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Volume-48

Communicate Minds
30th October 2006 FORTNIGHTLY

NOBEL INCENTIVES MICROFINANCE
ADVISORS
Khirod Ch. Malick Pitabasa Sethi Makardhwaj Sahu Shiv Prasad Meher Aurobinda Mahapatra Of late an event that caught attention of the world that an economist of Asian origin baggeed the most coveted Noble Prize for Peace in the World for his experiment on practising microfinance. Microfinance is a term used to refer to the activity of provision of financial services to persons who are deprived of the traditional financial system on account of their lower economic status. These financial services most commonly take form of loans and micro-savings. Some microfinance institutions offer other value added services such as micro-insurance and micro-enterprises. The concept of microfinance originated in Bangladesh, around 1976 through a pioneering experiment by Dr. Muhammad Yunus, who was then a professor of economics. Another early pioneer of microfinance was Fazle Hasan Abed, founder of the Bangladesh Rural Advancement Committee (BRAC). In October 2006, Dr. Yunus and the Grameen Bank (which he founded) were awarded the Nobel Prize for World Peace. The primary differentiator between microfinance and the conventional credit disbursal mechanism lies in the “joint liability” concept. A group of individuals, almost women, form an association to apply for loans for instance “Self Help Groups’ (SHG). All members of the association undergo a training programme on the basic procedures and system requirements. Loans to individuals within the group are approved by its other members; the group is likewise jointly responsible for its repayment. To minimise the financial burden, there are upper limits on the amounts lend and lower limits on the duration of repayment.

In this Issue...
Editorial Nobel incentives MF Poverty Eradication Other BISWA News

The Link
Chief-Editor Debabrata Malick Editors Guru Prasad Nahak Kiranbala Acharya

Microfinance as a development tool: People, living in poverty, need
access to a diverse range of financial services, including loans, savings services, insurance, and money transfers. Access to financial services enables the poor to increase income and smooth consumption flows, thus expanding their asset base and reducing their vulnerability to the external shocks that plague their daily existence. The availability of financial services acts as a buffer against sudden emergencies, business risk, and seasonal slumps that may push a family into destitution. More and better financial services specifically geared towards low-income groups can help poor households to move from mere subsistence for daily survival to planning for the future and investing in better nutrition, improved living conditions, and children’s health and education. Impact studies show that in many cases, microfinance reduced poverty through increasing income levels. Studies also show that microfinance has resulted in improved healthcare, children’s education and nutrition, and women’s empowerment. In particular, the ability to borrow, save, and earn income reduces economic vulnerability for women and their households. Increased financial and food security can bring a new confidence and hope, which often translates to a greater sense of empowerment for those benefited by microfinance. Nonetheless, microfinance is not a panacea. Even the most innovative
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Central Office
“BISWA” At-Danipali, P.o-Budharaja Dist-Sambalpur, PIN-768004 Tele fax- +91-663-2533597 Email:biswamalick@rediffmail.com, kcmalick@biswa.org www.biswa.org

State Offices
ORISSA Gada Gopinath Colony, In front of High School, Plot No. E/7 PO: Rasulgarh, Bhubaneswar-751010 CHHATTISGARH C-243, Kuber Griha Society Rohinipuram, Raipur-492010, Telephone No: 0771-6451927

The post nationalization period in the banking sector witnessed substantial amount of resources being earmarked towards meeting the credit needs of the poor. The banking network underwent an expansion phase without comparison in the world. Credit came to be recognized as a remedy for many of the ills of the poverty. Credit packages and programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experiences gained. SHG (Self Help Group), informal thrift and credit groups of poor came to be recognised as bank clients. The real challenge facing the microfinance industry today is scaling up services to reach the estimated three billion people in developing countries who still lack access to formal financial services. Successful microfinance institutions have proven that providing financial services to the poor can be an effective means of poverty reduction and be a profitable business. A major bottleneck to the development of sustainable microfinance is limited institutional and managerial capacity at the level of retail microfinance institutions, as reflected in inadequate management information systems, poor strategic planning, and high operating costs. There is also a marked shortage of organizations that can provide safe savings facilities for the poor and that can sustainably mobilize these domestic savings for on-lending.
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and participative programmes can lead to unwanted negative impacts. In many cases, microfinance has been shown to benefit the moderately poor more than the truly destitute. Many early impact studies on microfinance showed increased income levels, but more recent and better-designed studies have shown that the impact can vary per income group. In most cases, the better-off are benefited more from micro credit, due to their higher skill levels, better market contacts, and higher initial resource base. Lower income groups may be more risk-averse, and are benefited more from micro savings and micro insurance. Many microfinance and micro credit programmes target women, largely due to their higher repayment rates, but in many cases this is a mixed blessing. If a programme excludes men, particularly in areas where access to financial services is limited, the man may require his wife to get the loan for him. Others have argued that exclusive access for women actually increases her bargaining power within the household. While inspiring examples abound of women taking loans and then using the income from their business to provide employment to others, feed their children and send

