Complete Thesis - Ruchi Sagarshodhganga.inflibnet.ac.in/bitstream/10603/45020/10/10_chapter2.pdf ·...
Transcript of Complete Thesis - Ruchi Sagarshodhganga.inflibnet.ac.in/bitstream/10603/45020/10/10_chapter2.pdf ·...
21
CHAPTER 2
REVIEW OF LITERATURE
2.1 INTRODUCTION
There is a rich body of literature based on surveys, case studies, regional and cross-
country analysis that explores how the poor save and provides us with a better
understanding of the microfinance and its functioning. Microfinance institutions
(MFIs) provide financial services to the poor. These services are generally provided to
those people who live below the poverty line and are unable to get credit from the
financial system because of their inability to provide collateral. Generally there are
four types of services provided by the microfinance institutions. These are loans,
savings, insurance and pensions, Majority of the MFIs are engaged with the
mobilisation of savings and providing loans to their members. These institutions play
a vital role in poverty alleviation. The concept of self help groups (SHG) is an
important aspect of microfinance. The members of SHGs belong to similar socio-
economic strata. The regular savings of SHG members forms a precious resource
base. It is noticed that even the poorest people have urge to save. On the basis of their
savings the SHGs can avail loans from the banks. Those members who receive the
loan can fruitfully utilise it for various purposes such as supporting and strengthening
of livelihoods. Thus, SHGs are capab
their own benefits and are also involved in income generating activities.
22
2.2 DEFINITIONS AND CONCEPTS
The present section discuses some of the definitions of microfinance and SHGs as
given by the institutions and researchers on the basis of studies undertaken by them.
The declaration at the Micro-Credit Summit held in Washington DC in 1997 defined
Micro-
employment projects that generate income, allowing them to take care of themselves
icro-credit projects
offer a combination of services and resources to their clients in addition to credit for
self employment. These often include saving facilities, training, networking and peer
-credit Summit 1997).
In India, the task force on supportive and regulatory framework for microfinance
financial services and products of very small amount to the poor in rural, semi-urban
or urban areas enabling them to raise their income levels and improve living
As per the definition of International Labor Organisation (ILO) Microfinance is an
economic development approach that involves providing financial services through
institutions to low income clients. Financial instruments and institutions help create
jobs and reduce the vulnerability of the working poor. They complement policies that
target the labour market. Decent work recognises the role of the financial sector for
social justice. It advocates alliances with financial institutions, particularly those that
combine social and financial goals. A good illustration of this is microfinance, a
23
strategy that provides savings, insurance and loans to help the working poor and their
families gain financial security and cope with various contingencies of life.
Sinha and Mitra (2010) have defined Micro-credit by distinguishing it from general
financing or credit. According to them Micro-credit emphasises building capacity of
micro entrepreneurs, employment generation, trust building and help to the micro
entrepreneurs on initiation and during difficult times.
Fernandez (2007) differentiates between MFI and SHG by stating that in the SHG
model the loan is a single loan to the group as a whole, whereas the MFI disburses
loans in the name of individual borrowers. The MFI uses group mechanism mainly to
make recovery of loans easier.
Harper (2007) discuses the most popular method of microfinance pioneered by
Grameen Bank in Bangladesh. This requires its members to join groups of five, which
in turn form larger groups of about 30 members. The groups meet every week. The
meeting is conducted by the bank worker. The loan proposals are usually discussed by
the group before the meeting. The proposals are presented to the bank worker. The
members of the SHGs are generally free to decide who should borrow, how much, for
what term and even at what interest rate. The banks are not required to maintain
separate accounts of SHG members.
Das (2007) has discussed the sources of funds of SHGs. They usually have three
sources of finance. One is their own savings. The second is the bank loan and the third
is an informal chit fund promoted by members themselves.
24
NABARD defines an SHG as a group of about 15 to 20 people from a homogenous
class who join together to address common issues. Members of SHGs undertake
voluntary saving activities on a regular basis and use the pooled resources to make
interest-bearing loans to the members of the group. In the course of this process, they
imbibe the essentials of financial intermediation and also the basics of account
keeping. The members also learn to handle resources of size, much beyond their
individual capacities. They begin to appreciate the fact that the resources are limited
and have a cost. Once the group is stabilised, and shows mature financial behaviour
which generally takes up to six months, it is considered for linking to banks. Banks
are encouraged to provide loans to SHGs in certain multiples of the accumulated
savings of the SHGs. Loans are given without any collateral and at interest rates as
decided by banks. Banks find it comfortable to lend money to the groups as the
members have already achieved some financial discipline through their thrift and
internal lending activities. The groups decide the terms and conditions of loans to
their own members. The peer pressure in the group ensures timely repayment and
becomes social collateral for the bank loans. Generally, the SHGs need Self-Help
Promoting Institutions (SHPIs) to promote and nurture them. These SHPIs include
s, government agencies, self-employed
individuals and federations of SHGs. However, some SHGs have also been formed
without any assistance from such SHPIs.
In India mainly two models of microfinance have emerged. These are SHG-Bank
Linkage Model and MFI-Bank Linkage model.
25
i. SHG-Bank Linkage Model: This model involves the SHGs financed directly
by the banks viz., CBs (Public Sector and Private Sector), RRBs and
Cooperative Banks.
ii. MFI-Bank Linkage Model: This model covers financing of Microfinance
Institutions (MFIs) by banking agencies for on-lending to SHGs and other
small borrowers (NABARD 2010).
2.3 MICROFINANCE: SAVINGS AND CREDIT OPERATIONS
The present section examines the role played by Microfinance and SHGs in credit
markets in providing the link between lenders and poor women who are the
borrowers.
MFIs could play a significant role in promoting financial inclusion as they reach out
to the rural poor. Many of them are localised and therefore are in a better position to
understand problems of the rural poor. They enjoy greater acceptability amongst the
rural poor and have flexibility in operations providing a level of comfort to their
clientele (Reddy 2005).
Vasimlal and Narender (2007) applaud the Indian model of microfinance which
mainly operates through the formation of SHGs. According to them the Indian model
offers greater promise and potential to address poverty as it is focused on building
social capital through providing access to financial services to the poor by linking
them with the main stream banking system.
