Group 3

INTRODUCTION

Microfinance, the name suggests, it plans to cater to the financial need of the
smallest strata (low-income group) of the society. The smallest category of the
society like rural women, peasants, workers and other such small people who
have no capacity to visit the banks for loan application in connection with their
occupations. The microfinance industry has achieved an unprecedented growth
over the last two decades.
Therefore, Microfinance Services Regulation Bill has been introduced for the
purpose of financial assistance to be provided to an eligible individual directly or
by a group mechanism for certain purpose to be achieved by the
borrowers(members).
There are various types of microfinance institutions/organizations operating in
India. Mainly they are like Joint Liability Group (JLG), Self Help Group (SHG), the
Grameen Bank Model and Rural Cooperatives etc. Having main aim of financial
inclusion of smallest person of the society.

NEED & PURPOSE

1.Financial Services
Micro finance acts as a supplement to the services offered by the bank. It provides
financial services to the rural poor people such as micro credit ,savings and
insurance product. Apart from financial it also provides non financial services such
as training, counselling/guiding and supporting the borrowers.
2.Empowering women
It act as a tool for the empowerment of poor women as women are becoming
independent, they are able to contribute directly to the well beings of their families
and are able to confront all the gender inequalities.
Examples such as , Bandhan Microfinance, SHG bank linkage programme, SEWA.
3.Employment
Micro finance provides employment opportunities to the rural people by providing
them micro credit. The main aim of microfinance is to remove poverty in rural areas
by generating income activities among women and poor.
4.Helping the poor
The goal of microfinance is to ultimately give impoverished people an opportunity to
become self-sufficient. Microfinance institutions seek to be the bankers of the poor.
5.Economic development tool
Microfinance is not just about giving micro credit to the poor rather it is an economic
development tool whose objective is to assist poor to work their way out of poverty.
OBJECTIVES
1. To promote the socio-economic development among unbanked families
People who comes from other states to work in Maharashtra don’t have a place to
live. As these people don’t have perfect address to stay due to which their bank
account cannot be created and thus are called as unbanked people. Micro Finance
promotes the socio economic development among unbanked people by providing
them loans for their growth and development as no bank offers them credit.
2.To support/strengthen the SHG & use them for economic development of the
country
Micro finance support the shg by providing them micro credit or by guiding them in
the right direction to achieve their goals and objectives.
3.To support & promote startups & women enterprenuership across the nation
Classic example for this is the case study of Lijjat pappad that will be discussed in
the further module.
4.Provision of diversified affordable & financial services to the poor
It is an economic tool designed to promote financial inclusion which enables the poor
and low-income households to come out of poverty, increase their income levels and
improve overall living standards.
5.Creation of employment opportunities in rural India
Microfinance has the positive impact on the standard of living of the poor people and
on their life style. It has not only helped the poor people to come over the poverty
line, but has also helped them to empower themselves.

Key terms:
financial inclusion:
Financial inclusion refers to efforts to make financial products and services
accessible and affordable to all individuals and businesses, regardless of their
personal net worth or company size.
Financial Inclusion is described as the method of offering banking and financial
solutions and services to every individual in the society without any form of
discrimination.
The concept of financial inclusion was first introduced in India in 2005 by the
Reserve Bank of India.
Financial inclusion is an effort to make every day financial services available to
more of the world's population at a reasonable cost.
Financial inclusion is a major step towards inclusive growth. It helps in the overall
economic development of the underprivileged population. In India, effective
financial inclusion is needed for the uplift of the poor and disadvantaged people
by providing them with the modified financial products and services.
there are several financial inclusion schemes in India — Jeevan Suraksha
Bandhan Yojana, Pradhan Mantri Vaya Vandana Yojana, Pradhan Mantri Mudra
Yojana, Stand Up India scheme, Venture Capital Fund for Scheduled Castes
under the social-sector initiatives, Pradhan Mantri Suraksha Bima Yojana
(PMSBY), Atal Pension Yojana (APY), Varishtha Pension Bima Yojana (VPBY),
Credit Enhancement Guarantee Scheme (CEGS) for scheduled castes, and
Sukanya Samriddhi Yojana.
Financial inclusion enhances the financial system of the country
comprehensively. It strengthens the availability of economic resources.

