MICROFINANCE AND INCLUSIVE DEVELOPMENT: DECLARATIONS

DECLARATIONS

An alternative Summit on Microfinance focusing on inclusive development has been organized by National Rural Livelihoods Mission, Ministry of Rural Development, Government of India, SERP, Government of Andhra Pradesh, and International Network of Alternative Microfinance Institutions (INAFI India) from 21-23, 2011. The international conference was attended by delegates from India, Bangladesh, Sri Lanka, Nepal, Afghanistan, Philippines, and China.

With primacy on social capital, development outcome and savings-led microfinance services, the summit had deliberated upon the multi-dimensional aspects of development covering livelihoods, health, MDGs, social security, gender empowerment and mainstreaming across the development spectrum. A host of operational and policy issues have emerged from the deliberations, so also policy leads in many of the topical issues. Synthesizing these issues and policy leads/recommendations, the summit resolved to commend the following declarations to the world of microfinance including the practitioners, Government, regulators and policy makers.

1.      The purpose of microfinance being poverty reduction, development outcome connecting with Millennium Development Goals, securing social security and entitlements should be guiding the provision of microfinance services.

2.      The institutions delivering micro-credit shall be recognized as MCIs i.e. Micro Credit Institutions and not as MFIs as it gives rise to misleading expectations and under advantages. The summit recognizes the need to develop appropriate nomenclature for microfinance with inclusive development.

3.      The social capital model of microfinance shall focus on building institutions founded on mutuality and solidarity, specifically federations of SHG, and specialized institutions on health, education, livelihood for technical support to SHGs.

4.      Microfinance shall go beyond credit and shall include ‘Savings-first’ approach with differentiated savings products for livelihood, health, education and life cycle needs; insurance and micro pension for social for social security, remittance services for migrants, micro justice for conflict resolution.

5.      Holistic development approach with social and financial intermediation, livelihoods/enterprise promotion, integration with mainstream for civic intermediation with proper sequencing, graduation, context and member specific interventions shall guide the microfinance programmes.

6.      Microfinance interventions shall be integrated into sub-sector economic development process such as agriculture, farming, dairy, fisheries, etc.

7.      Capacity building of the enabling and demand stream is a crucial component of microfinance interventions and needs continuous public investment.

8.      Self-regulation process shall be a part of the microfinance programmes, which would promote growth with equality. The SHG Federations shall draw a road map and set standards for governance, financial and social development aspects according to their age and contexts and evolve action plans for implementation.

9.      In building livelihoods systems, community ownership in the form of producer and marketing companies with professional management shall be promoted with innovative and appropriate credit products. Creation of value and supply chain needs public investments for establishing infrastructure like cold chain, transport and processing.

10.   Gender empowerment and mainstreaming shall remain the core of the microfinance programmes.

11.   Highly vulnerable groups including Destitute, aged, physically and mentally challenged shall be organized with the help of microfinance exclusively with higher degree of sensitivity and innovation.

12.   Mainstreaming microfinance through linkages with the banking system shall promote financial inclusion to provide access with affordability for the poor. The banking system shall respond to the microfinance clients with timely credit and appropriate financial products.

Three-day microfinance summit begins today

Irrespective of what the Reserve Bank of India (RBI) thinks about the role of microfinance institutions (MFIs), the recent actions of the Andhra Pradesh government against these organisations for their alleged excesses in lending to the rural poor, have now assumed a pan-India significance.


Government of India's National Rural Livelihoods Mission (NRLM) and the International Network of Alternative Financial Institutions (INAFI), India, have joined forces with AP to correct what is termed as the 'mission drift' caused by gross commercialisation of microcredit in the last 3-4 years.

The two organisations, along with AP's Society for Elimination of Rural Poverty (SERP), are organising the fourth Alternative Summit, an international event, here from June 21 to 23. The theme is ‘Microfinance and Inclusive Development'. SERP spearheads the self-help group movement under the state rural development department initiative.

"There is a greater concern across the globe that microfinance programmes have been drifting from the original purpose and moving away from the primary objective of addressing poverty. They are more concerned with sustainability resulting in gross commercialisation...&" the state government today said while announcing the details of the summit.

In AP, the MFI operations have come to a standstill with the fate of Rs 6,500-crore microcredit outstandings hanging in balance. The state insists on regulating the MFI activities backed by the special legislation it brought out last year even as RBI thinks there is no need for such a regulation.

