indian womes life

1. German Chancellor Visits Indian Microfinance Programme
2. "Small sums work great wonders!" Financial experts are consistently loud in their praises of what micro-credits can do for the poor. German Chancellor Angela Merkel may well have been thinking the same when she was personally introduced to the microfinance programme of the National Bank for Agriculture and Rural Development (NABARD) in Mumbai on 31 October. GTZ supports the microfinance programme on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). During her visit, the Chancellor learned at first hand from a self-help group of 15 women what fine future prospects bank loans on favourable terms can open up to them.

The women are at last in a position, for example, to purchase tools and seed or to finance their children's education. Moreover, their economic independence has a positive effect on gender roles in India. For instance, women can now leave the house alone with no complaints from their husbands. And not only that: one of the women has been elected head of her village, as she informed Chancellor Merkel with some pride.
Photo caption: German Chancellor Angela Merkel talking with the 15 women who together formed a self-help group four years ago in order to get a bank loan on favourable terms. Photo: NABARD India
That the programme's self-help groups consist almost exclusively of women is thus a thoroughly desirable and important spin-off effect. In saving just five to ten euro cents a day together at the start, the groups learn a financial self-discipline they can point to when applying for bank credits later on. On average, the amount of the loans comes to about EUR 50 per person, which may then be used to purchase livestock, say, or goods to set up a grocery store.
These examples vividly illustrate what opportunities and prospects micro-credits can open up to poor people. A look at the overall dimensions of the NABARD programme shows just how great its potential is for sustainable improvement of the living conditions of Indian women: some three million self-help groups representing about 40 million households participate in this microfinance project, the largest in the world.
Rural Financial System Development Programme
Programme description
Title: Rural Financial System Development Programme (RFP)
Client: Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ)
Country: India
Lead executing agency: National Bank for Agriculture and Rural Development (NABARD)
Overall term: January 2005 to December 2012

Context

Despite positive economic development in India in recent years, the number of people living below the poverty line has decreased only slightly. Access to credit and savings services is an essential safeguard for low income households against the risk of slipping into poverty. While there is a numerically strong infrastructure of formal financial institutions in rural India, they often lack the capacity to provide adequate demand-oriented financial services. Structural obstacles hamper the sustainable development of the financial system in India.

In view of its large network of about 13,000 branches and 100,000 retail outlets, the cooperative credit structure holds a huge potential for reaching out to the rural poor in India. The scale of the reform and revitalisation of the cooperative credit structure in India is unique in its history and the largest endeavour in financial system development the world has ever seen.


Objective
An inclusive financial system enabling more and more rural households to avail qualitative and sustainable financial services is created.

Approach
GTZ works with NABARD at the macro level and achieves impacts at the micro level. Besides working on technical issues such as management information systems (MIS), credit risk management, design of demand-oriented financial products and viability analysis, GTZ cooperates with its partner in a process-oriented manner and supports strategy development of microfinance in India.

GTZ promotes the strengthening of the cooperative credit structure in rural areas by contributing to the overall planning of reform measures, design of common accounting, internal control and audit mechanism as well as management information systems. Important aspects such as corporate governance and professionalism of the staff are equally addressed.

The expertise of the German Cooperative and Raiffeisen Confederation (DGRV/ADG, Montabaur) are utilised. Collaboration with KfW Entwicklungsbank and multilateral development organisations like Asian Development Bank (ADB) play an important role in supporting the reform of the cooperative credit structure.


Results achieved so far
By March 2007, more than 2.9 million self-help Groups (SHG) have been linked to banks with a cumulative credit disbursement of € 3 billion reaching out to more than 40 million rural households.
The improved access of SHG members to sustainable financial services as well as the group approach and related capacity building processes are contributing with cross cutting outcomes in several direct and indirect ways to achievements of the MDGs 1 to 6 concerning eradication of poverty, universal primary education, gender equality and improved health care.
The common accounting system and MIS developed by the programme are used by the reform participating institutions
Microfinance and the UN Millennium Development Goals (MDG)
The year 2005, when the signatory states of the Millenium Declaration take initial stock of what has been achieved so far, has also been declared by the United Nations as the International Year of Microcredit. The reason is simple: Strengthening banking institutions for poor and underprivileged people in developing countries is an effective way to reduce poverty. Where the poor lack access to financial services, they depend on informal moneylenders, who usually charge high double-digit interest rates. Borrowers can easily be caught in a debt trap. Microfinance services contribute directly to reducing extreme poverty by improving the income of poor people (MDG 1). Thanks to higher and more stable income, parents can also invest in giving their children school education and training (MDG 2) and pay for health services (MDG 4 – 6). The main beneficiaries of microfinance services are women, so they contribute to women's empowerment and gender equality (MDG 3).

Practical experience

Since the nineties, GTZ has recorded considerable successes in setting up and developing of financial systems and finance facilities for micro and small enterprises. Thanks to the "Rural Financial System Development" Programme, for example, 80 million rural poor have been able to avail themselves of formal financial services in India. By simultaneously strengthening capacities in productive agriculture, the financial sector and in administration, the Mali North Programme has contributed to reducing poverty and raising the social status of women