SectorSector OwnOwn ControlControlAPMAS Pilot in Kamareddy Cluster, Andhra Pradesh

The Indian SHG MovementThe Indian SHG Movement

One of the best financial intermediaries for the alleviation of

widespread poverty due to

a tremendous potential for outreach,

a low cost approach and

its flexibility.

Combined with the Bank linkage program of NABARD and

about 4 million bank linked SHGs it is the biggest and

fastest growing microfinance program in the world.

The Indian SHG movement is huge and heterogeneous,

and thus supervision by Govt. authorities difficult

SHGs are unregistered

SHG Federations are registered under various laws, e.g.

different co-operative laws (e.g. MACS Act), Societies Act,

etc.

Under Co-operative law obligation for annual external

audit, AGM and filing of annual returns

No regulation and supervision of the sector so far

Regulation of SHGs in IndiaRegulation of SHGs in India

SOC provides reliable information about the performance of

a mF organisation

facilitates proper financial management and reduces risk

builds ownership and trust among the members

increases trust on the part of other stakeholders like

banks, facilitating access to additional funds, e.g. from bank

linkage program.

increases active participation of the members, thus

contributes to empowerment of women.

provides for well functioning SHGs and their federations

WhyWhy SoCSoC

Adequate norms and standards (external and internal)

Approved common bookkeeping and accounting

Effective internal control of management and risks

Sector-wide reporting, monitoring and rating (off-site sector

control)

Compulsory cooperative audit

Follow-up activities

Institutional protection, deposit insurance

Linkage to the Financial Regulator for regulatory and

supervisory duties.

Important elements of a SOC-systemImportant elements of a SOC-system

SHGs and their federations have the potential for being

highly self-reliant and sustainable, but

currently depend on external agencies for financial, human

and material resources

take savings deposits from their members – need checks

and balances to control the various financial transactions

need to strengthen internal capacities, improve systems,

increase accountability and transparency

In 2007 APMAS together with DGRV and SERP started a pilot

in the Kamareddy Cluster in Andhra Pradesh to promote

self- control and self-regulation

Why the PilotWhy the Pilot

To contribute to and ensure the further

successful development and sustainability of

the SHG system

The Overall ObjectiveThe Overall Objective

1. Economic and Social Development of the members

Member savings protection

Sustainable growth of thrift and credit services

Financial Literacy among the members

2. Sustainable Democratic and Legal Institutions

Growth of resources

Equality among the members

Profitable Institution

Institutional Accountability

SpecificSpecific ObjectivesObjectives

The Structure of the PilotThe Structure of the Pilot

… supported by an Advisory Group comprising staff of

APMAS and the Government Project IKP

To build and enhance the capacity of SHG members to run

and control their SHGs and federations on their own.

Therefore

members and office bearers of the federations are trained

to be capable to implement the developed systems

standards are developed

a simple but standardized system of bookkeeping is

introduced

internal control and audit are introduced

manuals for training on the related topics are elaborated

The StrategyThe Strategy

Trainings

ActivitiesActivities so so farfar

Subject (as of 30.06.2009) No. of trainings

No. of participants

Training of Trainers on SHG Bookkeeping 8 195

Training on SHG Bookkeeping to Bookkeepers 56 712

Refresher on SHG Bookkeeping to Bookkeepers 4 57

Understanding Financial Statements of a Federation

2 49

Training on Internal Audit to SHG Auditors (Members), incl. Master Auditors

6 112

Training on Bookkeeping to Federation Office Bearers and CC Audit Subcommittee Members

2 22

Elaboration of 11 Booklets on The significance of Savings

The significance of loans

SHG - Bookkeeping

Reconstruction of Accounts

SHG external audit

Federation Bookkeeping

Annual planning - Federations

Federation internal audit

Federation external audit

Election process in SHGs and Federations

Annual planning – SHGs

ActivitiesActivities so so farfar

Thank YouThank You