Financial Exclusion:
Financial exclusion refers to individuals and populations without access to
common financial services. These can include savings accounts, loans, cashless
transactions, credit, and other traditional banking services.
Financial exclusion describes the situation of people who cannot or do not access
and use appropriate financial products and services.
Financial exclusion is a difficulty that millions of people face every day. In the
absence of financial resources, low-income individuals confront hardships
progressing towards living a healthier, more sustainable and better life.
Financial exclusion is closely associated with poverty and social exclusion and
imposes significant costs on individuals. It often means paying more for basic
financial transactions. For example, those without bank accounts incur fees, often
of 10 per cent or more, for cashing cheques. Some services, such as contract
mobile phones, are not available at all to those without bank accounts.

Unbanked:
Unbanked refers to adults who do not use or do not have access to any
traditional financial services including savings accounts, credit cards, or personal
checks.
Unbanked persons also generally do not have a subscription to other investment
products, such as insurance, pensions, or any other type of professional financial
services. Unbanked individuals have the advantage of alternative financial
services, such as check-cashing and payday lending if such services are
available to them.
Extremely poor individuals may also have no need for the banking system as
they try to survive their day-to-day lives, and they may indeed find that they are
unable to maintain minimum balances, afford account fees, or arrange for
transportation to and from bank branches during banking hours.

SHGs:
Self-Help Groups (SHGs) are informal associations of people who choose to
come together to find ways to improve their living conditions. It can be defined as
self-governed, peer-controlled information group of people with similar socio-
economic background and having a desire to collectively perform common
purpose.
In SHG (Self Help Groups), NABARD provides refinance facility to banks for
providing loans to small and marginal farmers.
Self Help Groups have the potential to bring together the formal banking structure
and the rural poor for mutual benefit.
Banks should provide adequate incentives to their branches in financing the Self
Help Groups (SHGs) and establish linkages with them, making the procedures
simple and easy. The group dynamics of working of the SHGs need neither be
regulated nor formal structures imposed or insisted upon. The approach to
financing of SHGs should be totally hassle-free and may also include
consumption expenditures.

JLGs:
With an aim to provide institutional loans to small farmers NABARD came up with
the concept of Joint Liability Groups (JLG).
A Joint Liability Group is usually a group of five to ten who come together to
borrow from microfinance institutions. The members in a JLG are also from
similar socio-economic backgrounds and usually the same village.
JLG can be formed by Business Facilitators, NGOs, Farmers Clubs, Farmers
Associations, Panchayat Raj Institutions (PRIs), KrishiVikasKendras (KVKs),
State Agriculture Universities (SAUs), Agriculture Technology Management
Agency (ATMA), Bank branches, PACS, other cooperatives, Govt. Depts.,
Producer Associations , Artisan
 Guilds, Department of SMEs, Small Scale industries / Agro
industries, Individuals, Input dealers, and Document writers (in
cooperative banks),MFIs .

SKS MICRO FINANCE

Vikram Akula, the ousted founder of SKS Microfinance, had named the company
Swayam Krishi Sangham or SKS, meaning self-help group
SKS Microfinance Limited is a Hyderabad based company that was founded in
1998 as a Non-Bank Finance organization licensed by the Reserve Bank of India.
Vikram Akula was the founder and until November 23, 2011, he was the
Executive Chairman of the company. SKS was incorporated in 2003 and is the
largest Micro Finance Institutions in India based on its outstanding loan volume,
member base (they call their borrowers as ‘members’) and the number of
branches operating in the country.

The products of SKS Microfinance include life insurance and an array of financial
loans. It offers loans for Income Generation; Mid- and Long-term Loans. Income-
generating loans are provided for purchasing products like solar lights, cook-
stoves, water purifiers, bicycles, mobile phones and sewing machines. SKS
issues loans secured on gold jewellery. The social benefits of financial services
and products by SKS include: Creating Self-employment for women by giving
them financial assistance and supporting their business. These businesses
include raising livestock, tailoring, running local provision shops and so on.

