Micro Finance through Self Help Groups

ASA's micro-finance programme has grown substantially moving from an experimental stage, to a model-building stage and finally to a scaling-up stage. At ASA, we believe that if appropriate credit mechanisms are put in place, the poor can gain greater access to employment and income-generating opportunities. This is borne out of a reality that the quantity and quality of credit usually available to villagers from money lenders is often exploitative—interest rates usually range between 120-150%. As with most micro finance programs, the basic foundation of ASA's program lies with the operation of Self Help Groups (SHGs) of rural poor. The primary function of the SHGs is savings and credit and 80% of the groups are exclusively for women. SHGs are federated at the block level. ASA's approach to micro-finance stresses a revenue model wherein the operating costs are absorbed by the federations themselves. Each federation needs financial assistance for an approximate period of 18 months after which the expenses get covered from the fees generated for the services provided by it. Realizing the practical limitations of the conventional SHG-Bank linkage approach, in 2007 ASA established a Micro Finance Institution which is currently housed in ASA, for direct lending to the SHGs. The rapid growth in lending has become possible largely due to the access to funds through financial institutions like ICICI Bank, HDFC Bank, FWWB, etc.