26
Dhir (2012) suggests that it is not only economic upliftment of women which is
achieved through SHGs but they also play an important role as catalysts in wiping out
the social maladies. On the similar lines Armendariz and Morduch (2005) have
argued that microfinance can also improve long term development as the
th the women. In
particular, they highlighted the potential of microfinance to play a role in increasing
the self-employment opportunities and skill acquisition for the poor women.
h
facilitating savings and enhancing social capital.
intermediation. The organisation of groups assists the poor to access not only
financial services but also creates social capital in the economy by involving poor in
the process of financial intermediation. According to him in this sense MFIs become
not only agents of change but also avenues of unity and solidarity.
fiscal policies are used as instruments to attain decentralised growth. One of the major
hurdles in it is the sickness of rural credit system which arises out of high transaction
costs and poor recovery programmes. This problem can be tackled effectively through
the instrumentality of micro credit institutions. The experiments of microfinance
through SHGs have shown that the transaction costs could be reduced drastically and
repayment rates can be as high as 90%. Both RBI and NABARD have been
27
spearheading the promotion and linkage of SHGs to the banking system through
refinance support and other proactive policies.
Shetty (2007) has emphasised that micro-credit system should be an integral part of
the strengthened rural credit structure. He stresses that in order to make microfinance
sustainable it is essential to include rural poor into the mainstream rural finance which
comprises of banking system. The government must aim at increasing the number of
branches of banks in rural areas. In his opinion the empowerment of rural poor and in
particular rural poor women requires intermediation in rural areas by the government
by facilitating rural banking. So in its enthusiasm to promote microfinance the
government must not neglect the expansion of banking in rural areas.
Rajagopalan and Purswami (2008) discuss a dynamic shift in the conventional model
of microfinance. The donor money or subsidised credit (by governments) as the sole
source of funding is being replaced with private equity and debt capital. More
sophisticated ways of funding and insurance like securitisation of loan portfolios have
also entered the sector. The sector has also received recognition from mainstream
finance as an investment worthy sector. The commercial transformation has led MFIs
to increase their base of debt and borrowings and leverage their positions further.
Banco Compartamos of Maxico, DWM and Blue Orchard, Pro Credit Bank of
Bulgaria, BRAC, SKS Microfinance and SHARE Microfin of India are some
prominent MFIs in this sector which have tapped capital markets and private equity
funding sources.
28
Qazi, Moin (2007) has highlighted the main hurdles faced by women enterprises.
They are mainly the lack of knowledge of the market, inadequate bookkeeping, lack
of capital, setting up of prices arbitrarily etc. This justifies the microfinance access to
the poor women. He further states that microfinance could be a solution to help the
poor women attain social recognition and empowerment by assisting them to have
increased control over their incomes and resources. The women should be considered
as the nucleus of the family by microfinance institutions and donor agencies.
Mugadur and Uliveppa (2010) discuss the reasons for growing microfinance in India,
which are like promise of reaching out to the poor, the promise of financial
sustainability, the potential to build on traditional system and contribution of
microfinance to strengthening and expanding existing formal financial system. They
further state many success stories of micro finance which set the benchmark for new
programmes.
In a study on SHG-Microfinance initiatives in Purbo Midnapore District of West
Bengal by Bera (2011) it is concluded that there have been significant growth and
expansion of Self- Help Group Bank linkage across the different regions of the
country over the years. It was found that the growth of Eastern Region was second
highest, just after Southern region in respect of the number of SHGs linked. Further, it
was found that among the states of Eastern region, West Bengal ranked first. The
analysis revealed that there was substantial increase in the annual income of the
households in post-SHG stage. Additionally, when sources of income of SHGs were
analysed, it was established that substantial increase in household income came from
livestock and self-employment in non-farm activities.
29
The study also established that a significant number of members started savings only
after joining the groups. In fact, a majority of members having no savings in pre-SHG
era were found to be having substantial amount of savings in the post-SHG stage. The
study elaborated that apart from savings in SHGs the other major saving instruments
used by the households were LIC, savings in post offices and in co-operative
societies. It was found that the annual household expenditure of majority of members
had increased due to increase in their annual income. Thus, it could be concluded that
SHGs definitely helped in improving the purchasing power of the rural households.
A shift in the purpose of loan taken was also discovered in the study. While
previously the loan was taken mainly for consumption and cultivation, now the same
was taken mainly for business and allied activities in post-SHG situation. It was found
that due to increase in income of the members in the post-SHG situation, their need
for loan for consumption purpose had substantially reduced. The study revealed that,
formation of group has helped credit widening of the programme. Finally, it was
found that besides economic improvement the social outlook of rural women had
undergone a radical change. The involvement in the group significantly contributed in
improving the self-confidence of the women. They were more assertive in confronting
social evils and problem situation. As a result there was a fall in the incidence of
family violence. Some degree of transformation in social outlook was observed as
well.
In a case study of Microfinance in Haryana, it was revealed that repayment
performances of the SHGs were quite impressive for both internal as well as external
loans. Repayment performances of NGO groups were better than SGSY groups. Each
30
SHG had financed more than a couple of income generating activities. The NGO
groups had outperformed the SHGs under SGSY, due to better supervision of regular
activities and higher commitment of group members. However, it was observed that
the outreach was better in the case of SHGs under SGSY (Feroze and Chauhan 2011).
In a study on SHG-Bank Linkage programme (SHG-BLP) in Karnataka, it was found
that NABARD has played a pioneering role in promoting and financing of SHGs in
state since its involvement in the SHGs Bank-Linkage programme. The SHG Bank-
Linkage programmes are funded through Microfinance Development Fund (MFDF)
set up by NABARD in the year 2000-01. NABARD has organised a number of
training programmes, workshops, etc., in the state of Karnataka under the purview of
the fund to accelerate the SHG-BLP. NABARD has also been associated with the
Shakti Programme to promote SHG-BLP in Karnataka. It has co-ordinated with
-
BLP (Goankar 2010).
The Indian microfinance industry has been one of the largest microfinance industries
in the world. Ghate (2007) elaborates on the study conducted by NABARD about the
growth of SHG-Bank Linkage Programme (SBLP). The study showed that SBLP has
gradually helped in rectifying the inter-state imbalances. Although the SHG-Bank
Linkage Programme was found to be heavily skewed in favour of the three southern
states (Andhra Pradesh, Tamil Nadu, Karnataka) , the share of new loans for the four
states (the above three and Kerala) came down from 49% in 2005 to 44% in 2006, and
of cumulative loans from 58% to 54%. In 2005 NABARD identified 13 priority states
31
(Assam, Bihar, Chattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Maharashtra,
Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, Uttranchal, West Bengal)
The number of groups linked in these states increased by 68% in 2005 and 51% in
2006. As against an increase in 49% in the number of new SHGs linked countrywide
in 2005, the number went up by 54 % in the north-east, 45 % in the west, and 44% in
the east. Growth in the central, northern and sourthern regions ranged from 15 % to
20 %. This growth has been mainly achieved by SHG-Bank Linkage Model which is
the most popular model of promoting SHGs.