BANDHAN FINANCIAL SERVICES

Bandhan Financial Services helps poor communities to establish small

businesses in the society. The beneficiaries include fishermen, artisans, farmers,
small entrepreneurs, deprived communities etc.
Getting access to credit, sometimes, becomes difficult even for a salaried or self-
employed professional. Imagine, how would a poor un-employed individual get a
loan amidst enormous banking formalities? A large segment of people who live
under poverty find it hard to get finance from established lending institutions. As
the country aim for an inclusive growth at all sectors, the provision of micro credit
is certainly a powerful tool that will bring financial inclusion.
Advantages and Features of Bandhan Financial Services
 To empower poor women and their livelihood
To improve the living conditions of the marginalised people
To fund the small and micro business entrepreneurs
Loan for low-cost house building
To generate regular income for the downtrodden
To help poor communities to become self-supportive

GRAMEEN MODEL
The Grameen model emerged from the poor-focussed grassroots institution,
Grameen Bank, started by Prof. Mohammed Yunus in Bangladesh. It essentially
adopts the following methodology:
A bank unit is set up with a Field Manager and a number of bank workers,
covering an area of about 15 to 22 villages. The manager and workers start by
visiting villages to familiarise themselves with the local milieu in which they will be
operating and identify prospective clientele, as well as explain the purpose,
functions, and mode of operation of the bank to the local population. Groups of
five prospective borrowers are formed; in the first stage, only two of them are
eligible for, and receive, a loan. The group is observed for a month to see if the
members are conforming to rules of the bank. Only if the first two borrowers
repay the principal plus interest over a period of fifty weeks do other members of
the group become eligible themselves for a loan. Because of these restrictions,
there is substantial group pressure to keep individual records clear. In this sense,
collective responsibility of the group serves as collateral on the loan.
SMALL FINANCE BANK LICENSE PROVISION
Small Finance Banks are particularly regulated by Reserve Bank of India (RBI).
The main motive of these banks is to serve particular sectors of the society.
Under Companies Act 2013, Small Finance Banks are registered as public limited
company and are licensed under section 22 of the Banking Regulation, 1949
Minimum Capital Requirement to open small finance bank is Rs. 200 Crore.
Initially when licensing guidelines the minimum paid up capital to start SFB was
Rs.100 Crore.
Eligibility Criteria for Small Finance Bank –
BUSINESS PLAN – Exact business plan should be there, this should meet
Finance bank model, objectives of providing services to rural and semi urban
areas should be mentioned.
COMPLIANCE FROM RBI – All the rules and regulations given by RBI according
to Companies Act, 2013 should be followed and fulfilled.
FUNDING – The time loan ranges between Rs. 50000 to Rs.125000, promoters
are expected to meet this requirements.
SECTION 8 COMPLIANCE - An entity which is formed under the provision of
Section.8 of the Companies Act, 2013 is a not-for-profit company. It is registered
as Non-Profit Organization.
How to form a Small Finance Bank –
COMPANY REGISTERATION – An application process must be done by filing
documents with MCA & ROC.
SECURE CAPITAL – Applicant must secure minimum cost of capital i.e Rs. 5
Crore. This is mandatory to carry out the requirements related to NBFC
registration.
SECURE CERTIFICATE RELATED TO NO LIEN - Applicant has to receive a
certificate from the Bank related to no form of lien on the amount of money which
is present as the paid up capital for the small finance bank license.
MAKE AN APPLICATION WITH THE RBI –The application has to file with an
RBI, it is completely online. NBFC will get converted into SFB and then gets
CARN No. (Company Application Reference No)
FILE DOCUMENTS WITH RBI - Applicant also has to file a hard copy of
application with RBI.
Eligible Promoters –
Resident/Individual – with 10 years of experience and having successful track
record of running business for at-least period of 5 years.
The promoter should pass “fit & proper criteria”.
Existing NBFC’S, MFI’s, and LAB’s can opt for conversion in small finance banks.
Provision for sme and msmes
Small & midsized enterprise are that business that maintain revenues assets and
number of employees. They play an important role in the economy. Micro, small
and medium enterprise are refer as an backbone of the country. Some provisions
are there for these business enterprise under msmed act 2006 and they are as
follows
ISO 9001/4001 certification fee reimbursement;- the process of economic
production in large quantity, export and employment generation has opened
Indian smes to global competition. To enhance this competitive market,
government has introduced an incentive scheme which provides reimbursement
of ISO certificate expense
The credit lined capital subsidy scheme:- this scheme was launched on 1 st oct
2000. It provides an upfront capital subsidy of 15% for upgrading the technology
Ban loans (collateral free):- this initiative guarantees to micro and small sectors
enterprise. SIDBI, GOI and ministry of MSME make sure this scheme is
implemented for all micro and small enterprise
Subsidy on patent registration:- 50% of subsidy is given to enterprise that has a
certificate of registration granted by MSME. This subsidy can be availed for
patent registration by giving application to respective ministry
Overall interest rate exemption;- business or enterprise registered under MSME
can avail 1% on the overdraft as mentioned in a scheme that differs from bank to
bank
Protection against payment (delayed payment):- at times when buyers from
MSME’S tend to delay the payment. The ministry of msme lend a helping hand
by giving them right to collect interest on payment that are delayed. If enterprise
under MSME supply goods to buyer the buyer is liable o pay between 15 to 45
days after accepting the product. If buyer delays the payment he is liable to pay
interest also which is three times the rate that is notified by RBI
Fewer electricity bill:- the concession is available to all enterprise registered
under MSME by providing application to the department of electricity along with
registration certificate
Zero defect zero effect certification scheme:- the objective of this scheme is to
enhance productivity and competitiveness of MSME’S the scheme supports
make in India campaign

