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Formation and Management of Shg and Micro Credit Organizations Essay Sample

Formation and Management of Shg and Micro Credit Organizations Pages
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Savings & Credit Concept:
Savings and credit are inter related. It is proposed in a society for the significant development of the society. This both activities are much important to a SHG to bring economical changes in the lives of the people. Activities:

* Income generation
* Gainful employment
* Inculcation of saving habits
* Enhancement of social changes
* Ownership
Savings:
* A compulsory saving must be fixed for the development of the group
* Voluntary saving must be encouraged
* The saving contribution should be in the form of cash
* Nobody should allow withdrawing his/her money before the set date
* Receipt should be issued at every transaction
* All collection should be made during the meeting itself
* Saving should be deposited in the bank by the accountant
* Individual pass books should be issued to each member
* the pass books should be entered at every meeting after the collection is made

Credit:
With the mobilization of saving collected from the members for a period of month as fixed by the group, the saving and credit committee of the group should fulfil the needs of the members by disbursing small loans on an experimental basis to observe proper usage of the loan and whether members are prompt in loan repayment Credit function:

* SHG normally offer the small short-term loans
* Internal lending must be commenced
* Group must have system of priorities and purpose based loans
* Overall credit needs evaluation
* Loans are to be disbursed in the presence of all members
* Group must have the proper monitor till the end of the credit

Repayment:
* Repayment dates should be strictly adhered
* In order to increase the volume of the group certain fund must be collected from the members * Based on the nature of the loans the repayment date should be set * Fines should be charged to the member who violate the repayment scheduled * If any member wants to repay the loan accordingly the interest must be collected * Repayment should be made only by cash

Banking relationship:
* Try to open A/C in your area branch
* Regular saving will make good relation with the bank
* Terms and conditions should be liable to the member
* Banks must be encouraged to open account even wit out the photographs of the documents Opening of a saving bank account:
* The account should be opened after the first meeting
* Account can be opened in the name of SHG
* Minimum instalment for saving can be as low as possible Rules and regulations of credit management related:
1. The credit can be given to the needy members at the group for the purpose such as consumption, income generation asset creation 2. The credit shall be given to the needy members of the group only after careful study 3. The borrower should give a written agreement to the group to receive loan 4. The loan amount should be utilized for the agreed purpose only 5. The borrower should repay the credit /loan amount with the service charge 6. The members those who are irregular to the SHG will not be eligible to receive the loan 7. All members shall have equal opportunity to receive the loan 8. The group can receive donation for the development of SHG Records keeping:

* Admission register
* Attendance register
* Minutes book
* Individual pass book
* Receipt and payment voucher

Expected period of repayment:

APPLICANT’S SIGNATURE: DATE:

To be filled by the group representative:

1. Sanctioned / deferred / rejected :
2. Amount Sanctioned :
3. Repayment Period :

SIGNATURE OF THE SECRETARY : DATE:

SIGNATUREE OF THE TREASURER : DATE:

DISBURSEMENT PROCEDURE

* A register / ledger to record all assistance approved
* An authorization to release funds in terms of sanction
* Actual payment (cash or cheque)
* Loan ledger (containing individual accounts)
* Regular posting and balancing
* Loan ledger (containing individual account)
* Regular posting and balancing

DIFFERENT KINDS OF TRAINING TO THE SHG:
The main aim of these programmes is to build capacity of poor and disadvantaged women and ensure their socio economic empowerment. Capacity building: The main objective of this training is to capacitate the SHG members and to inculcate the fundamentals of the SHG concept through systematic modular training. All the members are imparted this basic training. The training consists of four modules and includes topics such as SHG concept, Ward Level Federation, Credit Rating & Linkage and soft skills Representative training:

The objective of this training is to enhance the capacity of the SHG leaders through modular training in leadership, team building and maintenance of accounts. The animator and the representative from all SHG are the beneficiaries of this training. Enterprise development training for SHG women:

This kind of training is given to the women those who are interested in taking up economic activities, particularly to the women those who are interested in going for the business purpose in the urban setting Ward Level Federation: (WLF)

Ward level federation is known as the networking of organizations. The number of women self help group that emerge function from a same ward under one umbrella to be called as ward level federation. WLF Executive member training:

To make the WLF functioning more participatory and democratic, an executive committee will be constituted to manage the WLF. The members and the executive will be elected from various groups itself.

REVIEW AND MONITORING -24-09-12- Reg- BSW
All the credits which are extended to the members must be closely and properly monitored. These kinds of monitoring helps to the group in these ways * Regular review of credit which is received and payed back * Regular report in credit extended, returned, and outstanding * Analysis on the credit made and find out outstanding amount and find out the remedial measures

AUDIT

Auditing is a specialised function having complex legal, economical and ethical implications; the auditors examine and report on the economic information relating to organization.

