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NABARD –GTZ Linkage Banking Project

NABARD –GTZ Linkage Banking Project. An attempt towards a refined and improved Management Information System for Linkage Banking. A Study on……. “Comparative Assessment of MIS Systems and Procedures maintained at the SHG level under the Linkage Banking Programme.”. Towards a.

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NABARD –GTZ Linkage Banking Project

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  1. NABARD –GTZ Linkage Banking Project An attempt towards a refined and improved Management Information System for Linkage Banking

  2. A Study on……. “Comparative Assessment of MIS Systems and Procedures maintained at the SHG level under the Linkage Banking Programme.”

  3. Towards a Consensus On Standards for a better MIS Accounting Audit Performance Indicators Benchmarks Reporting Elements of MIS: Interflow of information? Reporting to higher management levels? How to measure performance objectively? How to judge/ assess”good” or “bad” performance? How to record transactions/actions? How to verify? Standards: a minimum limit of acceptable quality and performance

  4. TASKS OF THE STUDY… • To collect & analyze the applied accounting practices at the SHG level supported by different SHPIs. • To identify minimum standards of group health in terms of organizational & financial aspects.

  5. TASKS…. • To identify the strengths and weaknesses ofexisting approaches applied by different stakeholders. • To synthesize the collected material with regard to common minimum standards adopted by different SHPIs.

  6. TASKS…. • To derive a list of minimum Performance standards, which could be integrated intothe existing MIS under Linkage Banking.

  7. Methodology… • Size of the Sample :33 SHPIs + 78 SHGs • Models covered: Banks as SHPI. - 10 NGOs/VVV Clubs as SHPI. - 15 DRDAs as SHPI- 2 NGOs as MFIs /federations- 6

  8. Sample Distribution:

  9. Methodology…. Methodology: • Questionnaire Canvassing to 80 SHPIs & their respective SHGs. • Field Visits to 13 SHPIs & their respective SHGs. • Focussed group discussions with SHGs. • Study of Books of accounts at the SHG level, reporting formats and grading formats at SHPI level.

  10. Accounting Practices…. General Observations: • Diversity across the formats & BOAs prescribed by the SHPIs to the SHGs which are different for recording both financial & non-financial data. • Accuracy of BOA is directly proportional to the literacy levels of the person maintaining it.

  11. General Observations…. • In cases of Banks acting as SHPIs minimal BOAs are prescribed. • Quality of maintaining BOA differs across the groups and is a matter of concern in some.

  12. Verification/Auditing…. General Observations: • In most cases SHPI workers verified the BOAs of the SHGs on their visits. • In some cases book keepers of one SHG verified the BOAs of the other SHGs. • Only 5 SHPIs had utilized the services of external/internal auditors to conduct regular audits.

  13. Aspects considered critical…..(Rankings…) Aspect SHG SHPI Bank* Reg of Savings 1 1 3 Repay’t of loan 2 2 2 Atten rate 3 3 6 Regularity of meetings 4 4 4 Book keeping 5 5 1 Participation quality 5 6 - Robust internal lending - 6 - Usage of credit 6 - 5 * As reported by SHGs, out of experience of visits and interaction by bank staff.

  14. Performance Indicators & Benchmarks…. General Observations… • Multiple indicators exist for the same critical aspect across groups and organisations. • Different definitions and different means of recording data pertaining to the same critical aspect( for example – loan recoveries). • Only a few SHPIs & some SHGs were able to list the benchmarks for it.

  15. Performance Indicators, Benchmarks & Data Required….

  16. Performance Indicators, Benchmarks & Data Required ….

  17. Reporting….Flow of Information SHG to Bank: • Bank officials collect information about the health of the SHGs: -Through personal visits- Only in about 41% of the SHGs they undertake regular visit of at least once in three months. -Interaction with members when they visit the bank- bank staff are too busy during transacting hours for any meaningful discussion on group health.

  18. Reporting…. Flow of Information • Exchange of information between the SHG/ SHPI & Banks - not regular. • 27 out of 33 SHPIs have formulated grading formats but these are not actively used except at the time of first linkage. • After the linkage, Banks usually monitor the health of the groups through the the loan a/c & repayments at their end.

  19. Conclusions….. • With scaling up of linkage programme quality and performance standards become critical. • With increase in number of SHGs per SHPI and bank branch, MIS to measure the health of SHGs is a felt need. • Critical indicators need to be agreed between the three primary actors – SHG,SHPI and bank. • To measure the indicators, the minimal data to be recorded need to be agreed upon. Thus standards will emerge. This may require minimal changes of books of accounts.

  20. Conclusions….. • Groups to be encouraged to self monitor the critical indicators. • Training of SHG,SHPI and bank on the why and how of MIS. • Tracking of these indicators can provide an early warning system for the bank. • Cost of such monitoring have to be shared between the primary actors.

  21. THANK YOU

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