typically suffer from severe economic and social impediments.

For this purpose, the project adopted a community-based participatory approach to identify and prioritize project beneficiaries, including ‘extreme poor and vulnerable groups, persons with disabilities, and the ‘left out poor’. The proposed methodology for the same is called situational Analysis in the project which will comprise of the following exercises:

1- Participatory identification of Poor(PIP):

o Social mapping/ collection of baseline of beneficiaries

o Well Being Grouping

2- SHG Grading

3- Institution Mapping

4- Livelihood mapping

FUNDS:- For operational sustainability of the GPLF, it needs different kinds of funds like the start-up fund, Institution Building (IB) fund, and Community Investment Fund (CIF). Start-up funds and IB funds are basically meant for office establishment and capacity-building activity. The Community Investment Fund (CIF) acts as a catalyst to help poor households meet their demand for improved access to credit for investment needs. The Community Investment Fund will be an infusion from the TRIPTI Project to the Gram Panchayat Level Federation (GPLF) down to the members and is expected to revolve among SHG members for taking loans and repay loans from this fund.

The SHG may provide loans for individual-based livelihoods preferably for reducing vulnerabilities and shocks, income-generating activities, meeting social needs, and supporting investments in housing, education, etc. based on the priorities fixed by the communities in their Micro Investment Plans (MIP). Member borrows from its SHG for implementing Household Investment Plan and repays the loan amount in full with agreed terms and conditions. The amount of loan received as CIF will be first available to the neediest and vulnerable. On repayment and accumulation of group funds, the other ranked members will avail funds from the group. The other sources of funding MIP are SHG’s own funds and bank finance.

Pro-Poor Inclusion Fund (PPIF) is a part of the Community Investment Fund (CIF) which will focus on activities aimed at identifying the extremely poor and vulnerable groups (EPVG) and enhancing their productive capacity. The fund size of PPIF is Rs 5000/- per eligible SHG.

Panchasutra- SHGs were well aware of the Panchasutra are the five principles of maintaining an SHG and includes: 

• Regular Meeting

• Regular Saving

• Bookkeeping

• Timely Repayment

• Internal Lending

SHG Model under TRIPTI Scheme - 1

Targeted Rural Initiatives for Poverty Termination & Infrastructure (TRIPTI) aims at enhancing the socio-economic status of the poor, especially women and disadvantaged groups, in ten districts of Orissa over a period of five years, beginning 10 February 2009. The project is assisted by the International Development Agency of the World Bank and implemented by Orissa Poverty Reduction Mission, a society under the Panchayati Raj Department of Government of Orissa. TRIPTI project under World Bank Assistance is running in 38 blocks in 10 districts that will be treated as pilot blocks for NRLM.

The SHGs are at the first tier of the community institution structure. One SHG is formed constituting 10-20 women members (in case of disability or dispersed location the group size may be 5 to 20). The second tier of the structure is called Cluster Level Forum (CLF) which is an aggregation of 5 to 15 SHGs at the village/hamlet level. GPLF is the third tier of SHGs which is formed taking representation from all CLFs at the GP level.

I have the privilege of working closely with TRIPTI block level team and SHG Federation at Kharidpipal GP for 21 days in Balasore. Bhograi is one of the blocks in Balasore that falls under the TRIPTI project. It consists of 32 Gram Panchayats out of which I was placed at Kharidpipal. Kharidpipal GP consists of eight villages. The GPLF federation of SHG is constituted of 13 CLF and 152 SHG. The detail of the structure is given in the diagram. That gave me a decent understanding of the SHG model that will be implemented in NRLM scheme with a slight tweak. I will draw the conclusion that the creation of dedicated machinery (staff support) &  Universalisation of SHGs has made it more sustainable than SGSY.

Looking on the data of Annual Exp of Average Poor – Rs.40-60K; 35-55% Food; 10-30% Health; 15-20% Education; 10-20% C&E (MGNREGS 2011). Most of the schemes related to the poor fail because the poor spend their money on urgent needs such as health rather than asset building. It is not only economic poverty but lack of financial planning that also plays a crucial aspect. Hence, TRIPTI focuses on the Micro Investment Plan (MIP) which is a household investment plan prepared by individual households and their consolidation at the SHG level.

MIP has socio-economic information will include critical factors such as income, assets and liabilities, needs and problems, number of earners and dependents, single woman, physical/mental disability amongst the members in their family if any, health problems, livelihoods and opportunities, skills, saving capacity, social backwardness, literacy, etc. It will look for the income and expenditure statement of members. The SHG at the outset ranks its members according to their wealth. The Self Help Groups will then be facilitated to prepare a list of all SHG members along with their loan requests indicating both activity/purpose and loan amount. The group would appraise each loan request and determine the loan terms like the amount of loan, installment amount, repayment period, etc. Here, the group would take into consideration the potential for chosen activity in the local area and the competence of the members to carry out the same gainfully.