There two kinds of auditing:

* Internal auditing
* External auditing

Internal auditing is to assess and to evaluate the economical position of the organization. It takes place within the organization. The higher authorities who are in the governing body may evaluate at any time the reports which is maintained on account External auditing is known as in depended staff assigned by the auditing committee to asses and to evaluate financial state of the organization Objectives of Auditing:

* To identify the financial position of the organization * To detect the frauds and the errors in the financial position

How to find out the errors:

Step – 1 check the total balance which has difference
Step – 2 check the balance is recorded in the right book or in the wrong book Step – 3 check the transposition of the figures represents right or wrong (780/870) Step – 4 check all the transactions made including bank balance is recorded or not Step – 5 ensure that all the transaction made is recorded in the correct year book or not Step – 6 if the amount is large check with the previous year books and month books Step – 7 if the error is not detected by the above steps check with the records starting from that year or that month.

FEDERATION:

What is Federation?

Federation is a term which simply means the network of organizations. A number of Women Self Help Groups SHG that emerge and function from a same ward can be formed under one umbrella to be called as a federation. The purpose of the federation is to integrate the power of the mass to feel their strength and empowerment with the activities of self actualization and to strengthen their social, economical and political development in their own life as well in the social life.

Objectives of Federations:

1. To enhance the political leadership empowerment of women. 2. To equip them to advocate and to lobby for their denied and violated rights 3. To question and to improve the existing systems and services. 4. To strengthen the existing self help groups

5. To promote women political leaders (especially the marginalized and excluded section of the society)
6. To extend the socio-economic support systems.
7. To address the social issues
8. To promote gender sensitization.
9. To mobilize resources for the federation activities and for the community development. 10. To facilitate the economic development activities.

What is federation? – Meaning – Federation is a network of organization – how?

Federation is a network of organizations. When we mean federation is a network of organization it is a combination of all the above mentioned organizations.

Let’s try to understand the concept in a very simple manner. Self help groups (CBO) are from the local geographical area and have homogeneity in membership. Thus they became a CBO.

Federations revolve around a strategy – it has a political agenda behind it and thus it becomes a people’s organization. Federations become a voluntary organization as they are intended not only to help the local community but also to help the needy irrespective of any caste, color, race etc. Though federation members are not voluntary rather selected for the representation by their own group members, we can call the federations as the voluntary organization based on the reason.

“It volunteers to help the community in any of the issues – may it be in social or economic or political or health issues not only in their own community but also in the outside community.”

PRINCIPLE OF FEDERATIONS

1. Principle of unity

* Unity is the key concept to be reinforced in federation * People should realize the importance of collective power

2. Principle of net working
Principle of federation basically net work of organization. The concept of net working plays a significant role as it help in sharing of knowledge and skills of various knowledge sources. A cordial relationship should be established among the organizations.

3. Principle of communication

* Good communication is an important tool to disseminate knowledge and to understand the need of the people * Proper and genuine communication should be maintained * Open communication is preferred among the organization

4. Principle of shared responsibilities

* Ensure that roles and responsibilities are equally shared among the members * Role clarity very much important and role should be defined properly * Do not give multiple roles as they will result in role ambiguity * Allotment of role should be based on the interest and the skills of the individuals

5. Principle of advocacy

Advocacy is one of the important roles played the federation. it acts like advocate and suggest some policies and views to government and policies makers. This is what expected federation to stand up for the issues and act legally towards the solution.

6. Principle of flexibility

This flexibility refers to the approaching attitude of the organization. Both federation and the NGO facilitating them should be flexible enough to act according to the needs and emergency situation.

7. Principle of mutual understanding

The organization should understand the federations better and in turn the federations also should understand the organization. The mutual
understanding helps them for better communication and to maintain cordial relationship.

8. Principle of transparency

It is the most important principle that any organization should maintain to reflect it’s genuine. Transparency of any organization brings a good opinion amidst the people and in the same way federation should also maintain the transparency so that the works and the accounts are known to everyone by which the organization gains the trust of the people.

Scope of the federation:

* It is the way for empowering women in social, economical and political aspect * The women who are member of the federation develop their knowledge on various trends in the world * The self esteem and the analytical capacity of the women is strengthened * The problem of the society is identified and solved in boarder way * Utilization of local resources for societies development * Federation is the base and platform for the emergence of women leaders including political * An effective activity carried out in order to strengthen the existing service system of the society.

Benefits of the federation:
* The social and economical status of women in the society is increased
* Women are involved in the political leadership activities
* Enhanced the personality of the women
* By having the tie up with the other business centres, the women group are helped for easy market
* The federation takes effort to link the resources appropriately
* The community or the society is getting developed because of its various activities

The procedure to organize the federation meeting

* Welcome address
* Attendance registration
* Summarizing the previous meetings minutes report
* Session to share the current information about the society
* Collection of subscription
* Getting the signature of the members who attended the meeting
* Thanks giving
* National anthem

WLF –World Level Federation
NLF -National Level Federation
PLF – Province Level Federation
DLF – District Level Federation
CLF – Constituency Level Federation
WLF – Ward Level Federation
The eligibility of the member on the federation:
* Any SGHs can become the member of the federation
* The group should have completed 6 months after having opened a bank saving account on the group name * The SHGs who like to become the member of the federation ought to abide by the rules and regulation of the federation

