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Assamís microfinance sector needs mentoring

Microfinance Focus, Aug 16, 2010: Compared to the rest of the country, the progress of microfinance in the North Eastern (NE) Region of India has been very slow. Only 0.02 percent of total microfinance loans disbursed during 2008-09 was in the NE Region. The share of NE Region in the total no. of existing SHGs is only 0.04 percent (NABARD, 2009).

Assam5 150x140 Assamís microfinance sector needs mentoring

Mr. Debobrata Das, DDM, NABARD Cachar, Assam

In this backdrop Microfinance Focus talked to Mr. Debobrata Das, DDM, NABARD Cachar, ASSAM to know the status of microfinance in the Cachar District and to unfold the factors which are hindering the progress and growth of microfinance in the NE Region in general and Cachar District in specific.

Microfinance Focus: Microfinance is an established tool to fight poverty today. What is your opinion for the same?

Debobrata Das: My opinion is that, yes, it is a tool to fight poverty, because very poor people or the poorest of the poor is getting financial assistance from microfinance, where as they cannot get financial assistance from the banks and other formal sources for the want of formalities, documentation etc. The poor people may meet their requirement with the help of small amount of loan advanced by microfinance and they also can save little amount with the help of microfinance. In this process over the period of time they can elevate themselves economically and socially.

Microfinance Focus: Can you shed some light on progress of microfinance in India and in Cachar District?

Debobrata Das: In India progress of microfinance is in a few pockets only. Progress of microfinance is not evenly spread across the country. Progress of microfinance is very low in the Eastern and North Eastern part of the county. In Cachar District the progress of microfinance is very very low.

Microfinance Focus: What are the reasons behind this low progress in Cachar District?

Debobrata Das: Presence of good NGOs (non-governmental organization) is lacking in the district. There is no lawful microfinance institution in the District and some organizations are doing microfinance activities without proper license. Peopleís mindset here is to get Govt. money and not to stand on their own feet. Even Self Help Groups (SHGs) are mostly interested in getting subsidy. Recovery rate is also low here.

Further institutional support for capacity building is lacking here. There are no specialized institutions/NGOs to support capacity building activities of the members of the SHGs. Government officials are also responsible in a way that they are sometime telling people to form SHG and take subsidy without properly monitoring the sustainability of the SHG. They are simply after the number of SHG formation and subsidy benefit of the poor; they are not accountable for the failure of SHGs subsequently. Neither do bank officials are not providing whole hearted support to the microfinance movement.

Microfinance Focus: Bangladesh, which is very close to the State of Assam and also to the District of Cachar, is making wonderful progress in the sphere of microfinance but in the State of Assam and also in the District of Cachar the progress of microfinance is very low even though there is similarities between environment, socio-economic condition and cultural affinity between the two places. Why this is so?

Debobrata Das: In Assam and In the District of Cachar, people are mostly interested for subsidy oriented schemes. They are interested to get something from the Government. Here personal care to nurture the SHGs is absent. In Bangladesh, on the contrary, personalized support for the members of the Group is very high. Md. Yunus is a great force behind the success of microfinance there. In Assam as well as in Cachar district mentoring and personalized support is absent in the microfinance sector. Moreover, in Bangladesh, microfinance is covered under the national priority scheme.

Microfinance Focus: In Assam efforts are made for the formation of SGHs, but no efforts are made to make the SHGs sustainable. What are your suggestions to make the SHGs sustainable?

Debobrata Das: SHGs should gradually function as activity based group rather than subsidy based group. In most of the SHGs only the office bearer (President and Secretary) know the operation of the SHG, other members do not know any thing. To make SHGs sustainable over a long period of time, all the members are to be empowered so that they can jointly think and take decision for the progress of the SHG. For all the members of the SHGs, capacity building training needs to be provided regularly.

Microfinance Focus: What are the different factors that can remove hindrance and make microfinance successful in Cachar District?

Debobrata Das: Presence of capable and dedicated NGOs can remove the hindrance for the progress of microfinance in the District.  Proper identification and implementation of microfinance projects for the promotion of microfinance in the district is highly required. Moreover, Microfinance Training institute may be set up in the district.

