The need for efficient and reliable financial services for the development of the economy cannot be disputed. For those who live on the margins of the economy, such access can enable increase in scale of their operation or diversification into a new source of livelihood. Studies reveal that about 80% of the rural poor do not have access to formal financial services. In this context, Microfinance has emerged as a widely recognised tool to mainstream the underprivileged with the financial sector. While there are other models of dispensation, Self Help or Savings and Credit Groups are predominant in India with nearly 80% of organisations offering mf services through formation of groups of women.

The hilly districts of Dungarpur and Udaipur in Rajasthan suffer from the vagaries of the monsoons and are prone to drought. Rain-fed agriculture is the chief source of livelihood in this area and with the increasing uncertainties of regular rainfall, a large proportion of the male population has migrated to larger towns in search of labour. Drought conditions have also affected the animal husbandry economy of the region, making the lives of the people very vulnerable. Sakh Se Vikas – Rajasthan Microfinance Initiative was launched by the Trust in March 2003 to demonstrate working of self sustaining community based mf programmes. The initiative focuses on strengthening livelihoods and reducing vulnerabilities of the marginalized in this region and consists of five major components.

1. Field Projects
Currently, the Trust is supporting field projects with three organisations
(a) Jan Shiksha Evam Vikas Sangathan (PEDO), Dungarpur
This three year project focuses on scaling up livelihood development interventions and collaborations for significant impact on microfinance in Dungarpur district, Rajasthan. The project seeks to impact 20,000 women in this underserved region over a three year period through: (i) up-scaling; (ii) strengthening existing federations through enabling them to work on livelihood promotion; and (iii) creating a microfinance resource centre which supports both government and civil society efforts at community based microfinance.

(b) Ibtada, Alwar This project focuses on improving quality of life for women through savings and credit based women’s institutions, besides scaling up livelihood development and collaborations. The project seeks to impact 5,400 women in this region over a three year period through: (i) up-scaling; (ii) strengthening existing federations through enabling them to work on livelihood promotion; and (iii) creating a microfinance resource centre which supports both government and civil society efforts at community based microfinance.

(c) Hanuman Van Vikas Samiti (HVVS), Sakroda The project focuses on consolidation of a micro finance programme, which strengthens savings and credit groups, covering over 2,800 women in 45 villages in Udaipur district, Rajasthan. The project also aims to promote cluster level bodies, initiate additional services through health initiatives, initiate livelihood promotion, enhance capacity of staff and undertake qualitative studies.

2. Human Resources and Organisation Development
The Trust has partnered with Association for Rural Advancement through Voluntary Action and Local Involvement (ARAVALI), towards supporting implementation of microfinance programmes through ten small and medium non profit organisations in six districts of Rajasthan, to demonstrate a working model of initiating self sustaining microfinance programmes with small and medium organisations.

3. Technical support
The Trust has engaged Kalanjiam Foundation to provide technical inputs to the three field projects, through conducting visits and periodic reviews, which highlight the lacunae in the operational aspects of the programmes and help bring about new ideas and changes.

4. Research on Microfinance
The Trust has requisitioned Indian Institute of Management (IIM), Ahmedabad to conduct pilot studies to understand cash flows of the members, the results of which would be fed into the programme design of the field projects to make them more members centric.

5. Networking
With a view to share learnings emanating from the field projects at the state level, the Trust, along with ARAVALI, organizes the Sir Ratan Tata Trust Colloquium on Development Finance annually. The event also seeks to build synergies and identify the future course of direction for the microfinance movement in Rajasthan.

Partnering with the District Poverty Initiatives Programme in Rajasthan

For the vast masses of India living on the margins of economy, access to efficient and reliable financial services can be the slender thread of hope for increasing their scale of operation, or perhaps, diversification into a new source of livelihood. With studies revealing the lack of access for 80% of the rural poor to formal financial services, microfinance has emerged as a wieldy tool to mainstream the underprivileged with the financial sector. Self Help Groups (SHG) and Credit Groups are predominant in India with nearly 80% of organisations offering microfinance services through formation of groups of women. Rajasthan is one of the most underprivileged states, contributing to less than 3% groups to the national total of over 1.6 million groups that have been linked with banks for loans.