2.4 ROLE OF NON GOVERNMENTAL ORGANISATIONS IN
MICROFINANCE IN INDIA
The role of NGOs in providing microfinance to poor women has been well
recognised. NGOs can play a special role in the promotion of sound microfinance
institutions. They impart information and organise training for the SHG members.
Through training they can help in improving the viability of SHGs. Members can be
taught the importance of savings. They can be helped to access loans from banks.
NGOs conduct social awareness programmes and teach some income generating
activities to the group members. Many researchers believe that NGOs are better
positioned than banks in promoting SHGs as they work at the grass-root level. In this
context the present section discusses the work undertaken by some NGOs in the field
of microfinance through the promotion of Self Help Groups in India.
32
Some of the prominent NGOs in the field of micro finance in India are MYRADA,
(WWF). Apart from these there are
some others like Outreach, Spandana, and CSR etc. which also work for SHG
formation but have still not been able to have substantial impact.
MYRADA is an NGO that manages 15 major projects in three states of South India
viz. Tamil Nadu, Andhra Pradesh and Karnataka. It works directly with 1.5 million
poor people. Its major activities are promoting SHGs, watershed development
programmes and wasteland management, forestry community management of
sanitation and drinking water, housing and habitat etc. MYRADA promotes an SHG
model where the group decides who the loan should be given to, for which purpose,
on what terms and at what schedule of recovery. The decision making lies with the
group. The members learn the skills to manage credit and savings. SHGs allow
rescheduling of repayment in genuine cases where crops have failed and are willing to
use their profit to write off genuine defaults.
Sanghamithra was promoted by MYRADA and incorporated as a-not-for-profit
company in February 1995 under Section 25 of the Indian Companies Act of 1956.
The purpose of promoting Sanghamithra was that it would provide credit to SHGs
(where the banks left gaps) formed by MYRADA in the first phase and then to SHGs
promoted by other institutions, provided they meet the performance criteria set by
Sanghamithra. Sanghamithra functions independently with senior staff that have
banking experience whereas MYRADA guides it so that it continues to share and
promote a common vision (Fernandez 2007).
33
The Development of Humane Action (DHAN) Foundation, a professional
development organisation was initiated on 2nd October 1997. The Kalangiam
Community Banking Programme started by Dhan Foundation focuses on women and
believes that localised financial institutions owned and controlled by women are an
effective strategy to make impact on poverty and gender issues. The primary unit of
community financial institutions is the Self Help Group of 15 to 20 poor women and
is called the Kalanjiam. They act as a single
the savings and credit transaction. By 2010, 40,618 primary groups at village/slum
level covering 609,139 families have been promoted in 12 states of India and the
groups have been networked into 209 federations.
Livelihood financing founds base for the developmental programmes of Kalanjiam
Foundation. The community banking programme has enabled the poor women to
generate ` 282 crores of own funds through savings products in SHGs and to leverage
` 841 crores of loan funds from commercial banks for livelihood development. The
approach has been tested and proved in rural (100 federations), urban (29 federations),
coastal (35 federations) and tribal (45) federations (Dhan 2010).
Centre for Social Reconstruction (CSR) has been working in the districts of
Kanyakumari and Tuticorin for the past three decades addressing the core issues of
the people such as livelihoods etc. The strategies of the programme were planned in
ies and promote human
resources among the weaker sections especially women through collective efforts.'
With the objective of bringing about economic and social development of women and
34
improving their status in the community the Programme for Women Development
was being implemented by CSR in and around Tiruchendur of Tuticorin district and
Thovalai blocks of Kanyakumari district. The thrust of the programmes is organising
women and federating them at different levels to enhance their social status. Due to
the entrepreneur development skills promoted, the women took up various income
generating activities as individuals and as a group such as mat weaving, dairy farms,
palm crystal candy making, flour rice, fancy shops, petty shops, soap manufacturing,
textile business and paper cups. By the year 2009 CSR formed 477 SHGs with 8666
members (CSR 2009).
OUTREACH was established in May l992 in response to the needs of communities
living in the drought prone areas of South India and also in response to the growing
need for training in the NGO sector and within Government. In order to demonstrate
how the quality of life of poor communities living in these areas could be enhanced,
OUTREACH established 8 direct projects and at the same time linked up with a
number of small NGOs who were also involved in addressing the issue of poverty in
drought prone regions. The main thrust of the approach is the development of local
initiatives in the form of Self Help Groups, primarily women, enabling them to restore
and manage the natural resources in their habitats and stabilise their livelihood
systems. Non-land based economic activities also play a major role in the
OUTREACH approach. The SHGs save and manage credit and at the same time take
up integrated micro watershed development activities thereby improving their primary
production base. Non-land based economic activities which follow the land based
ones help to deflect pressure on the natural resources in the habitat. This approach is
35
actively promoted by OUTREACH, among the other NGOs and Government projects
working in similar regions in Andhra Pradesh, Tamil Nadu and Karnataka. Outreach
has been supporting the upcoming SHG entrepreneurs and other members with the
requisite information and linkages with relevant institutions such as Government
departments, Financial Institutions such as SIDBI and local NGOs. By the year 2011,
3146 women members from 771 SHGs have been assisted for income generation with
an average loan size of ` 10,500 (OUTREACH 2012).
Spandana was formed in 1997. The area of operation of Spandana is eight states i.e.
Andhra Pradesh, Karnataka, Tamil Nadu, Odisha, Maharashtra, Chhattisgarh, Madhya
Pradesh and Rajasthan. It has a clients base that constitutes almost 1.5% of the BPL
(Below poverty line) population of India. Various varieties of loans like general, small
business loans, micro enterprise loans, agriculture family loans, dairy loans, farm
equipment loans are provided to people. These loans are used for various income
generating activities by its clients (Spandana 2012).
response to the poverty of the urban slum women, making out a living in the
unorganised sector such as petty traders, hawkers, crafts women, providing domestic
help, etc. These women were organised on the basis of the locality in which they
were staying. WWF adopted a threefold programme of organising the underprivileged
women into Self-Help Groups to help against their exploitation, facilitating credit to
them from the nationalised banks, and for improvement in health services to them. It
also started undertaking the marketing of the products turned out by the women. In
36
1981, WWF formed a cooperative society so that the savings of members could be
collected, and the needy could be given credit. WWF has extended its activities in
other states such as Karnataka and Orissa (Mishra 2003).
