Prof Mrs Shubhangi Shekhar Deshkar
# Guru Nanak institute of Engineering and Technology .Nagpur. India.
Associate Professor Department of Business economics, Dnyanasadhana College, Mumbai University
Dnyanasadhana College, off Eastern express highway, Thane, Maharashtra, India.
Annapurna Mahila Cooperative Credit Society is a micro finance institution promoted by Annapurna Pariwar for urban poor. The operational area of MFI covers 150 slum pockets of Pune and 60 slum pockets of Mumbai. This institution also extends micro credit facilities to the self help groups promoted by their partner organisation called Samata Pratisthan in Beed. Annapurna Mahila Mandal is the paternal organisation of Annapurna Pariwar, which played a pivotal role in the micro finance sector by initiating and encouraging micro credit for the home based self employed urban poor women.
The micro credit activities of Annapurna Mahila Mandal were promoted in Mumbai in the International Year for Women in1975 under the inspiration and guidance of Comrade Dada Purao and the leadership of Padmashree Prematai Purao. Dada Purao was a trade union leader in a public sector bank and a communist leader while Prematai was a strong activist and a freedom fighter from Goa. Annapurna Mahila Mandal was started to organise and boost the confidence of women inn- workers. Most of these women had practically no income as their husband had lost jobs in cotton mills strike in early 70’s. A registered credit cooperative was promoted to extend credit at low rate of interest to these women to free them from the clutches of moneylenders. Later on micro credit was extended to self employed women .Loans under differential rate of interest scheme of bank were given to these women. After 18 years their daughter Dr Medha Purao Samant set up a branch of Annapurna in Pune which is known as Annapurna Pariwar. It is an umbrella organisation of six different organisations working independently in Mumbai and Pune.
II. BRIEF HISTORY
The main purpose of this paper is to present microfinance model of Annapurna Pariwar which is a combination of SHG and JLG models. Secondly, it is a fine example of sustainable microfinance activity.
III. ORGANIZATIONAL STRUCTURE OF ANNAPURNA:
In the organization there are five sister organizations
I. Micro Finance : Annapurna Mahila Multi state Co-operative Credit Society (Established in 1986) Undertakes two activities:
- Micro Credit
- Micro Saving
Both activities are for women, but men are also participating.
II. Micro Insurance: Annapurna Pariwar Vikas Samvardhan (Established in 2003)
- Micro Health Insurance
- Micro Life Insurance
- Micro Family Insurance
- Micro Pension
III. Day Care Centres:
Vastalyapurna Swayamrojgar Sewa Co-operative society (Established in 2007)
Vatsalyapurna Day Care Programme.
IV. Educational Sponsorships & Research Centre:
Annapurna Mahila Mandal, Pune (Established in 2000)
- Educational Sponsorship Programme for children of single mothers, Named as Vidyapurna Project.
- Dada Purao Research & Training Institute
This centre started functioning in the year 2008 and it focuses on research in Micro finance and Micro insurance. It also arranges seminars and lectures on micro finance and micro insurance. It publishes books and research papers on both these subjects. It also gives training to bank officials on finance and insurance.
