SUFFiciENcy EcONOMy ANd GRASSROOtS DEvElOPMENt
SUFFiciENcy EcONOMy ANd GRASSROOtS DEvElOPMENt
SUFFiciENcy EcONOMy ANd GRASSROOtS DEvElOPMENt
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The Meaning of Sufficiency Economy <br />
International Conference<br />
297<br />
Microfinance sector of India is unmatched because of both its large size and<br />
diversity of institutions operating in the field. Having crossed the stage of formative<br />
years more under an informal framework the microfinance sector is now looking<br />
forward to a conducive and an appropriate regulatory environment to grow further.<br />
Since SHGs are mostly unregistered local groups, lack of legal framework does<br />
deter many grass root bankers from the concept as a major methodology for<br />
continuous lending. There is a need for establishing an apex Organisation with some<br />
required statutory powers for microfinance at the national level, which should work<br />
for advocacy of microfinance and also for networking among NGOs banks and<br />
governments.<br />
Microfinance programs are costly because of the small size of their loans and<br />
because banks cannot operate them with their traditional mechanisms and overhead<br />
structures. Strategies must be devised to minimize processing costs, increase staff<br />
productivity, and rapidly expand the scale of micro enterprise portfolios. Incentives<br />
to staff for improving their performance in SHG-bank linkage banking need to<br />
devised in order to encourage linkage banking without compromising on the quality<br />
of linkage. Also, incentives to SHGs for encouraging them to maintain good group<br />
health need to be devised.<br />
There are five generic recommendations, keeping in view the various<br />
challenges.<br />
1. Establish a Global/ Commonwealth Gender Innovation Challenge<br />
Fund<br />
It is critical to establish a Global/ Commonwealth Gender Innovation<br />
Challenge Fund to help the microfinance industry and private sector innovate and<br />
develop models, methodologies, products, processes, procedures and performance<br />
measures for financial intermediation. This should be specially tailored to the needs<br />
of low-income women in several contexts. It is suggested that this fund be<br />
established with contributions from respective governments, multilateral and<br />
bilateral donors and other stakeholders. The Commonwealth Secretariat would be<br />
uniquely placed to be the global coordinator.<br />
2. Create an enabling environment for supporting financing for gender<br />
equality<br />
The second recommendation is primarily for governments and central<br />
bankers/ regulators and addresses the salient aspects pertaining to the creation of an<br />
enabling environment. These are:<br />
• Ensuring a minimum number of women directors in MFIs and<br />
intermediaries;<br />
• Establishing an integrated and comprehensive database on microfinance<br />
and gender;