Sambhav is an NGO which has been closely working on the issues of women
empowerment and tribal upliftment among the Sahariya and Adivasi communities in
Ghatigaon sector of Gwalior district in Madhya Pradesh. Over the years Sambhav has
been able to mobilise women and marginalised communities to get together and come
up as a tribal pressure at the village level to demand for services and rights through
advocacy efforts. Sambhav follows the strategy of SHG formation for many of its
livelihood and other programs. The SHG programme of Sambhav is closely
intertwined with its other developmental interventions. Each SHG has 10-20
members. These are required to meet and deposit savings every month. This process is
monitored by the field supervisors. After few months of savings, SHGs are linked to
the banks as per the bank regulations. The banks have their own criteria for sanction of
credit limit to the groups, which include current level of savings, regularity in the
meetings, capability of the SHGs to maintain proper books of accounts and repayment
performance of the group on internal as well as past loans. After the bank linkage, the
bank opens a current account for a period of three years. SHGs lend to their members
with their savings and amount available in their account. Loan disbursal decision rests
with the group members jointly. Repayment schedule is flexible and decided by the
group at the time of disbursement. Interest is charged at a rate of 2% per month on
reducing balance. The loan amount ranges from ` 1,000 to ` 10,000 and in some
37
exceptional cases it is up to ` 15,000. Major reasons for applying for loans are poultry
health, release of mortgaged land and marriage of children etc. (Sambhav 2008).
poor. Across seven of the poorest states in the country, PRADAAN promotes Self
Help Groups, develops locally suitable economic activities, mobilises finances and
introduces systems to improve livelihood of the rural poor and sustain their progress.
PRADAAN collaborates extensively with government agencies, banks, market
institutions, panchayats, other voluntary organisations and research bodies. PRADAN
is one of the pioneers in the promotion of self help groups (SHGs) in India, having
involvement an increasing number of rural families especially women are engaging in
independent livelihood activities. These activities serve as opportunities for
members own experiences SHGs can potentially play key roles through the different
stages of mutual help, financial intermediation, and livelihood planning and social
empowerment. PRADAN is promoting home based micro enterprise such as poultry
rearing, tasar yarn production, vermin composting, mulberry sericulture and
cultivation of oyster mushrooms. PRADAN is operational in seven states viz.
Rajasthan, Bihar, Madhya Pradesh, Orissa, West Bengal, Chattisgarh and Jharkhand.
As of March 2010 PRADAN had worked with 13,049 SHGs across eight states,
representing a total membership of 177,529 rural poor women. These SHGs had
mobilised a total saving of ` 459 million (PRADAN 2011).
38
In 1974 when many textile mills in Ahmadabad closed down, the women causal
-Employed Women's
policies of the SEWA Bank are determined by a Governing Board, which has
representatives from petty traders. As a trade union, SEWA works for the protection
of interest of petty vendors etc. including fighting court cases on their behalf. As a
Bank, it provides them valuable credit. It also helps in improvement of designs of the
traditional craft items of the women, and in the sale of the products. It has several sale
outlets in and out of the city of Ahmadabad. It also has several affiliates in other
States. In India, it has initiated a new culture of the organised and articulate poor
women-artisans, hawkers, petty vendors commanding and demanding attention and
respect.
SEWA has associated itself with the DWCRA (The Development of Women and
Children in Rural Areas) programme sponsored by the Ministry of Rural
Development. Each DWCRA group consists of 15 to 20 women from below poverty
line rural families. The group is given seed capital in the form of a revolving fund of
`25,000 to develop their own, local collective business. By 2009 there were total 181
such groups formed by SEWA with a membership of 2,981 (SEWA 2009).
Like SEWA, Annapurna Mahila Mandal (AMM) was formed in 1975. AMM
organised the women into groups of 35 each and approached the bank for credit under
the Differential Rate of Interest (DRI) Scheme which gave concessional credit @ 4%
p.a. By 1992, 3,034 such groups had been formed with 60,020 members. The
programme has extended to Latur, Osmanabad, Goa and some other places. AMM
39
was registered as a Religious Trust in 1975. It also became a Cooperative Society in
the same year. Apart from factory workers, the women staying in AMM's headquarter
set-up also do catering for company executives. They also sell savories and sweets
and run departmental stores. AMM gives them training on catering, management of
stores, purchases, supplies and cooking recipes. In place of cash to the Annapurnas
(women working in AMM), the AMM organises help in kind, e.g., facilitating gas
connections, pressure cookers, and other utensils at concessional rates (Mishra 2003).
AMM is the pioneer in urban microfinance and works in 200 odd slum pockets of
Mumbai and Pune. As on March 2012 it had disbursed micro-credit to 43,613 urban
poor women (AMM 2013).
The experience of NGOs in the field of microfinance has shown that women from low
income groups have been responsive and genuine borrowers. But there are a number
of problems which are faced by NGOs in handling microfinance. Firstly, fund raising
becomes a major hurdle for them. Secondly, other problems such as inability to
appoint and maintain good staff persist. The government grants are full of red tapes
and bureaucratic obstacles. Even donors have their own agenda, programmes and
priorities (Mishra 2003).
There is a vital need for creation of support for NGOs. The government departments
must review their policies to keep them in tune with the changing needs of the society.
NGOs in India have to overcome their constraints if the Indian microfinance sector
40
has to achieve sustainability in providing economic empowerment to poor women and
if they have to be at par with microfinance in Bangladesh and Indonesia.
2.5 INTERNATIONAL EXPERIENCES IN MICROFINANCE
There is a plethora of writings available on microfinance but the actual penetration
can be felt in some countries only. A country like Bangladesh which is also the origin
of microfinance has achieved great milestones in this sector. Asian countries like
Indonesia and Sri Lanka have also started taking advantage of this concept to
eradicate poverty and create employment. It is also becoming popular in Thailand,
Malaysia, and Philippines and in some African countries like Kenya and Zimbabwe.