V. Working Women’s Hostel:
Annapurna MahilaMandal, Mumbai (Established in 1975)
- Working Women’s Hostel
- Guest Hostel
IV. BACKGROUND OF MICRO FINANCE INSTITUTION:
Micro Finance Services:
Annapurna Mahila Multistate Co-op. Credit Society
- Pune, 8 branches (30,000)
- Mumbai, 8 branches (23,000)
- Maharashtra, 3 districts (6000)
Pune chapter of Annapurna Mahila Mandal started in 1993 when Dr Medha Samant an ex banker working in a public sector bank shifted from Mumbai to Pune. As a family member of social activist she was well aware of various problems of poor urban people and she understood the problems of vegetable vendors while frequenting market. These vendors were in need of affordable finance to carry out their small business of selling vegetables and all of them were women. They were borrowing from moneylender at high rate of interest and no access to institutional credit. Medha convinced them to form a small Common Goal Group of nine women. First loan of Rs 1000 was extended to each woman in Pune. Medha borrowed Rs 9000 from Annapurna Mahila Cooperative Credit Society Mumbai and distributed it to these women. This was the beginning of micro finance activities of Annapurna Pariwar. The women were happy as terms of repayment and interest were convenient to them .Microfinance activities there after started in Pune and Mumbai for urban poor and Marathwada, north Karnataka for rural poor. The operational area of institution covers 150 slum pockets of Pune and 60 slum pockets of Mumbai city. Over a period of time several saving, credit and insurance products were developed to serve members in a better way. The vision of Annapurna is “An empowered woman in a sustainable family “. In order to achieve equality among men and women it is essential to include men in all economic activities of women and therefore Annapurna also decided to include men in their microfinance activities. The micro finance activities of Mumbai and Pune gave birth to a sustainable microfinance institution named Annapurna Mahila Cooperative Credit Society Ltd. Annapurna Mahila Cooperative Credit Society Ltd is the micro finance institution promoted by Annapurna Mahila Mandal .It was registered in Mumbai in 1985 under the provisions of State Cooperative Act of 1984.It got a multi state licence in 1998.
Most of the clients are poor self employed women but it also extends credit to men. Clients are mostly vegetable vendors, fish sellers, fruit sellers, florists, rag pickers, papad rollers, construction workers, domestic help, farm labourers, small fabricators, rickshaw drivers, petty merchants etc.
VI. OPERATIONAL AREA
In Mumbai the head office is in Vashi and in Pune it is in Warje, on Mumbai –Bangalore highway. Actual operations of MFI are carried out through their branch offices which are spread over different slum areas. Loan application, sanction, credit disbursement, repayment and collection of loan, enrolment of insurance programme are done at branch level. At present there are 8 branches in Pune and 5 in Mumbai.
VII. CREDIT DELIVERY MECHANISM
The MFI delivers small loans without any guarantee or collateral security .small repetitive loans are given through common goal group. These groups are formed by five poor women or men who stand as a guarantee for loans drawn by each member in the group .Three groups come together and form a centre .These groups are similar to Grameen Bank Groups of Bangladesh .Members of the group come together to avail credit but do not dissolve after repayment of first loan . Sometimes one or two members discontinue after one or two loans but others remain in the group .Initially the group is formed to access micro credit but once they become members they pool together all resources for micro insurance and social security measures and avail different services of Annapurna Pariwar .In a way this model is different from JLG as well as SHG model.
VIII. PRODUCTS OF MFI
There are three saving plans namely
- Compulsory Security Deposits: A client has to compulsorily save 10% of their loan amount from the first day she receives loan .If member does not take second loan after repaying the first loan amount then she is entitled to withdraw the deposit amount after eight days of repayment. The interest on this deposit is 6% per annum.
- Fixed Deposit: Member can have a fixed deposit starting from six months to a maximum period of three years for any amount of money. Withdrawal is possible only after completion of term mentioned by member. The interest rate on fixed deposit is 7% per annum for one year 8% for two years and 9% for three years.
- Recurring Deposit: It can be opened for a short period of six months and onwards. Withdrawal of money is possible only after completion of term mentioned and interest is same as fixed deposit. The compulsory Security Deposit is monitored by Loan and Savings Officer and Branch Office Manager through Outstanding Portfolio Report. If the compulsory security deposit amount is less than 10% of the loan amount then officer remind the member and compensate the gap .Branch staffs motivate members to save and have to maintain an overall 30% ratio of savings to loans.
2 Micro Credit
Micro credit is extended to self-employed women and men in the urban slum areas. First loan is of small amount but they can borrow loans of higher amount depending on their repayment and group strength .Loan amount is in the range of Rs 7,000 to Rs 1, 00,000 depending on the Level (gradation of family on the basis of income, assets and basic standard of living), category, need and repayment record of member .No collateral is needed for sanction of loan. Common Goals Group acts as a security and family member (spouse, children, or in their absence next of kin) give signature on loan disbursement day. Minimum documents like ration card and family photographs are required to complete all formalities. Credit is given for different purposes like setting of business, expansion, education of children, house repairing, and creation of asset or repayment of old debts.
