Streenidhi – Society for Elimination of Rural Poverty, Andhra Pradesh

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Providing Livelihood Finance to SHG Women

Problem

• Unethical, uneconomical, high-interest rates are being charged by MFIs.
• Coercive/inhumane methods of recovery.
• Multiple private MFIs lending to the same poor people lead to the debt trap.
• The vacuum created as a result of the exit of MFIs- lead funds crunch for the poor SHG members.
• Creation of database.

Solution

• Delivering credit to the SHG members within 48 hours through the use of technology.
• Leveraging funds from the financial institution and public sector banks under priority sector lending.
• Simple loan procedure, credit delivery at their doorstep and acceptable recovery methods.
• Providing thrust to financing livelihoods activities of SHG members.
• Helping the staff and creating gainful employment for the community as they participate in managing the operations.

Outcomes

• Improved the living standards of poor communities in Andhra Pradesh.
• Emerged as a low-cost and self-sustainable model.
• Benefitting 38.79 lakh SHG women through 5.90 lakh SHGs.
• Enabling timely and low-cost delivery of credit to SHGs.
• Reaching the unreached areas with modifications in the operating model.

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Case Study

Providing Livelihood Finance to SHG Women

Introduction

Streenidhi was started by the Department of Rural Development, Government of Andhra Pradesh to extend credit support to SHGs to prevent high-cost loans from other sources, and the cost of loans was significantly reduced.

Problems

Unethical, uneconomical, high-interest rates were being charged by Microfinance Institutions (MFIs). Also, coercive and inhumane methods of recovery were used. Again, poor people fell into a debt trap as a result of multiple private MFIs lending to the same groups of people.

Solutions

Leveraging funds from the financial institutions and public sector banks under priority sector lending to SHGs. Likewise, meeting the credit needs of the poor through simple loan procedures and credit delivery. Also, automating the entire operations like loan requests, repayments, etc.

Outcomes

This initiative has improved the living standards of poor communities in Andhra Pradesh. It has also emerged as a low-cost and self-sustainable model. It is estimated that this initiative will benefit 38.79 lakh women through 5.90 lakh SHGs.

Challenges

The outreach of StreeNidhi is only 39% and hence working on increasing the outreach is indeed a challenge. Again, educating the SHG women on using technology and data integration are two other challenges faced while introducing this initiative.

Innovation

Using IVRS technology, Web application, and Mobile application with biometrics are some of the innovative aspects of this initiative.

Opportunities

There is a high scope for the velocity of funds and coverage of more members. Also, the Stree Nidhi business model can be replicated across the country given its customer-centric features – low-cost credit delivery, adequate amount of credit, etc.

Summary

Streenidhi was started by the Department of Rural Development, Government of Andhra Pradesh to extend credit support to SHGs to prevent high-cost loans from other sources, and the cost of loans were significantly reduced.  This programme shows how technology may be used to keep operational costs to a minimum, allowing it to price loan products at lower rates than those under SHG-Bank linkage.

For more information, please contact:
Mr SIDDI SRINIVAS, Deputy General Manager at dgm.admin@streenidhi.com

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