Access to microfinance by itself cannot be taken as financial inclusion, as the latter idea requires having an individual bank account which brings the account holder into the national payment system and insures her deposit, according to Usha Thorat, director, Centre for Advanced Financial Research and Learning.
Addressing the valedictory of a three-day summit on microfinance here on Thursday, Thorat, who was a deputy governor of the Reserve Bank of India, said, “Financial inclusion has become a global buzz word, figuring on the agenda of G-20 meetings. We need to convince banks about the profitability of serving the poor.”
Referring to a comment that the focus has been more on providing credit services rather than on savings, she said the original RBI rules required a six-month savings record by the groups before they could take loans under the SHG-bank linkage programme.
She said her organisation would take up research on how to utilise the social capital built by SHGs for financial inclusion, called for more attention to the issue of urban poverty too.
B Rajsekhar, CEO, Society for Elimination of Rural Poverty (SERP), said the notion that the SHG movement in the state was successful because of funds from the World Bank was incorrect.
According to him, the World Bank assistance during 2000-2011 was Rs 2,200 crore, while the cumulative bank lending to SHGs was Rs 34,316 crore. The Centre’s contribution under the Swarna Jayanti Swarojgar Yojna was Rs 500 crore, the SHGs’ own corpus was Rs 5,070 crore, and the state government contributed Rs 1,099 crore as incentive for prompt repayment.
On the suggestion that SHGs were evolving as a parallel structure to the Panchayat system, Rajsekhar said that with the participation of SHG women, the dysfunctional institution of Gram Sabha had actually been revitalised. Earlier, Sarpanches and ward members used to run the system on their own without any participation of Gram Sabhas in the decision making.
At the end of the summit on Microfinance and Inclusive Development, the organisers issued a declaration with 12 points, including one calling for integration of microfinance interventions into sub-sectors like agriculture, dairy, fisheries, etc. Another said self-regulation of microfinance programmes would promote growth with equality.
MP Vasimalai, president, International Network of Alternative Financial Institutions (Asia), said there were many different models of SHGs being followed in different areas, and these experiments leading to a diversity of models needs to be encouraged. According to him, microfinance is not an alternative to mainstream systems and it was too early to talk about the derivatives of microfinance such as micro-insurance.