Five Loan Products of the institution are:
- Business Creation and Expansion: Maximum limit in this category is Rs1, 00,000
- Education: Limit is Rs 1, 00,000
- House Repairs: Maximum limit is Rs 1, 00,000
- Repayment of old Debts: Maximum limit is Rs 35,000
- Asset Creation: Maximum limit is Rs 1, 00,000
Interest rate on loans reduces as the member goes on to higher amount of loan .Repayment period varies from twelve to thirty six months depending on credit amount.
4.Postdated cheques of bank
Interest rate on micro credit and repayment period Promotion, Enrolment and Group formation process: Annapurna extends micro credit services to its members at the doorstep .They operate micro finance activities from its branch offices that are located in slums. Around ten slums are covered under one branch. Each branch is headed by BOM, one Health Service Executive and four to five LSOs who are involved in promotional activities, processing of loan, collection of repayment, filling and documentation’s conducts household visits once or twice a month in her operational area as per target fixed during monthly meetings. She gives information about organisation and various loan products available. Operational manual has been prepared by the organisation which contains information formation of Group, loan products; Level of borrower’s etc .With the help of this manual orientation meeting is conducted. A Group of five is formed of all those people who wish to join the micro credit activity of institution .Once group is formed all personal details of members are filled in a format prepared by institute. Once three common goal groups are formed a Centre is promoted .This centre helps loan officers to collect loan instalments. Centre can be a centralised place or house of leaders of groups where group members can come together conveniently. Each centre is given a name based on the names of group leader’s first names. If a member of any group wishes to discontinue then other members replace her with other member in accordance with the rules of institution. In order to avail first loan following eligibility criteria’s is to be fulfilled:
- Member has to be self employed
- Should be in the age group of 18 to 55
- Should own a house
- Possess a ration card with home address
- Need to identify five people belonging to similar socio economic status from neighbourhood who are willing to stand as guarantors for each member.
After proper scrutiny of documents and eligibility members get their first loan .On the loan disbursement day branch operation manager asks all borrowers to take oath stating that all information given in the personal information form is true .Branch operation manager reminds all members about their responsibility of joint liability. Entire break up of amount, repayment period, role of group leader, and fine for delayed payment and various rules and regulations are explained to all members and their signature is obtained. Officers make it sure that all members of family are aware of loans taken and repayment of it.
When borrower fails to repay the instalments on due date then their name is automatically entered in the Portfolio at Risk (PAR). As a result, if a borrower delays payment, even for a week then he is referred as defaulter. There are various categories of defaulters
- Ordinary defaulter- One month default
- Sure defaulter- Two or more than two months
- Fully defaulter- Three or more months
- Last stage defaulter- six or more than six months
If a borrower is late by one month then he is contacted by the office and asked to pay. The LSO visits the house of borrower and recovers amount. If there is delay of two months then LSO and BOM visit the borrower to find out the reason of delay and explain the member of his responsibility. If there is further delay then members of group and staff put pressure on the member to repay in time and sometimes strict action is taken by head office.
Annapurna Mahila Cooperative Credit Ltd raises loanable funds from external sources like banks, financial institutions plus there are internal sources like membership fees, savings of members. The main banks that provide loans are Small Industries Development Bank of India, Indian Overseas Bank .It also takes loan from Friends of Women World Banking India.
The expenditure of institution include staff salary, administration, infrastructure, stationary, office maintenance, transport, communication, and other petty expenses as well as interest paid on deposits and interest paid on borrowings from outside sources. The income of institution includes interest on micro credit, membership fees, and other service charges. Institution does not take any financial support for its administrative expenses.
