8/7/2019 Increasing intervention of Private sector SHG-NGO-MFI1

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Increasing intervention of Private sector in Livestock farming throughlinkages with SHGs-NGOs

D.Thirunavuukarasu, P.Thilakar and B.Mohan

Krishi Vigyan Kendra, Namakkal.

ABSTRACT

In the context of globalization the Concept of Self Help Groups (SHGs),

Micro enterprises and Micro finanancial institutions (MFIs) are beingpromoted as one of the remedies to alleviate poverty; promotion of equityand empowerment of unprivileged sections. Initially developmentalagencies were in the forefront of promoting the concept of Self HelpGroups. Currently there is increased interest of private financial institutionsand Multi nationals. The untapped financial service market in rural hasbeen attracting financial institutions including foreign financial investors. Tillto date the majority of the rural community depend upon money lenders fortheir financial needs. Organized finance sector (Public and Private banks)has poor reach with the rural community. In order to over come the issue

organized sector needed an ideal partnership. For these NGOs wasenwrapped as partner which has better reach with the rural community.The linkage with NGOs and mobilization of rural people as SHGsfacilitated externalization of some of the credit activities, supervision andrepayment of borrowers, reduced transaction cost and increased margins.In addition prompt repayment, mobilization of savings and expansion ofbusiness was resulted. This resulted in increased penetration of organizedbanking sector into unorganized markets. In recent years thecollectiveness of SHGs and their linkages with NGOs, financial institutionsare being tapped by other sectors too. Livestock is one of the major micro

enterprise activities being carried out by SHG members. More than 40 %of micro finance portfolio goes for dairying. Linking of corporate housesengaged in dairy sector with NGOs / MFI /SHGs are in pipeline. GodrejAgrovet, cattle feed company linked with Spandana, an NGO cum MFI.The feed company sells its feeds on credit basis through the MFI. AnotherMFI namely Basix, acts as franchise for selling livestock micro insurancepolicies of Royal Sundaram alliance general insurance company. TheNGO Pradhan in Uttar Pradesh has formed 67 goat rearing SHGs /Commodity Interest Groups (CIGs). These groups are facilitated withforward and backward linkages. Private bank ICICI has established Centrefor Microfinance at Chennai. One of its mandates is to focus research onformation of strong network of potential partners in dairy sector involvingMFIs. These all shows gradual increase of corporate role in livestocksector through SHGs. These kinds of linkage are sure to create newmarkets for the financial institutions and other private companies engagedin the sector. This will facilitate corporate business penetration at bottom ofpyramid and reap huge returns. Similarly new extension policy advocatesgroup formation and linking them to agro-retail industries. In Livestocksector these kinds of events are less but over a span of time likely to bepredominant.