NABARD AS REGULATOR OF MICRO FINANCE BUSINESS

ACTIVITY

Regulatory Body-National Bank for Agriculture and Rural Development

(NABARD) is an apex regulatory body for overall regulation of regional rural
banks and apex cooperative banks in India. It is under the jurisdiction of Ministry
of Finance, Government of India.Microfinance is a way in which loan, credits,
insurance, access to saving accounts, and money transfer are provided to small
business owners and entrepreneurs in the underdeveloped part of India. The
beneficiaries of microfinance are those who do not have access to these
traditional financial resources. Under microfinance there are so many activities,
and NABARD provide fund and schemes for these micro finance activities.
Credit provider- NABARD provides credit facilities to micro finance activities.
The key objective of the Micro Credit Innovations Department of NABARD has
been to facilitate sustained access to financial services for the unreached
segments of the population viz. the poor in rural hinterlands, through various
products and delivery channels in a cost effective and sustainable manner. The
department came into being in the year 1998 with mainstreaming of the
microfinance innovation viz. SHG-Bank linkage programme to a nation-wide
scale. NABARD, through the department of ‘Micro Credit Innovations’, has
continued its role as the facilitator of microfinance initiatives in the country.
Facilitator and mentor- NABARD has truly played the role of an enabler in the
Microfinance Drive helping it to evolve rapidly into a global movement dedicated
to providing access to a range of financial services to the financially excluded
through various products and delivery channels in a cost effective and
sustainable manner. During 2019-20, NABARD continued with its role as the
facilitator and mentor of microfinance initiatives in the country through sanction of
grant assistance for formation, nurturing and credit linking of SHGs with the
banks, capacity building of various stakeholders through training, exposure visits,
seminars, workshops etc, sanction of LEDPs for promoting sustainable and
holistic livelihood opportunities, commissioning of studies etc.
Training and Capacity building-NABARD Support for training and capacity
building of clients for SHG-BL PROGRAMME: Giving due recognition to training
and capacity building of various stakeholders such as bankers, NGOs,
Government officials, SHG members and trainers, NABARD has trained around
37.69 lakh participants as on 31 March 2017, in the process giving shape to a
strong back up team for implementation of the programme. Further it revised
existing training modules and the ‘Revised Handbook on Training Programmes
under SHG-BLP in association with GIZ.
NABARD since 2006 has been supporting need-based skill development
programmes (MEDPs) for matured SHGs which already have access to finance
from Banks. MEDPs are on-location skill development training programmes
which attempt to bridge the skill deficits or facilitate optimization of production
activities already pursued by the SHG members.
Coordaining with partner- NABARD has been continuously focusing on
bringing in various stakeholders on a common platform and building their
capacities to take the initiatives forward. NABARD continues close coordination
with all stakeholders in SHG BLP sector. Collaboration with NRLM is being
regularly maintained and enhanced for the support of SHG BLP. Coordinated
efforts like conduct of National level seminars and workshops, mutual dialogues
and capacity building of stakeholders on SHG BLP have now become very
regular. Coordinated efforts in following areas have particularly proved
immensely fruitful. With a view to foster better understanding of mutual
requirements between banks, SHGs & SHPIs and to sort out issues like credit
linkage & repayment etc. at ground level, Village Level Programmes (VLPs) are
being conducted with the support of banks and NRLM in 13 priority States. These
VLPs sponsored by NABARD are also helping in opening of SHG accounts, their
credit linkage and regular loan repayments. Any many more programs are done
by NABARD for micro finance activities.