The entire operation of MFI is computerised. All documents are maintained at branch level and head office. The employees are trained to handle data and operate computer. In this meeting last month’s activities are reviewed and action areas are identified. The second meeting is a full day training session for capacity building of staff.
IX. COMMUNITY MEETINGS
Every branch organises one community meeting at cluster level with the clients of MFI. Community meetings are organized after loan recovery meeting and before the next loan disbursement. It is conducted at branch office with the team consisting of BOM, LSO and one junior manager/Assistant manager/Trustee. These meetings are helpful in creating a sense of responsibility and belongingness among members. It is compulsory for clients to attend at least three community meetings in a year. These meetings are organized in a planned and systematic manner and all preparations are done by staff. New members are introduced in these meetings, minutes of previous meetings are shared and business, health guidance is provided to clients. During meeting details of borrower, purpose and amount of re-loan are announced and consent/vote of members is taken before sanctioning re-loan.
X. DOCUMENTS AND RECORDSX
All records of borrowers are maintained at branch level and head office. The LSO, BOM and loan sanction committee go through all records and files before sanctioning loan. All records are computerized. Annapurna has prepared operational manual in which details of all activities are mentioned. It provides a check list to staff and helps them to perform day today activities efficiently. Responsibilities and task of each field officer and staff is mentioned which helps them to take right decisions at right time.
XI. STAFF STRUCTURE:
Annapurna Mahila Cooperative Credit Society:
MFI is fully managed by all women staff. There are junior managers, field operator who work under Assistant managers. In each branch there is one Branch Office Manager (Bom) who looks after entire operations of that branch. Under each BOM there are Loan and Savings Officers (LSO) .LSO’s are involved in promotional activities, taking surveys, filling of forms and documents, processing of loans, disbursement of loans, collection of instalments, documentation, conducting meetings at centre and follow up processes.
At the back office there is Assistant Manager Administration who heads the operations. Under him there is administrative executive; one in Mumbai and in Pune. The MIS department has junior managers who look after data and prepare reports. Under junior managers there are Senior Encoders who validate data. Below them there are Encoders who enter data of members.
Entire operations of accounts are managed by assistant manager. There are two junior accounts managers, one in Pune and Mumbai who are assisted by two accountants. Micro insurance is managed by HMF- Assistant Manager and they are assisted by Health Service Managers. Under HSM there are Health Service Executives who conduct house visits, meetings, counselling, and collect data.
Members of Annapurna Pairwar are owners of MFI.Representatives of members are elected every year to all governing bodies of Annapurna Pariwar. The Managing committee of Annapurna Mahila Credit Society consists of eleven members. Dr Medha Purao Samant is the Chairperson of Managing Committee. Then there is Vice-chairperson, secretary and a Joint Secretary and rest are members. The managing committee members are on Board of Directors.
Board meetings are held quarterly to take account of financial operations of MFI and to monitor functions. Day to day operations of MFI are supervised, managed and handled by Core Committee consisting of Chairperson, Senior Manager, two Assistant Managers and two active members of Managing Committee. Meeting of core committee is conducted in the second week of every month. Four active managing committee members meet separately once in a month and monitor activities of MFI.
XIII. PROGRESS OF MFI:
The activities and business of MFI has grown over the years and it is a fully sustainable institution which is managed by women and best example of women empowerment. The growth story of institution can be best understood with the help of following data.
Micro Finance Data:
The data of micro finance is given from 2009 as there is fast progress of institution from that period till date.
Number of members as well as borrowers is increasing which is shown in the above bar chart. Even though activities of micro finance started way back in 1986 it is not possible to present the entire data in this paper so data from 2009 is presented here to show progress of the institution.
This case study presents a good example of sustainable microfinance model and Annapurna has achieved good level of women empowerment through it. Government through its various efforts cannot achieve financial inclusion objective therefore such efforts are laudable.
- Annual Reports of Annapurna Parivar.
- Lopa Dasgupta, Basics of Microfinance-Presentation of two models (Sept 2010) Publishers- Dada Purao Research & Training Institute.