1. welcome in this presentation
(micro-finance)
- Bashu, WUPAP

2. 1. Positive discrimination policies applied
for reaching to ultra poor in micro-finance activities
Arrangements at present:
25% of the total lending fund reserved for LFUGs - the poorest among the project beneficiaries
35% of the total borrowers from internal savings should be women – a mandatory provision
Provision of loan to internally displaced people due to conflict
20% increment in the COs' loan ceiling those serving to the women and dalits
Highest priority to the demands filed by the women and dalits

3. 1. Positive discrimination policies applied
for reaching to ultra poor in micro-finance activities
Arrangements under discussions:
Difference in lending rates between ultra-poor and others utilizing:
DDCs' and VDCs' annual contribution to LDF
Interest earned from credit capital mobilization

4. 2. Building skills of the poor to manage savings: what works and what doesn't?
Exposure through meetings, trainings and visits
Vocational skills
Market access opportunities
Know-how on new enterprises and awareness on opportunities
Cycle of Savings mobilization

5. 3. How can micro-finance strategies be used effectively for gender empowerment?
Ensuring access of women and unprivileged section of the society to newly formed savings and credit groups
Establishing separate savings and credit groups of women and deprives
Considering policy or legal changes to facilitate participation in new forms of savings and credit groups
Including special provisions to increase access to credit and encouraging savings (Consider information, communication and training strategies, and terms that give poor women or women household heads and members of deprived communities improved access.)

6. 3. How can micro-finance...
Providing skills development training in setting up a business, product development, managing business, marketing etc
Ensuring participation in project planning and design
Recruiting mobilizers, trainers and facilitators from among the deprived communities
Providing leadership training to the members of deprived communities so as to ensure their say on decision making

7. 4. Challenges in linking savings groups to formal channel of credit?
Problems associated with Formal Financial Institutions
4.1 Access Problem
At FFI level - a paradoxical situation:
i. savers do not find FFI appropriate and satisfactory for their deposits
ii. small and micro-entrepreneurs do not find FFI accessible, and appropriate for their credit needs,
iii. FFI do not find enough investment opportunities
At borrower level - a paradoxical situation:
i. banks are paying penalty for not being able to lend to the poor,
ii. the poor find banks credits inaccessible

8. 3. Challenges
4.2 Fund Utilization Problem
At FFI level
low interest rate of FFI as compared with high interest rate of informal sector
FFI lacking investment opportunities
as a result, interest rate has gone down sharply and urban- centered investment schemes are opened
At borrower level
borrower feel lack of flexibility in terms of use and time
credits are provided based on the criteria set by FFIs but not on the need of the borrower
borrowers feel that rules and procedures are complex

9. 3. Challenges
4.3 The Cost Problem
At FFI level
to serve customers below certain scale is not profitable for FFIs unless it has a special way of dealing
extending credits to micro-entrepreneurs in dispersed locations with small size of loan and a great deal of assistance and supervision incur high cost
At borrower level
lengthy, complex and cumbersome process to fulfill formality is very costly

10. 4.4 Repayment Problem
viability of FFIs depends on consistent and disciplined repayment of loans by borrowers
selection of trustworthy borrowers, designing appropriate volume of loans and assistance in proper utilization of delivered loans are crucial for ensuring repayments
all these incur extra cost

11. The conclusion is
'Poor are not Bankable."

12. The root cause of the problem
From policy perspective:
inappropriate legal and institutional parameters and deficiency in policy frame-work
From implementation perspective:
ambiguity to final destination with a poor- friendly arrangement

13. The major challenge in Micro-Finance
From policy perspective
Reframe existing legal and institutional parameters and policy frame-work
From implementation perspective
Define destination and craft appropriate steps and procedures of implementation to federate all savings groups at various levels so as to make them BANKABLE

14. in WUPAP context
Destination is defined and we are in a process of articulating steps and procedures of implementation

15. thank you
for your kind
attention !!!