In certain Latin American countries like El Salvador, Guatemala and Nicaragua
microfinance has shown considerable promise for helping the poor improve their lives
by increasing their purchasing power and giving them more income. Though it may
not be a panacea for poverty it can definitely reduce the vulnerability of poor people
by preventing them from falling into extreme poverty. In this context the present
section examines the growth and performance of microfinance internationally.
Seibel and Parhusip (2003) discuss the APRACA (Asian and Pacific Regional
Agriculture Credit Association), Indonesia which has been first to implement a pilot
project of linking informal and formal financial institutions. The whole idea was to
create a class of financial self help groups who would act as intermediaries between
micro entrepreneurs and banks. APRACA has been actively involved in upgrading
financial Self-Help Groups of micro entrepreneurs, linking Self-Help Groups and
banks and helping the banks to adept to this new environment. In 1989, 30 bankers,
41
30 private voluntary organisation (PVO) staff and 815 Self Help Group staff were
trained. APRACA is an association of central banks, rural development banks and
rural commercial banks and is one of four Regional Agricultural Credit Associations
(RACA) originally promoted by the United Nations Food and Agriculture
Organisation (FAO) established in 1977, with an emphasis on agricultural credit. It
subsequently broadened its scope towards rural finance. An initiative has been taken
by Bank Indonesia the Central Bank, together with Bank Rakyat Indonesia the
largest commercial bank with a rural mandate, the Bina Swadaya a prominent PVO,
to improve the system of rural finance. After extensive consultations with APRACA
and FAO, they jointly formed a National Task Force, commissioned a study of Self
Help Groups by Gadjah Mada University and worked out a linkage programme. The
purpose of the project was that viable financial services would be made available to
Self Help Groups of micro entrepreneurs and small farmers. This project has proved
to be extremely successful in Indonesia. Loan performance had been excellent. In
terms of utilisation, 98.6 % of the loans were used for income generating micro
enterprise activities, 48.9% for petty trade and small shops, 36.0% for agriculture, live
stock and fisheries and 16.2% for rural crafts and industries by 31st January, 1990.
Robinson (2008) elaborates the role played by Bank Rakyat Indonesia (BRI) in
been the dominant player in the country for twenty years. Its micro-banking system
maintains at least one unit in all sub-districts of Indonesia. All loans have been
financed by savings. Repayment has been consistently high and the micro banking
system has been profitable every year since 1986 including the crisis years of the
42
late 1990s when the country's financial system collapsed. BRI was the first bank in
the world to provide commercial financial services-savings and loans as well as other
products to millions of economically active poor and lower middle- income
households.
The Grameen bank was started in 1976 in Bangladesh to assist the economically
active poor who are excluded from official lending sources. Its repayment on loans
is 98 percent, with some branch offices, reporting 100 percent repayment. The
compulsory nature of savings holds one of the keys to Grameen Bank's success in
mobilising savings. The borrowers from the banks must have a specified amount of
savings. The Group Fund deposited with the bank becomes an important source of
capital for
more than doubled the members and expanded the geographical coverage of the
programme. The Grameen Bank success story clearly brings out the strong positive
relationship between savings mobilisation and micro enterprising programmes
(Otero 2003).
Thekkekara (2007) examines the impact of Grameen Bank Bangladesh by stating that
it improved the situation of both men and women vis-à-vis men and women from non-
borrowers families. Female borrowers had greater decision making power than the
wives of male borrowers. Greater confidence and awareness levels were also
indicated by women borrowers on issues such as whether they cast votes, oral saline
preparation, education of children etc.
43
Otero (2003) also discusses about ACCION International a US private non- profit
development organisation which reaches out the smallest producers and vendors in 12
countries in Latin America. The micro enterprise programmes affiliated to ACCION
provide small loans to women. Many of them are working in food processing, textile
processing and commerce. In 1989 the programmes could reach about 50,000 men
and women in 70 large and small cities and they disbursed approximately US $ 2.5
million a year in loans. The repayment rates are satisfactory. ACCION affiliated
programmes are also operational in Colombia, Honduras and Bolivia. PRODEM,
Bolivia was initiated in 1987 with some 20,000 borrowers. It is also the best example
of a large number of programmes sponsored by ACCION International. PRODEM
charges a rate of interest between 10 to 12 percent per annum above the commercial
rates in Bolivia, has generated savings equivalent to one third of its loan portfolio
solely through a forced deduction on loans and has 99.88 per cent recovery rate. The
programme operates predominantly with five person groups but lends to larger
businesses (loans of upto $ 1000) on an individual basis.
Stemper (2003) undertook a study based on comparative analysis of some banks in
Latin America and the Caribbean. These banks provide small loans to micro
enterprises run by women. The study showed that a small number of banks in
Columbia, Ecuador and Chile are expanding financial services to these enterprises.
This type of activity undertaken by these banks helps to increase the flow of credit to
women enterprises. The common features of the programmes of these banks included
the identification of micro entrepreneurs as clients, the consideration of
microenterprise loans as investment, the allocation of banks funds for this sector and
44
adaptation of modern technology to speed up the facilitation of financial services to
this sector. The institutional mission of these banks is a key in determining their
involvement in the micro-enterprise sector. These banks recognise that certain
segments of the population are excluded from the financial services mainstream. She
concludes that such kind of banking operations are not seen in other Latin American
and Caribbean countries like Costa Rica, The Dominican Republic and Jamaica.
Johnson et al. (2003) undertook a comparative analysis of microfinance progrmmes in
Kenya, the one assisted by the donor and the other operating without the support of
external donors. According to them the latter one known as ASCA model has made
better progress in the field of microfinance. In this model the groups operate as
Accumulating Savings and Credit Associations (ASCAs) and the agencies which
provide management services to these groups are termed as ASCA Management
Agencies (AMAs). The AMAs mobilise women to form groups either working with
existing groups or facilitating new ones. The AMA field officers meet each group
monthly and co-chair the meetings. At each meeting the group pays the AMA a fee
which is set at 1% of the value of the group's Total Revolving Loan Fund (TRLF).