them to school, and become empowered members of their household and community. On the other hand many more examples exist of vicious circles of debt, family violence and increased workloads. Micro-finance programmes not only give women and men access to savings and credit, but reach millions of people worldwide bringing them together regularly in organised groups. Although no “magic bullet”, they are potentially a very significant contribution to gender equality and women’s empowerment, as well as pro-poor development and civil society strengthening. Through their contribution to women’s ability to earn an income, these programmes have potential to initiate a series of “virtuous spirals” of economic empowerment, increased well-being for women and their families and wider social and political empowerment. Micro finance services and groups involving men also have potential to question and significantly change men’s attitudes and behaviors as an essential component of achieving gender equality. However, donor funding for micro finance has generally been conditional on compliance with some variant of Consultative Group to Assist the Poor (CGAP’s) Guidelines for Best Practice aiming at short term financial sustainability. Funding for programmes which place prime emphasis on women’s empowerment continues to decrease. Despite some successes, evidence indicates that even in financially sustainable programmes, benefits for women cannot be assumed. To the contrary, many programmes report decreases in their ability to ensure that women benefit following introduction of policies to increase financial sustainability. It is clear that gender strategies in micro finance need to look beyond just increasing women’s access to savings and credit and organising selfhelp groups to look strategically at how programmes can actively promote gender equality and women’s empowerment. Moreover the focus should be on developing a diversified micro-finance sector, where different types of organisation: NGOs, MFIs and formal sector banks all have gender policies adapted to the needs of their particular target groups/ institutional role and capacities. But where all collaborate & work together, to make a significant contribution to gender equality and propoor development. The current point in time is potentially favorable to bring together elements of Best Gender Practice strategies for different types of institution. On the one hand there is now more experience and awareness of the issues and possible strategies. On the other hand the earlier somewhat dogmatic promotion of one-size fits all financial sustainability is now being convincingly challenged in relation to poverty targeting a major theme at the forthcoming Micro Credit Summit in Halifax in November. This will provide a key opening for now paying more attention to gender issues— the second official goal of the campaign being not only “reaching” but also “empowering” women.

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International Day for Eradication of Poverty
BISWA organized a program on “International Day for Eradication of Poverty” on October, 17th, 2006 in its Training Institute. It was meant for to have a discussion about the poverty eradication program in Indian context. Mr. Bikram Keshari Das, AGM-NABARD, was present as the chief guest on the occasion. Dr. Diptibala Patnaik, Consultant SWADHAR presided over the meeting. Mr. Das expressed his deep concern about the poverty situation in Orissa and he also urged that micro finance would help to eradicate poverty in some extent. He also said that NGO only can reach the poor and serve better. Mr. Jibardhan Kheti, Zonal Coordinator also shared his experience in Bangladesh. He compared the poverty situation in India with Bangladesh. Mr. S.P. Meher, PROBISWA proposed vote of thanks at the end.

Role of Youth in 11th Five Year Plan
Participation of youth in the development of the nation is of prime importance. The future development of nation is planned through its five years plans. India is going to enter in to 11th Five Year Plan. So it is very important that role of youth in this prime program must be assessed. In this context BISWA & NYK jointly organised one day Youth Convention on “Role of Youth in 11th Five Year Plan” on 27th October, 2006 at BISWA Training Institute. The main objective of the convention was to interact with youths and discuss about the contribution of youth in the process & development planning in next five year. Mr Sishir Ku Ratho, Director, Ministry of Youth Affairs & Sports, Government of India was the chief guest. Mr. Ratho explained all the activities and programs run by different department of the government for the development of youth. He also assured to extend his departmental support as much as possible for the improvements of youth program in the district. Dr. Nandakishore Mahakud, Program Officer NSS, Dr. Tribikram Panda, ADMO-PH, Sambalpur, Dr. Diptibala Patnaik, Rtd. Joint Director Health, Mr. Prabir Ku. Pradhan, Regional Coordinator NYK Sambalpur, Mr. Gopal Ch. Ojha, District Youth Coordinator NYK Jharkhand were also present on the occasion.