Self Help Groups (SHG) play a significant role in the development process
of countries like India. The Government alone cannot bring development. The
development process in India has many factors. Along with the Government,
Non-Governmental Organizations (NGOs) and Self Help Groups (SHGs) also
play a significant role in the development industry.

What are Self Help Groups (SHGs)?

Self Help Groups are groups of 10-20 people in a locality formed for any social or
economic purpose. Most of the SHGs are formed for the purpose of better
financial security among its members. SHGs can exist with or without registration.

Statistics of SHGs in India

About 1 crore SHGs with active bank linkages in India.
Involvement of 10 crore people of India.
The aggregate bank balance of about Rs.7000 crores.
90% of SHGs in India consist exclusively of women.

Some of the basic characteristics for provision of credit by the bank to the
group area.
SHG members should preferably have the homogeneous backgrounds and
common interests.
It should have been in active existence for at least a period of six months.
It should have successfully undertaken savings and credit operations from its
own resources.
It should be democratically working, wherein all members feel that they have an
equal say.
The group is maintaining proper accounts/records.
 Banker should be convinced that the group has not come into existence only for
the availing benefits and there should be a genuine need to help each other and
work together among the members

Role of Self Help Groups

Income generation for the poor.
Access to banks for poor, financial inclusion.
Against Dowry, Alcoholism etc.
A pressure group in Gram Panchayats.
Social Upliftment of marginal sections.
Upliftment of women.

Why SHG are a necessity in rural development?

In India, there is a substantial percentage of the rural and urban poor, who if tried
individually cannot break their chains of poverty, and hence collective action is
required.
For self-employment and financial independence, poor sections need credit.
Bank credits are not easily accessible to individual poor, but by forming an SHG,
there are make better prospects for bank credits. (often without collateral).
The chances of successful income generation are high with SHGs than individual
attempts.

Major Functions of an SHG

Savings and Thrift:
All SHG members regularly save a small amount. The amount may be
small, but savings have to be a regular and continuous habit with all the
members.
“Savings first — Credit later” should be the motto of every SHG member.
SHG members take a step towards self-dependence when they start small
savings. They learn financial discipline through savings and internal
lending. (Advantage: This is useful when they use bank loans.)
Internal lending:
The SHG should use the savings amount for giving loans to members.
The purpose, amount, rate of interest, schedule of repayment etc., are to
be decided by the group itself.
Proper accounts to be kept by the SHG.
Discussing problems: In every meeting, the SHG should be encouraged to
discuss and try to find solutions to the problems faced by the members of the
group. Individually, the poor people are weak and lack resources to solve their
problems. When the group tries to help its members, it becomes easier for them
to face the difficulties and come up with solutions.
Taking bank loan: The SHG takes loan from the bank and gives it as loan to its
members.