During first three months period the service is given without charge. Other than the
facilitation of the meeting, arbitration of disputes and the keeping of group records,
the AMA has a key role in default management. When a member is in default, the
responsibility is on the AMA to follow up and ensure that the outstanding dues are
recovered. While some AMAs are NGOs, the others are run as sole proprietorships
with owner managers who own the institutions and oversee their running. In addition
to the monthly service fee AMAs charge for the provision of savings books. Before
45
loan losses are taken into account, the fee represents an annual cost of a little over 12
per cent to the group fund, which compares very favourably to the effective rates
charged by the traditional MFIs in Kenya. The effective rates are commonly between
50 and 300 percent above bank base lending rates, which were about 20 percent in
mid 2001. However, despite what would appear to be a relatively modest fee
structure, these ASCA Management Agencies are proving profitable, with one of the
organisations making an Adjusted Return on Assets (AROA) of over 2000 percent in
2000-2001. This high return on assets is of course a function of the very low asset
base and again illustrates the low financial barriers to entry. This model offers an
approach that occupies a middle ground between mainstream MFI operation and self
help group development approaches. The experience of the AMAs in Central Kenya
shows how innovation can be encouraged when donors pull out.
Nava et al. (2009) examine the case study of a savings product called SEED (Save,
Earn, Enjoy Deposits) account launched by Green Bank of Caraga, a small rural bank
in Philippines. The purpose of this special product is to allocate more power in the
hands of the women. This is done explicitly through financial accounts in her name
or through marketing or training which encourages separate assets. The SEED
account requires that clients commit not to withdraw funds that are in the account
until they reach a goal date or amount. After the goal is reached, the SEED client, not
his or her spouse, could withdraw the funds. It was found that such a commitment
product positively impacted both household decision making power for women (i.e.
the house hold is more likely to buy female oriented durables), self perception of
savings behavior as well as actual consumption decisions regarding durable goods.
46
The results showed that such a product positively impacted the decision making of the
females at the household level.
The World Summit for Social Development, held in Copenhagn in March, 1995, also
underlined the importance of improving access to credit for small rural or urban
producers, landless farmers and other people with low or no income, with special
attention to the needs of women and disadvantaged and vulnerable groups. Similar
successful examples are known in Latin America (e.g. Banco Solidario in Bolivia), in
Africa (the Kenya Rural Enterprise Programme). These schemes are characterised by
relatively small loans, a few hundred dollars at most. The repayment period is
relatively short, about a year or so. Women are a major beneficiary of these activities
and the target of the funds primarily includes agriculture, distribution, trading small
craft and processing Industries. The administrative process is generally easy and
Bank of Agriculture and Agricultural Co-operatives. Newcomers such as the
Association for Social Advancement of Bangladesh and the People's Credit Funds of
Vietnam and other institutions such as the Association of Cambodia Local Economic
Development agencies, Buro-Tangail of Bangladesh and Amanah Ikhthiar, Malaysia
are also making good progress. Both the Grameen Bank and the Bangladesh Rural
Advancement Committee offer non-financial, services, such as retail outlet facilities
for products of their clients. In West-Africa micro finance institutions are still in their
infancy. Countries like Bolivia, Ghana, Kenya and Peru are creating laws or special
regulations for this new breed of institutions. World Bank has led the process of
international co-ordination primarily by establishing the Consultative Group to Assist
47
the Poor (CGAP), which brings together a number of western donor countries and
international agencies. CGAP, which comprises 25 members including United
Nations bodies, is a multi-donor effort to address the problems facing micro-
financing. The most important of these are lack of access to information, the
measurement of loan delinquency, setting of interest rates, designing lending
procedures and developing business projects. The objective of CGAP is to foster
good donor practices, including performance standards (Loganathan and Saravanan
2010).
Seibal (2005) discusses the important role played by NGOs in promotion of sound
microfinance institutions. They can spread information and organise training
programmes, such as the one provided by Grameen Bank in Bangladesh. Through
training they can assist small institutions to improve their viability and advance their
legal status, as required. They can also commence financial operations which mainly
includes collection of deposits. But if they are seriously interested in financial
operations, they are required to register as a rural or commercial bank, finance
company or saving and credit co-operative. Banco Sol in Bolivia, Bank Purba Danarta
and numerous other NGO banks in Indonesia and CARD Rural Bank in Philippines
are some of the examples of such NGOs which could successfully achieve this.
2.6 CHALLENGES FACED BY MICROFINANCE
The present section reviews the performance of microfinance and SHGs and also
throws light on the challenges faced by this sector.
48
As stated by Mrudula and
decreasing their financial vulnerability is one of the primary challenges that an MFI
has to face. This can be done by making the borrowers invest in productive activities
like setting up and running their own businesses thus enhancing their income and
bringing prosperity to their households. Despite the impressive growth rate of the
microfinance institutions about 95% of the poor households in the Asian and Pacific
regions have little or no access to formal or informal financial services. These
institutions can effectively help in poverty alleviation if they have a sound policy in
place that combines all essentials of development machine in order to eradicate the
poverty and bring economic prosperity to the poor rural households.
Basu and Shrivastava (2005) discuss the issue of sustainability of SHG bank linkage
programme. According to them the major challenge is that of ensuring that high
quality groups are created and maintained and that concerns over numeric targets of
group creation and linkage do not override attention to group quality and resilience.
Ghate (2007) states that the main challenge facing the sector is identified as the need
to build up long term and healthy relationship with the government and other
stakeholders. He also emphasises on the importance of improving statistics and
information on the sector.
Ramakrishna, Rao and Rao (2010) have evaluated the role of SHGs in poverty
alleviation. SHGs have come up only in the areas where the NGOs have taken the
initiative. Though under the new policy financial institutions can promote the SHGs,
they have for many reasons shown reluctance. While the SHGs as financial
49
intermediaries have the goal of providing easy access to savings and credit for the
gender empowerment. Here, they have raised the question whether SHGs confine
themselves to nearly perform the role of financial intermediaries or should they also
help to attain some of the objectives of NGOs?
Nair (2001) cautions against the use of microfinance, by the government, as a quick
solution to all the problems of poverty in rural and urban areas. She emphasises that
the policy makers must pay attention to the core problems related with poverty such
as infrastructure, land distribution etc. She further mentions that many microfinance
institutions in India are operating without proper license. As these institutions are
handling the savings of the poor who have pooled their meager resources with them it
becomes imperative for the government to supervise these institutions and create
proper norms for their regulation.