Intangible Cultural Heritage of Orissa
With an objective to restore the cultural heritage of Orissa, Sambalpur University organised a seminar on “Intangible Cultural Heritage of Orissa” on 16th to 18 th October, 2006 at University Campus at Burla. This program was supported by Rastriya Manav Sangrahalya, Bhopal. Prof. P.C. Tripathy, Vice Chancellor, Sambalpur University inaugurated the seminar with lighting the lamp. Dr. Jharana Mishra, Research Consultant-BISWA presented a paper on “Preserving the Cultural Ethos: A case study of Brass & Bell Metal Artisan of Western Orissa, India” on behalf of her organisation & it was highly appreciated by all the intellectual mass there at. Laxmipriya, sales outlet of BISWA also exhibited its SHG products in the campus. Dr. Avantee Pradhan, Research Consultant, Sri Shiv Prasad Meher, PRO and Sri Arun Dash, Program Officer also participated in the seminar on behalf of BISWA.

STATE LEVEL T.O.T
Indian Red Cross Society, Orissa branch was organised a 5 days training program on Emergency Health Responder Team Training of Trainer (TOT) from 16th to 20th October, 2006 at DPTC Red Cross Bhawan, Bhubaneswar with support from Spanish Red Cross. The main objective of the training program was to prepare a group of trained and motivated volunteers at district level, to mitigate any kind of disaster in emergency situation. Mr. Bhawani Sankar Mishra, Program ManagerBISWA participated in the training program.

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DICS-2006
A district level meeting was organized by District Administration on “District Information Services Council-2006” on October 19th, 2006 at Office Chamber of Collector, Sambalpur. The theme of the meeting was to promote IT usage and bridge the digital divide between regions, people and classes, formulate the District agenda for e-Governance, promote electronic delivery of citizen’s services, facilitate & promote interaction and synergy amongst various stake holders including line departments and NGOs in the use of IT for e-Governance and good governance. Sri Vishal Gagan, IAS Collector & DM, Sambalpur presided over the meeting. In this meeting different officials from DRDA, NIC, NABARD, OCAC and HINDALCO were present. Sri S.P. Meher, PRO-BISWA represented BISWA in place of Sri K.C. Malick, Chairman BISWA.

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AIDS Control program
Orissa State AIDS Control Society (OSACS), Bhubaneswar organised a district level program on HIV/AIDS at Panthanivas of Sambalpur district on 18th October, 2006. The program was meant to create awareness about the control and prevention of HIV/AIDS. Thirty participants from 9 districts were participated in the program. Dr. T. Panda (MD), ADMO and Dr. S.K. Sethi, ACDMO, Sambalpur facilitated participants as resource persons. Dr. Avantee Pradhan, Research Consultant & Ms. Mausumi Poddar, Counselor FCC participated on behalf of BISWA.

SDRT 2nd Phase Training
Disaster Management Unit of Indian Red Cross Society, Orissa branch was organised its 2nd phase training program of “State Disaster Response Team (SDRT Orissa)” from 20th to 24th October, 2006. The main objective of the training was to select persons from the district for disaster response team augmentation. Sri S.P. Meher, PRO-BISWA participated in it as the faculty and resource person.

SHG Interaction Meeting
A meeting on SHG members was organised by BISWA on 20th October, 06 at Sahaspur Market Yard of Maneswar block, with an objective to interact with SHG members. They came up with their doubts and problems regarding various aspect related to Self Help Group (SHG). Mr. K.C. Malick, Chairman BISWA was the chief guest on the occasion. Nearly 450 members were present on the occasion. Mr. Harish Dash, Chief Monitoring Officer BISWA, Mr. Ajaya Dhar Badgayan, District Coordinator, Sambalpur and Pahelu Deep, President BISWA also participated in the meeting. The Link “B I S W A” At-Danipali P.O-Budharaja Dist-Sambalpur PIN-768004 91+663 2533597(O)

Training on Grain Bank
CARE- India organised a two days training program on Grain Bank Concept from 26th to 27th October, 2006 at CYSD Campus, Bhubaneswar. The main objective of the training program was to impart knowledge about the various aspect of Grain Bank. Trainees learnt about the formation of Grain Bank, book & record keeping, accounts maintenance, various principal objectives etc. Mr. Mihir Nath, Area Coordinator Sambalpur, Umakanta Pati and Trilochan Dansana participated on behalf of BISWA.

Printed and Published by Debabrata Malick, Chief Editor. The Link, at BISWA Computer Section, Danipali, Budharaja, Sambalpur. PIN- 768004 Ph. No- 0663-2533597, email: thelink@biswa.org

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