Microfinance Focus: In Cachar District, apart from NABARD which other organisations are promoting microfinance?

Debobrata Das: DRDA (District Rural Development Agency), Commercial Banks and RRBS are promoting microfinance alongside NABARD.

Microfinance Focus: Please highlight the initiatives made by NABARD in the last 3 years for the promotion of microfinance in Cachar District.

Debobrata Das: NABARD has implemented SHG Promotion Institute scheme in the district. Under the scheme it has sanctioned the formation of 50 SHGs for Moniarkhal Youth Club, 50 SHGs to Seva Kendra and 500 SHGs to Desh Bandhu Club.

It is imparting training for microfinance awareness in the district, and is conducting microfinance awareness programme for different durations, from one day to three days. NABARD is also sponsoring SHG members to sell their products in various melas, exhibitions etc. to increase the exposure of the members of the SHGs and thereby making them self sustainable.

Microfinance Focus: How many SHGs are formed by your office in Cachar District during last few years.

Debobrata Das: NABARD is not directly forming SHGs. Therefore, it is very difficult to say which SHGs are formed by NABARD and which SHGs are formed by others. At present there are 6973 savings linked SHGs and 4992 credit linked SHGs are in operation in Cachar District.

Microfinance Focus: Are you playing any role in the sphere of financial inclusion?

Debobrata Das: NABARD is having two funds namely, Financial Inclusion Fund and Financial Inclusion Technology Fund for promoting financial inclusion. Under Financial Inclusion Technology Fund NABARD has given grant support to Assam Grameen Vikash Bank, for providing banking services to the rural poor at their doorsteps through the introduction of Smart Card and similar other services.

Through the formation of Farmersí club which is formed under their initiatives NABARD is promoting financial inclusion. It has come out with a policy to involve the farmersí club members as Business Facilitator (BF) or Business Correspondence (BC) for spreading financial inclusion. NABARD is also conducting financial literacy awareness programme from time to time. Besides, SBI has identified 18 persons to act as business facilitators for promoting financial inclusion in the district.

Microfinance Focus: Microfinance is also focusing on micro-enterprise development. Whether NABARD is taking any step for micro-enterprise development in Cachar District.

Debobrata Das: NABARD is conducting micro-enterprise development programme for matured SHGs covering different activities. In Cachar District also MEDP may be conducted for the matured SHGs.

Microfinance Focus: In Cachar District, some people think that formation of SHGs under NABARD is not beneficial; rather formation of SHGs under DRDA is beneficial, what is your opinion for the same?

Debobrata Das: Formation of SHGs under NABARD is a misconception. NABARD is not directly involved in SHG formation. It is assisting NGOs for formation of SHGs. NABARD follow the system of development through Integrated Income Generation Activity (IGA), where as DRDA follow subsidy based approach. Here the mindset is to get subsidy that is why people like DRDA lead SHG formation in Cachar District.

Microfinance Focus: Which factors in your opinion are hindering growth of microfinance institutions in this region?

Debobrata Das: There are a few reasons which are hindering the formation of good microfinance institutions in this part of the country. Poor communication and connectivity is one such factor. Roads are in very bad shape which is hindering smooth movement of people and microfinance activists. Repayment ethics which is crucial for the success of microfinance is very poor in this part of the country, moreover personal contact and support for the promotion of microfinance institutions is lacking.

Microfinance Focus: For the development and growth of microfinance in Cachar District, what collaborative work NABARD and Assam University can take up in future?

Debobrata Das: Assam University and NABARD can jointly conduct training programme for the members of SHGs/ NGOs/ Anganbadi workers/ and bank employees. Trainers Training Centre can function under the guidance of the University with necessary financial support by NABARD. Collaboration may also be made with other organisation for financial and other support.

Microfinance Focus: With Microfinance Focus, we are trying to promote the best practices in this sector. Do you have any specific suggestion?

Debobrata Das: Publication may be tries in the regional language, as most of the SHG members are poor and less educated; therefore, the best practices can only be replicated when the people will be able to understand and feel it. Circulation of the magazine may be increased. Different stakeholders of microfinance must know about the magazine and about its publications.
Source :
Microfinance Focus
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