On the similar lines Hulme (2003) warns against the belief that microfinance can
serve as cure for poverty. This creates misunderstanding in the minds of supporters of
microfinance who imagine it to be a panacea for all problems of the poor. Such
thinking can be harmful for the society if policy makers start neglecting the other
issues like health care services, universal education programmes, social safety nets
and most importantly effective macroeconomic policies for the poor, in their zeal to
fulfill the microfinance targets. They must not forget that microfinance is a part of
poverty alleviation policies and not the only policy to deal with poverty.
50
The debate on poverty outreach will never end. Most authorities seem to agree,
however, that microfinance generally does not, and probably should not, directly
People who work in microfinance have generally accepted that it is not a panacea for
poverty, and that it does not reach the Dondo 2003).
Microfinance is making a significant contribution to both the savings and borrowings
of the poor in the country. The main use of micro-credit is for direct investment. The
performance of SHG model is exceptional in providing a savings-based mechanism
for internal group credit to meet household needs. This mechanism also serves to
assist access to credit by poor clients who are more likely to need small amounts of
credit for immediate household purposes but appear less creditworthy for larger MFI
loans. While the presence of microfinance has increased the borrowing options for
the poorer clients, it seems not to have significantly affected the terms and conditions
of different informal credit providers. In terms of accessibility, capability to provide
loans to meet borrowers demand willingness to lend without security and flexibility of
repayment schedules, they are still considered valuable by microfinance clients. Most
of the MFIs are not yet ready to offer this kind of flexibility and provide timely and
adequate credit, though many of them do compete on cost. Another reason why micro
finance has not been able to make a significant mark on the local financial landscape
is their relatively low outreach relative to the local population and to overall credit
needs (Verman 2005).
51
Swaminathan (2007) emphasises on the crucial role of banking sector in the provision
of microfinance. Micro-credit has been receiving a significant amount of attention all
over the world, especially in developing countries. It is felt that by providing Micro-
dit sector can be
filled. A majority of such projects are now being controlled by non- government
organisations in the hope that they will be able to overcome the weaknesses in the
banking system. However, while small scale rural credit is necessary, overall credit
policy must be built on strengths of the banking system in India as its mainstay. Banks
have many advantages over private Micro-credit organisations as provider of small
scale loans. They have advantages of scale; the banking system in India has a reach
and spread that NGO controlled Micro-credit cannot begin to match; banks can cross-
subsidise loans; and banks are better able than private micro credit organisations to
offer a wide range of financial services to borrowers.
Vijaya and Kumar (2010) have given certain suggestions to make SHGs more active
in contributing to the rural economy. According to them the banks must provide
proper training for skill and entrepreneurship development. The group members
would be able to diversify into income generating activities, thus proving their credit
absorption capacity. Particularly in rural areas, after formation of the groups women
are empowered socially and economically. Hence, it is the duty of the government to
assist the women in starting SHGs covering all the rural areas in the country.
Anand (2008) took up the case study of MFIs in Andhra Pradesh where they were
criticised for their oppressive behaviour towards clients. He discusses the challenges
52
faced by microfinance institutions. According to him some of the major challenges
are lack of funds, no proper government regulation, higher operating costs, lack of
infrastructure in rural and remote areas. In order to remove such hurdles the MFIs
should seek out funds from alternative sources. The government must have proper
regulatory framework in place to scrutinise the activities of MFIs. Further he suggests
that there should be a mechanism to share information about loans availed by each
client and their actual credit servicing capacity. This would reduce the possibility of
credit trap for the clients.
Nair (2005) discusses the transformation of Indian microfinance sector on the lines of
global trends in this sector. There has been commercialisation of micro finance
observed in India with ICICI being the first private commercial bank to make entry
into the Micro-credit market. On the other hand the public sector commercial banks
continue to rely on NGO-MFIs for their microfinance operations. The banks can use
the experience of NGOs who work at the grass root level and NGOs in turn can
benefit from the good quality governance of banks. If commerialisation of
microfinance industry takes place as can be seen with the entry of ICICI Bank, ABN
Amro Bank, UTI Bank, HDFC Bank, there would be a new model of microfinance
emerging in India. But up scaling in this sector should be viewed with caution as it
could lead to credit discipline failures.
In a study on SHG-Bank Linkage Programme in Rajasthan, Bhatia (2008) has
discussed the threats of disintegration of SHGs. The large-scale disintegration of
SHGs as brought out by the study depicts a potential threat to the SHGs Bank Linkage
53
Programme. In order to ensure sustainability of SHGs, the quality of groups formed is
of prime importance. Group formation needs to be handled in a professional manner
by trained personnel. At the apex level, NABARD should focus on paying increased
attention to the promoters of SHGs. In recent years, when Government agencies have
ventured into group formation in big way, it is very important that their functionaries
are also sensitised about the importance of group quality and sustainability.
The banks should undertake due diligence of the promoting organisations before
releasing the funds. An initial guideline enunciated by NABARD at the time of
launching the Pilot Project stated that the group members should have a feeling of
mutual help and should not have come together only for the sake of getting bank
finance. This is still relevant and should not be lost in the race to achieve the ever-
increasing targets for forming SHGs. SHGs that have been sustainable must be
provided with substantial external loan assistance so that the members could start
income generating activities. The time has come for NABARD to formulate a
suitable policy for matured SHGs. Both banks and the promoting organisations have
to be sensitised about the financial requirements of SHG members after the SHGs
reach a degree of maturity. Such members of mature SHGs who desire to graduate to
higher levels should have access to guidance and finance to enable them to increase
the scale of their operation, either at the individual level or in the group.
While the general practice in the context of the SHG bank linkage programme has
been to promote groups comprising 15 to 20 members, the desirability of having
smaller groups comprising about 10 to 12 members needs to be examined. On the
54
lines of Grameen model smaller groups can be promoted. Such smaller groups would
result in greater group cohesiveness and harmony than is in evidence at present. While
leadership issues were among the major causes for disintegration of SHGs, they were
not of much consequence once the group had stabilised. It was found that more
educated and economically and socially advanced members tended to assume the
leadership roles in SHGs. The same set of two or three persons continued with the
leadership roles within the SHGs. This arrangement had been accepted by the other
group members. Problems in repayment of loans by SHGs were quite widespread.
Since the amounts involved in these loans at the individual level were not of much
significance to the banks, there was a tendency not to take a serious note of
irregularities in the repayment schedules of SHGs. However, as the loans to SHGs
also had a tendency to slip into the irregular mode more often than not, bankers need
to exercise care and caution while dealing with SHGs as they would in case of other
borrowers. Besides conducting personal visit to the SHG and due diligence of the
promoting NGO before sanctioning loans to the SHGs, the post sanction supervision
and monitoring also requires to be carried out seriously.
