Savings and Credit
What is the impact of NGOs’ Savings & Credit activities ?

In the international discussion on Microfinance, there is a strong tendency to emphasise the importance of reaching the poor people efficiently, effectively and in a sustainable manner. NGOs play an important role in this context; but there is a discussion as to whether specialized institutions are the key to provide financial services to poor people on a large scale. It is often recommended to separate the financial services from non-financial services. Some development orientated NGOs, however, traditionally provide comprehensive services themselves to self-help organisations (SHGs); meanwhile there are other Indian NGOs that assist and encourage the SHGs to establish linkages with the nationalised banks and with government programmes in order to get loans.

Recent understanding and concern of Microfinance programmes is that providing financial services is just one aspect of the programme. To contribute successfully to a real empowerment of deprived population, especially the women, a comprehensive programme for economic, social and political empowerment is to be planned. The social performance has to be continuously monitored and the project management should be oriented to maximise the positive outcomes and impact on all these aspects. Participatory impact monitoring and self assessment are thus gaining importance for internal learning and steering in order to ensure that Savings and Credit services achieve the expected goals. The management of social performance, such as building sustainable institutions, reaching the target group and ensuring that the intended impact (and not the opposite) are, hence, the central challenges of Microfinance practitioners.

Beside the experience of the partner organizations, NGO-IDEAs will internalise lessons from the experience from across the world with the evidence in India in order to identify and to improve the NGOs’ performance in Savings & Credit programmes. These will be done to make sure that they serve and suit the conditions of NGO work in Southern India.