Sa-Dhan meet on standards for SHGs, MFIs in Chennai

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Chennai, Jul 29: Self help groups (SHGs) and microfinance institutions (MFIs) play pivotal role in meeting the credit needs of over 7.5 lakh poor households and thousands of small businesses in the country. The money involved could be over Rs 15,000 crore.

Measuring the perfomance quality and public accountability of these organisations have become necessary for their efficiency and sustainability.

The intervention of a multitude of organisations operating in diverse and pluralistic socio-cultural backgrounds calls for fixing and practising certain common standards in accounting and public reporting.

The Delhi-based Sa-Dhan, The Association of Community Development Finance Institutions, which has been working with three in-house thematic subgroups of ‘Policy’, ‘Capacity building’ and ‘Standards’, has been setting standards for the microfinance sector. It had carved out a road map for this to identify standards which are appropriate, verifiable and which can substantiate the strength and peculiarity of the microfinance sector.

Its endeavour has been to encourage microfinance institutions to comply with the standards and move to a self regualtory regime.

According to Mathew Titus, executive director of Sa-Dhan, the association has been engaged in streamlining the policy and operational environment for the microfinance institutions. Today, the sector has achieved credible growth in terms of both outreach and sustainability. There is an increasing emphasis to promote MFIs which provide small-scale credit and other financial services to low-income households and small informal business. Empowering MFIs will facilitate their role as an intermediary between the lending banks and the beneficiaries. Sa-Dhan has produced the operational manual on ‘Financial performance standards for MFIs’ and a discussion paper on ‘Quality parameteres of SHGs and tools to measure their performance.