Roles and Responsibilities of the federation:
1. President

* Organizing the meeting
* Fulfil the pros and corns of the federation
* Exchange of communication
* Should have a good qualities of the leader
* Monitor the subcommittees and their works
* Give guidance to proper plan
* Make the members to follow the rules and regulations
* Maintain the records
* Involve in social action
* Invite the guest for meeting
* Responsible for all the activities
* Implementing the rules and regulations of the federation

2. Vice president

* Joining hand in hand with the president in all the activities
* In the absence of the president he has to take the responsibility of the president

3. Secretary

* Record all the activities
* Responsible for all the activities and for the management of the office
* Maintain the records and the files
* Joining hand in hand with the president in all the activities

4. Vice secretary

* Joining hand with secretary in all the activities
* In the absence of the secretary take the responsibilities of the secretary

5. Treasurer

* Maintain the records of financial transactions
* Informing the members about the status of the finance
* Make arrangement for auditing
* Be helpful to prepare the action plan report
* Play important role in maintain the bank account
* Responsible for all the activities related to finance

6. Counsellors and executive members

* They should function as pillars of the moment
* They should implement all the items of the action plan
* They should participate in all the meeting and lead the organization in an good way
* They are the responsible for submitting the monthly report of the sub – committee at the monthly federation meeting

7. Federation members

* All federation members should participate in the discussion in the meeting and be supportive * All members should support to execute the planed activities of the federation with full involvement * The federation members can avail the support from the SHG members * They are the responsible for representation of the SHG to the federation

Various sub committees:
* Educational committee
* Health committee
* Social welfare committee
* Economical committee
* Women development committee
* Management committee

WARD LEVEL FEDERATION (WLF)
* Two members from each SHG will participate in WLF
* There will be president, vice president, secretary, vice secretary, treasurer and 10 counsellors. They are elected voluntarily and by election. * The WLF meeting will take place once in the month

* There should be sub Committees like, Education, Child development, Health, Social Welfare, Economic, Women Development, and Management Committee. * In each Ward one WLF office should be established

* Bank account should be opened in the name of the federation * Each members should pay the entry fee prescribed by the federation which range from K5000 to K25000 to become the member

CONSTITUENCY LEVELFEDERATION (CLF)

* Two members from each WLF will participate in CLF
* There will be president, vice president, secretary, vice secretary, treasurer and 10 counsellors. They are elected voluntarily and by election. * The CLF meeting will take place once in the month

* There should be sub Committees like, Education, Child development, Health, Social Welfare, Economic, Women Development, and Management Committee. * In each Ward one CLF office should be established

* Bank account should be opened in the name of the federation * Each members should pay the entry fee prescribed by the federation which range from K5000 to K20000 to become the member

DISTRICT LEVEL FEDERATION (DLF)

* Five elected members from each CLF will participate in DLF * There will be president, vice president, secretary, vice secretary, treasurer and 10 counsellors. They are elected voluntarily and by election. * The DLF meeting will take place once in the month

* There should be sub Committees like, Education, Child development, Health, Social Welfare, Economic, Women Development, and Management Committee. * In each Ward one DLF office should be established

* Bank account should be opened in the name of the federation * Each CLF should pay (K 2500) per WLF to DLF and every month each CLF should pay the subscription which range from K25000 to K100000 to become the member

PROVINCE LEVEL FEDERATION (PLF)

* Five elected members from each DLF will participate in PLF * There will be president, vice president, secretary, vice secretary, treasurer and 10 counsellors. They are elected voluntarily and by election. * The DLF meeting will take place once in the month

* There should be sub Committees like, Education, Child development, Health, Social Welfare, Economic, Women Development, and Management Committee. * T he DLF should pay K20000 per CLF to PLF

* Every month each DLF should pay the subscription which range from K 100000 to K 300000

NATIONAL LEVEL FEDERATION (PLF)

* Five elected members from each PLF will participate in NLF * There will be president, vice president, secretary, vice secretary, treasurer and 10 counsellors. They are elected voluntarily and by election. * The DLF meeting will take place once in the month

* There should be sub Committees like, Education, Child development, Health, Social Welfare, Economic, Women Development, and Management Committee. * T he PLF should pay K20000 per DLF to NLF

* Every month each PLF should pay the subscription which range from K 100000 to K 300000

WORLD LEVEL FEDERATION (WLF)

* Two elected members from each NLF will participate in WLF * There will be president, vice president, secretary, vice secretary, treasurer and 10 counsellors. They are elected voluntarily and by election. * The WLF meeting will take place once in the month

* There should be sub Committees like, Education, Child development, Health, Social Welfare, Economic, Women Development, and Management Committee. * T he NLF should pay K200000 per PLF to WLF

* Every month each DLF should pay the subscription which range from K 200000 To K 500000

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