Joint Liability Group

Joint Liability Groups are a concept established in India in 2014 by the rural
development agency, National Bank for Agriculture and Rural Development
(NABARD) to provide institutional credit to small farmers.
A joint Liability Group is a group of 4-10 people of the same village or locality of
homogenous nature and of the same socioeconomic background who mutually
come together to form a group for the purpose of availing loan from a bank
without any collateral.

Features
Members should have a common activity.
Members need not to have a land title.
Members should be of the same village.
Only one member of a family can become a member of JLGs.
Members should not be a defaulter of bank loans.
Member should hold regular meetings.
Objective

To augment the flow of credit to farmers, especially small, marginal, tenant

farmers, oral lessees, sharecroppers /individuals taking up farm activities
To extend collateral-free loans to tenant farmers through the JLG mechanism.

Who can form JLG

Business Facilitators, NGOs, Farmers' Cubs, Farmers Associations, Panchayat

Raj Institutions (PRIs), Krishi Vikas Kendras (KVKs), State Agriculture
Universities (SAUs), Agriculture Technology Management Agency (ATMA), Bank
Branches, PACS, Other Co-operatives, Government Departments, Individuals,
Input dealers, MFIs / MFOs, JLPI etc.

Models of JLG
Financing Individuals in the Group:
Size: 4-10 individual’s
The group is eligible for accessing separate individual loans from the financing
bank. In such an arrangement each group member is jointly and severally liable
for repayment of all loans taken by all individuals in the group).
Financing the Group:
Size: preferably of 4 to 10 individuals (may go up to 20).
This JLG functions as one borrowing unit. It is eligible for accessing one loan,
which could be combined credit requirement of all its members.
Loan limit
Since loans are granted against the mutual guarantee offered by the group,
maximum amount of loan is usually restricted to Rs. 50,000 per individual both
under both the models

Amul Case Study

Good afternoon everyone today I will talk about amul’s cooperative movement.
Amul cooperative was registered on 19 December 1946 as a reaction to the
exploitation of local milk producers by the dealers and the agents of the main
dairy Before this I will give a brief why this cooperative movement started. Their
was a company polson which used to sell milk and milk product. Government has
given monopolistic rights to polson company to collect milk from the milk supplier
of kaira district to supply it to city of Mumbai. Polson company was exploiting milk
suppliers by giving them less money for their milk by saying quality of milk is not
good. So all the farmers approached Sardar Patel in the leadership of
Tribhuvandas Patel for help. Sardar patel advised them to form an organization.
Kaira District Co-usable Milk Producers' Union (KDCMPUL), and supply milk
directly to the Bombay Milk Scheme rather than relying on Polson. Milk collection
was decentralized as most of the makers were minor farmers who could provide
1–2 liters of milk each day. Cooperatives were framed for every town. By June
1948, KDCMPUL had begun pasteurizing milk for the 'Bombay Milk Scheme'
The cooperative was additionally created and headed by Dr. Verghese
Kurien with H.M. Dalaya. Dalaya's innovation of making skimmed milk powder
from buffalo milk for the first time in the world and then making it on a commercial
scale with Kurien's help led to the first modern dairy of the cooperative at Anand
(Gujarat). In 1970, the White Revolution of India began. In 1973, the Gujarat
Co-operative Milk Marketing Federation Ltd. (GCMMF), an apex marketing
body of these district cooperatives, was set up to combine forces and expand the
market while saving on advertising and avoiding internal competition. Since
then, GCMMF has become the largest food products marketing organization in
India. It is the leading organization of dairy cooperatives in Gujarat. GCMMF is
responsible for the exclusive marketing of products falling under 'Amul' and
'Sagar' brands. Over the last five and a half decades, dairy cooperatives in
Gujarat have created an economic network that links more than 3.1 million
village-manufactured milk products with millions of consumers in India.

Three Tier Structure

Village Dairy Cooperative Society :

Collection of milk twice a day from farmers.

Make regular payment to suppliers.

Dispatch the milk collected to Milk union.

District Milk Unions

Procure, process and market milk and milk products.

Arrange/Provide macro level inputs like cattle-feed, animal health

and breeding care, etc.