Apart from microfinance practitioners from countries such as Bangladesh, Philippines, Afghanistan, Nepal, Sri Lanka, Africa and USA, the event is being attended by senior officials from both the state and the Centre besides the World Bank and the RBI. Union Minister of State for Environment and Forests Jairam Ramesh and chief minister N Kiran Kumar Reddy will inaugurate the event tomorrow.

INAFI chief executive M Kalyana-sundaram said no mainstream MFI had been allowed to take part in the event. "The summit is being attended by those NGOs that consider microfinance as a part of their larger objective of addressing poverty," he said.

About 75 overseas delegates, 130 members representing community groups and 150 representatives from various NGOs are taking part in the event, according to Sunita Laxma Reddy, minister - Self-Help Groups and Women's Development.

SERP chief executive officer Rajasekhar said the government would soon announce the details of the proposed NBFC being exclusively set up for catering to the microcredit needs of women self-help groups in the state. The NBFC would be launched with a corpus of Rs 300-400 crore contributed by both the Centre and the state government apart from other financial institutions.


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Microfinance summit for steps to check exploitation of poor

About 75 participants from USA, Philippines, Afghanistan, etc. expected to participate

The motto of the three-day summit is ‘development with dignity'

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HYDERABAD: Worried over the trend of commercialisation of microfinance services originally envisaged as an important strategy to address poverty, an international summit on microfinance to be held here from Tuesday will analyse the reasons and explore ways to bring the sector back on to the track.

Giving the details, Minister for Women Development and Child Welfare and Indira Kranthi Patham (IKP) Sunita Laxma Reddy told reporters here on Monday that the three-day fourth international summit ‘International Alternative Summit on Microfinance and Inclusive Development' will have ‘Microfinance and Inclusive Development' as its main theme.

It was being organised by Society for Elimination of Rural Poverty (SERP), AP Government in association with the National Rural Livelihoods Mission (NRLM) of Central Government and International Network of Alternative Financial Institutions (INAFI).

Ms. Sunita said that about 75 participants from countries like Bangladesh, Philippines, Afghanistan, Nepal, Sri Lanka, and USA were attending the summit along with the representatives of SHGs, government, NGOs and banks.

Chief Minister N. Kiran Kumar Reddy would give the inaugural address and the Union Minister of State for Forests and Environment Jairam Ramesh would deliver the key note address.

The Minister said that unfortunately the MFIs which initially started as NGOs drifted from the objective to promote microfinance as an alternative solution for empowerment of poor communities and focused only on maximising profits by giving multiple loans without due diligence.

This led to several poor families getting caught in the debt trap. That's when the State government brought the legislation to regulate the commercialised MFIs and safeguard the poor.

The three-day summit would have parallel sessions on various themes related to microfinance, issues and challenges and the way forward for inclusive development, she said.

SERP CEO B. Rajsekhar said that this summit would comprise like-minded organisations who view microfinance activities for facilitating the socio-economic development of the BPL families. The summit thus chose ‘development with dignity' as its motto.

Mr. Kalyanasundar, Chief Executive, INAFI, said the summit would focus on community ownership as an alternative to exploitative system by ensuring micro-credit, savings, insurance as a package.

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International microfinance summit from today

HYDERABAD: To put microfinance back on development track, the state government in association with the National Rural Livelihood Mission (NRLM), the Union government and International Network of Alternative Financial Institutions (INAF), will be organising a two-day seminar in the city from Tuesday.

Announcing this at a press conference on Monday, women development and child welfare minister Sunita Laxma Reddy said the microfinance summit, in which MFI practitioners will take part, would focus on sharing knowledge and practice on advancing development of the power with dignity.

The minister said that microfinance in the state had shown an increasing trend of drifting towards crass commercialisation, resulting in many poor families falling into debt trap. This had made the government to introspect as to what had gone wrong with microfinance and also think of ways to put it back on the track.

Microfinance practitioners from Bangladesh, Philippines, Afganisthan, Nepal, Sri Lanka, Africa and USA are among the countries participating in the summit. On the second day of the summit, the delegates will visit and interact with communities with whom Society for Elimination of Rural Poverty is implementing poverty reduction programmes. Chief minister N Kiran Kumar Reddy is slated to inaugurate the programme and Union environment minister Jairam Ramesh will deliver the keynote address. 


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