Amidst this backdrop, in August 2000, the Government of Rajasthan initiated the Rs 6,000 million livelihoods enhancement District Poverty Initiatives Programme (DPIP), focused in seven districts of Rajasthan. Within this demand driven programme, livelihood investments are identified by the community and facilitated through Non-Profit Organisations (NPO), which organize Common Interest Groups comprising of about ten families, for livelihood intervention programmes. The programme has gained impetus with participation of 84 NPOs across these districts.

Professional Assistance for Development Action (PRADAN) and Self Reliant Initiatives for Joint Action (SRIJAN) have been involved in DPIP as field organisations since 2002 and 2003 respectively. SRIJAN is also playing a critical role in improving business processes under the DPIP including recruitment, selection of district project managers and setting up review systems for thematic progress across the programme. In 2005, the Trust reviewed the work being carried out by both organisations under DPIP, before supplementing support, spread over a three year period, under the Sakh Se Vikas – Rajasthan Microfinance Initiative.

PRADAN has been supported by the Trust to work in Dholpur district, for promotion of 504 groups across 126 villages in two blocks and in 78 villages in one block of Dausa district, under DPIP. These groups focus on thematic interventions for livelihood generation, including dairy, goat rearing and agriculture. PRADAN is helping these groups to establish backward and forward linkages, whilst sharing the success of the projects through case studies, exposure visits and experience-sharing workshops. Similarly, SRIJAN has been supported by the Trust towards improving sustainability of livelihood groups and assets through 200 Self Help Groups (SHGs) across 72 villages of one block in Tonk district, under DPIP. These groups are undertaking dairy and horticultural activities for livelihood generation. The grant offers critical support for strengthening these groups to function as SHGs and establish forward and backward linkages. The grant is also targeted to promote 120 SHGs.

Centre for microFinance

As the initiative progressed, the need for an institution which could help increase access and outreach of financial services, help improve quality and penetration of these services and finally deepen by strengthening the linkages with livelihood promotion was felt. A feasibility study for such an entity was undertaken by an eminent economist and academician – Dr. V. S. Vyas over January – March 2005. The findings of this study were presented at the Sir Ratan Tata Trust Colloquium in microfinance in Rajasthan in April 2005. With encouraging response from the state government and other eminent persons in the state, the Centre for microFinance (CmF) was seeded.

CmF was subsequently set up in Jaipur, to deepen and upscale the microfinance movement in Rajasthan. It is an autonomous institution, employing high quality professionals to provide a wide range of technical and other support services to microfinance players. Given its mandate, the Centre places value on networking and collaborations with stakeholders, undertaking direct action only in gaps where players neither exist nor can be catalysed.

CmF is the nodal agency for all the Trust’s projects under Sakh Se Vikas, particularly the field implementation projects. It is currently housed at the Indian Institute of health Management Research (IIHMR), Jaipur. Amongst its chief functions, CmF: (a) acts as a knowledge hub, providing information on microfinance in Rajasthan; (b) actively encourages microfinance practitioners to deepen the sector by identifying effective current practices and piloting innovative initiatives that enhance effectiveness of microfinance delivery systems; (c) works collaboratively with significant promoters of savings and credit groups, including Government departments, to improve quality of interventions; and (d) networks and collaborates with Government and other stake holders for developing strategies for increasing access to microfinance for poor.

Partnering with the Department of Women and Child Development, Government of Rajasthan (DWCD)

In Rajasthan, nearly 70,000 of the over 100,000 SHGs have been organised by government departments. Following the growing recognition of microfinance as a tool for development, there has been a heightened increase in the government in improving the quality of existing groups and promotion of new groups. Based on this interest, the Department of Women and Child Development, Government of Rajasthan (DWCD), Centre for micro Finance and two of the Trust’s field partners – PEDO and Ibtada have come together to pilot intensive strengthening of SHGs promoted by the Department in two blocks in Rajasthan, one each in Dungarpur and Alwar districts. 500 old and 200 new groups comprising of 9,000 women members are being covered under the collaboration. Activities underway include: (a) Training and capacity building of DWCD staff, including 100 grassroots workers; (b) Training of SHG leaders; and (c) Promotion of livelihood activities for the SHG members.

Click here to read on the Community Banking Programme of Kalanjiam Foundation