Arrange for training and education of managing committee

members, staff, and members of dairy cooperative society and also
for the Board members, managers and staff of the milk union.

State Milk Federation

Marketing of milk and milk products.

Manage production planning and State Milk Grid (movement of milk within the
state).

Coordinate with state government, central government, NDDB and other

agencies.
Important Points

AMUL : ANAND MILK UNION LIMITED

FATHER OF WHITE REVOLUTION : Dr. Verghese Kurien 

Lijjat papad script

A story of seven ordinary women who had no background in business, no

significant educational qualification, and with just 80 rs in capital, could build a
business empire worth 16 hundred crores spread across 69 branches and
employing more than 42,000 people.

This is the story of women’s struggle that saw the light of the day.

The brand I’m talking about is none other than Shree Mahila Gruha Udhoy Lijjat
Papad — a pappadam manufacturing company, a household name in India.

So what’s unique about this pappadam company, and how has it lasted for more
than 62 years? And how did these seven women manage to build a business
empire out of just Rs 80 in capital?

The answer lies in the incredible history of Lijjat Papad.

The story dates back to the late 1950s, when India had just gotten its
independence and was underdeveloped.

Back then, let alone education, even literacy was considered a luxury. In terms of
education, women’s literacy was deemed unimportant, and only eight percent of
Indian women could read and write. On top of that, women were not even allowed
to go out and work.

80% of India’s population was below the poverty line, and earning capacity of
families was not enough to afford a decent standard of living.
That’s when in Mumbai, a group of seven exceptional women from very ordinary
backgrounds came together to discuss a business idea that wouldn’t need them to
step out of the house, wouldn’t need education, and yet could produce a
competitive product in the market.

And, that is how the idea of Lijjat Papped was born with just eighty rupees of
capital given to them by a social worker.

These women first started selling their pappadams at a local store, and soon
enough, due to the superb quality and taste of the pappadams, even other shops
began buying their product.

The business was growing, and Lijjat decided to scale up. Initially, they had the
opportunity to hire women at a dirt-cheap cost because they were one of the
rarest avenues of income for women, which allowed them to work from home.

But, when these women had their first board meeting, they decided that the
primary goal of their business wouldn’t be to make money but to empower women
from the smallest houses of the country and provide them with the livelihood to
nurture their families.

And, more importantly, they also established a value that the money would only
be used as a fuel to scale their impact on the women of India and not be the sole
purpose of their existence.

So instead of hiring women, they started to give out ownership to every woman
who joined their business and called them Lijjat Ben (Lijjat sister) rather than
employees.

This concept is called “collective ownership,” wherein every employee owns a

small part of the company. And, every single person shares the profits and losses
in the organization.

So regardless of your age, caste or religion, even if you were at the lowest
hierarchy of the organization, you would still own a part of the business.

In the second phase of Lijjat, the organization focused on building a robust supply
chain that would be cost-effective, ensure production quality, and fend the lifestyle
of the women who work for the company.
So instead of having huge office spaces, they used the sisters’ houses as their
small centers of pappadam making.

Lijjat’s supply chain was pretty simple. The flour would first arrive from the mills to
the respective central locations and be made into dough. The sisters were brought
to the center by a bus facility provided by the company. They would collect their
dough and then go home, make pappadams, dry them on their veranda, and
deliver the finished product the next day. Lastly, after the delivery of the
pappadams, they would collect their money and the dough for the next cycle.

The company would ensure quality by doing surprise visits by supervisors to

check the quality of oil they use, the hygiene check of the house, and most
importantly, the process of making pappadams.

The company also gave sisters aluminum pappadam makers to ensure that the
production is in a standardized manner.

Each branch of Lijjat would work as a separate unit. So, if one of these branches
does very well, the profits are distributed among all sisters, and if not, the losses
are borne by the branch members together.

After all of this success comes the most challenging part. As I mentioned earlier,
the organization’s primary goal is not to make money but to empower women from
underprivileged families.