There exists an imperative need to set up and maintain a systematic life cycle data-
base of all SHGs covered under the SHG Bank Linkage Programme. Although
NABARD does maintain figures relating to SHGs promoted and financed under the
programme still there is a case for individual SHG level data being available at
NABARD at its district level offices. Since the SHG Bank Linkage is a flagship
programme of NABARD, it must possess micro level information relating to the
SHGs covered under the programme. The life cycle of an SHG needs to be studied
55
and understood in detail. The granting of first loan to the SHG should not be viewed
as the culmination of the process of linkage (as happens in many cases) but as the first
step in the progressive maturing of the group. Unfortunately, the reporting system and
the target oriented approach places undue importance to this aspect resulting in
complacence on the part of the promoting agencies as well as the banker. This often
results in the first signs of problems within the group getting ignored. In order to
monitor the progress of the health of SHGs that have been linked to the banking
system, all SHGs may be covered by a rating system based on parameters already
identified by NABARD. Only those SHGs that secure top ratings may be considered
for subsequent doses of funds. A similar rating system may also be made applicable to
the promoting organisations.
The basic aim of the SHG-Bank Linkage Programme was to create livelihoods for the
poor. But it has been observed that this could not be successfully achieved by it.
Governments, donors, policy makers and resource providers need to be aware of the
dynamics involved in these small organisations. Problems in capacity building to
SHGs and its members include poor educational standards, non-availability of
competent, experienced and qualified staff and resource persons, lack of quality
reading materials, lack of community support, non availability of adequate funds etc.
The problems in proportion of micro-enterprises were reported to be mainly related
with entrepreneurship development, skill up-gradation, technology transfer, market
linkages, low level of confidence among women entrepreneurs etc. Thus, it is clear
that both internal and external factors influence the proper functioning of micro
financing of SHGs. With massive expansion, the performance of SHGs also becomes
56
even more critical, especially as many SHGs are being promoted by governments and
banks. Ensuring good performance and sustainability across such a vast number of
small local organisations is a real challenge and will require significant resources for
support and development. Moreover, as specialised micro-financial organisations
grow, whether NGOs, cooperatives or companies, they will require increasing
resources not just for capital but also for organisational and human resource
development to ensure their becoming effective financial and developmental
organisations. Another challenge is that the vast majority of resources are channeled
through public agencies, which can be slow, rule bound and risk averse. Almost no
attempt has been made to build more independent organisations for resourcing and
supporting providers of micro-financial services that must emerge if the sector is
going to massively expand and develop (Planning Commission Report 2012).
Due to the nature of the expansion of banking service in the country and constraints
on banking entities, microfinance and micro financing institutions have gained
immense relevance. The microfinance activities of banks have grown to new heights.
The SHG Bank Linkage Programme initiated by NABARD has helped millions of
Indians in improving their lifestyle and also contribution to the development of the
economy. The Microfinance portfolio would enable commercial banks to diversify
alone would be the right answer to bring marginalised communities into the
mainstream of the national economy. The continuous flow of innovations in designing
new products and services would produce the desired results on a sustainable basis. It
is also suggested that the strong and firm commitment of the top management of the
57
banks to microfinance operations is the essential precondition for sustainability of this
business in any commercial bank (Khandelwal 2007).
ve
efforts for development through Self-Help Groups. SHGs are an attempt to build a
form of informal organisation through a combination of thick trust (personalised)
within peer groups and thin trust (generalised and institutionalised) that exists
between specialised elites (banks, NGOs and other agencies) and the non-elites.
Building this is not always easy. Personalised trust is dependent on good interpersonal
relationships but generalised and institutionalised forms of trust are more complex
and depend on the relationships between the individuals and the organisations with
which the members interact. Therefore, the Self Help Groups promoting agencies
need to keep this factor in consideration to develop trust and confidence among the
members.
NABARD (2008) emphasises on the need of Microfinance institutions for the urban
poor and it also recognises the dearth of microfinance institutions operating in cities.
There are certain reasons of reluctance shown by banks in fulfilling the credit needs of
the urban poor. Urban branches of banks even though having manpower and
technology support are not attuned to SHG lending or microfinance. They are busy
with multiple and diversified activities and generally find no time to cater to the
microfinance segment. Lending opportunities in other sectors discourage them from
attempting the arduous task of micro lending. In view of this NABARD suggests that
58
banks can consider associating with MFIs undertaking urban micro lending as a viable
option and develop suitable models and tailor-made products for this segment.
2.7 SCOPE FOR RESEARCH
A review of literature on microfinance justifies the claim that it has been able to
provide a network which supports and encourages the poor to save and increases their
reliability worth as small borrowers in developing countries, though the questions can
be raised about the sustainability of these programmes. Various studies clearly reflect
that there is a paucity of studies conducted on urban microfinance in India though
there have been stray cases of research on SEWA Bank which has 30 years of
Annapurna Mahila Mandal (AMM) Mumbai. Increasing number of microfinance
institutions (MFIs) have illustrated that even by extending very small loans the poor
people can be helped. Yet, within India microfinance activities in cities remain limited
in contrast with the development of this sector in rural areas. However, if
microfinance is to continue expanding its outreach
then the needs of urban poor must be addressed and constraints in providing micro-
credit to them must be overcome.
2.8 SUMMARY
The review of literature has highlighted the role played by microfinance and SHG
Bank Linkages in the upliftment of the weaker sections. It is noteworthy that each
study is explained in a context. There is a need for the large number of studies at the
micro level especially in the urban areas. In this background, the present study is
59
undertaken to examine and evaluate the role of microfinance and the role of SHGs in
the urban context. Urban clients are more likely to come from various parts of the
country and social groups, possibly impacting the quality of social networks formed
within self-help groups as well as restricting the ability of an MFI to gather
information on clients. Other difficulties in catering to the urban space include a lack
of requisite documentation, irregular incomes and migration among workers, to and
from rural areas. This makes the situation for an MFI operating in urban areas
different from its counterpart in rural areas. For an MFI seeking to catalyse
challenges is essential to delivering financial services to this market. It is in this
context the present study aims to understand the working of microfinance and SHG
Bank Linkage Programme in the city of Mumbai.