Project Id :In 141

Introduction:

Terre des Hommes- Netherlands has been working in India for over two decades. The vision of TdH-NL is ‘to ensure that all children have dignity and worth as human beings’ and concentrates in three sectors namely education, health and socio-economic development to fulfill the vision. In pursuit of economic development of disadvantaged households to sustain the rights of children, TdH-NL has now chosen the microfinance approach among others for intervention. Microfinance consists of mobilization of small savings, and provision of small credit to those who could not access mainstream financial institutions, and therefore had no choice but to get entrapped in the vicious cycle of informal money lending system.

TdH-NL believes that though microfinance is a good development tool, the real ‘development utility’ of the approach depends on how well it is integrated with certain non-financial (other than credit/savings/insurance) services. The approach is also not completely new for us as the partner NGOs are already involved in promoting SHGs of women, initiating micro savings, and bank linkages.

In order to take up socio-economic development and to support the project partners, TdH-NL has proposed to promote an independent Micro Finance Organization (MFO) as a non-profit company namely “Netherlands India Cooperation (NELINDCO)” Foundation. It is to be registered under section 25 of Companies Act, 1956.

Objectives:

The proposed company has multiple objectives including microfinance. The niche of the company is to provide techno-managerial services to the community to improve their earning capacity through income generation activities and some micro-enterprises. The specific objects of the company would be:

• Provision of micro finance (micro credit and insurance) services, at reasonable rates, to the disadvantaged sections (poor, women, children etc.) through partners at initial stage and with local societies, trusts and companies having similar objectives later.
  
  
• Promoting and building the capacity of community organizations such as SHGs, youth clubs etc. for enabling their social and economic development.
  
  
• Promotion of micro enterprises and income generating programmes for the disadvantaged, and provision of techno-managerial, marketing and other relevant services to those activities.
  
  
• Building the capacity of partner organizations in delivery of various services related to the other objectives.

Services of the company:

• The company would lend directly to the SHGs of partner NGOs, and not to individual members. Lending to groups has been found to effect better repayment because of peer pressure within the group.
• The SHG members those who are extremely poor, dalit, disabled, and disadvantaged occupations having children under or prone to disadvantaged living or those who are not accessible to such credit services would be given access to financial services of the company.
• The project partners have to guarantee or secure the loans provided to their groups through producing collaterals to the company.
• The responsibility of project partners is to receive loan applications from SHGs, submit to NELINDCO and to ensure repayment. The responsibility of the company is to provide and monitor credit, and guide partner NGOs through capacity building and techno-managerial support to micro enterprises.
• NELINDCO envisaged to fix an effective interest rate to the end user at 20 percent on a declining balance basis on monthly rest for the loans provided and will share the interest income with the the project partners to cover the administrative costs.

Capacity Building of partners:

Capacity building of project partners has been found vital because of introduction of new microfinance operations through NELINDCO.  There should be good governance, regular meetings and savings, good book keeping system, good repayment rates, and positive and progressive attitudes in the groups. The groups will be graded before linking to the company. Therefore, the partners would be oriented about various quality parameters and building them in their groups for outreach, impact and sustainability. Initially this will be taken care of by MEC from its own budget and the second year onwards the partner NGOs need to bear the cost of training.

Financial Products:  

The varieties of loan are not defined in very rigid terms like one size fits all. The terms are also defined broadly so that there is flexibility in deciding the specific terms according to the members’ ability and need. In the first phase, the company would start with 8 varieties of loan products as mentioned in the following table:

Recently, a short documentary film by the name, "We are admistrators too.." has also been done with the successful trades by the self help groups who have got loan from NELINDCO Foundation which was released during the regional project partners workshop held in Goa on 7th July 2010.

To know further details about NELINDCO and its activities email to: nelindco@gmail.com