After expanding business to sixty-seven branches, scaling up to forty-two

thousand employees, and exporting their products to fifteen different countries,
they still abide by the core philosophy, “Sarvodaya,” a Sanskrit language word
that means “progress for all.”

You will agree that we live in a world where billion-dollar corporates wouldn’t think
twice before firing thousands of employees, with the slightest change in policies,
putting their employee’s family’s life under stress.

On the other hand, we have Lijjat, which makes sure that with every automation
they make, not a single woman is asked to leave the organization.
This is because they’re 100% clear that their ultimate purpose of business is not
to make money but women’s empowerment to give their families and children a
better quality of life for the future.

On one side, where we’ve got these evil companies who would put the health of
their frontline workers at stake to maximize their profits, on the other, we’ve Lijjat,
where they make use of the extra profits to sponsor the education of the children
of their frontline workers regardless of their age, caste, religion, or even their
position in the organization.

And they do all of this to ensure that the next generation of these frontline
workers can get the opportunities they truly deserve.

This was the story of “Lijjat Papad,” an organization that was true to its goal and
kept ethics over profits.
Mahalaxmi Saras Exhibition
The Rural Development and Panchayat Raj Department, Government of
Maharashtra has been working towards the socio-economic up-liftment of the
socially deprived section of the rural women under Maharashtra State Rural
Livelihood Mission (MSRLM) eco-system by organizing them into Self-Help-
Groups (SHGs). This initiative was started by the Maharashtra Government back
in 2003 to provide a market place to rural entrepreneurs and artisans. In the
month of December every year in Mumbai, there is a large scale sale
demonstration in the name of Mahalaxmi Saras by the name of 'Swarnjayanti
Gram Swarozgar Yojana' (Maharashtra State Rural Life) scheme.
One of the biggest cultural amalgamations in the city, The Mahalaxmi Saras
Exhibition has kickstarted at the MMRDA Grounds in BKC. Expect tons and tons
of stalls including handicraft products, food products, jewellery, handloom, home
essentials and utility, textiles and lot more. Free services are provided to the self-
help groups, octroi tax on items manufactured, free of cost for self-employment,
and transport arrangements for carrying out of the exhibition site to the system.
Entry is absolutely FREE
Claimed to be one of the biggest rural exhibitions in the country, this exhibition is
surely a melting pot of multiple cultures and cuisines even. Find handicraft
products made of jute, terracotta, metal, bamboo etc. Popular For: Handicraft
and artisanal products, jewellery and Indian wear. The food court at Mahalaxmi
Saras had authentic food from all over the country. From brilliant Maharashtrian
cuisine to Konkani thali, you’ll be in for a delicious surprise. Various stalls at the
exhibition were also selling some delicious chaklis, jams, juices and churans..
In line with this vision, MSRLM has launched an initiative of “e-SARAS” to steer
the hand made products made by Self Help Group (SHG) in the state of
Maharashtra. e-SARAS is an initiative of the Government of Maharashtra to
provide a marketing platform to rural entrepreneurs Users need to search in
Google Play store by name – “ Mahalakshmi e-Saras”
Conclusion-
Since its birth in 1970s microfinance has been growing rapidly with the aim to lift
people out of poverty and promote economic growth. Its role and importance
have been amplified amidst the global financial crisis when trust into formal
banking is shaken. It helps low-income households to stabilize their income flows
and save for future needs. In good times, microfinance helps families and small
businesses to prosper, and at times of crisis it can help them cope and rebuild.
The goal of microfinance is to ultimately give impoverished people an opportunity
to become self-sufficient.
Microfinance have received extensive recognition as a strategy for poverty
reduction and for economic empowerment. Microfinance is a way for fighting
poverty, particularly in rural areas, where most of the world’s poorest people live.
A financially sustainable institution can continue and expandits services over the
long term. Achieving sustainability means lowering transaction costs, offering
services that are more useful to the clients, and finding new ways to provide
banking services to the poor. and enjoy an improved quality of life. Microfinance
services can also contribute to the improvement of resource allocation, promotion
of markets, and adoption of better technology; thus, microfinance helps to
promote economic growth and development.
Thank You.