SHARE’s business model generates greater economic benefits by way of supporting the development of micro-entrepreneurs and their communities in a complex economic situation, while at the same time fostering a responsible financial culture.
Client Focus and Client Understanding are the key words that define SHARE’s approach towards microfinance. SHARE’s continued efforts to improve organisational efficiency have yielded rich dividends raising its efficiency level and promoting transparent systems and processes, ultimately helping SHARE emerge as a premier microfinance institution in the country.
SHARE has stood by its commitment to working towards poverty alleviation with responsive systems. The approach has paid off and today SHARE has a platform that would allow it to launch a more ambitious campaign to reach out and serve many more poor women in the country and outside. The top ratings provided by rating agencies reflect SHARE’s strong performance.
For-profit Approach for Social Returns
SHARE has adopted a for-profit approach to create social returns by channelling funds from development institutions and commercial banks as collateral-free loans to Joint Liability Groups (JLGs).
JLGs are central to the lending methodology that SHARE has replicated. In this methodology the group lending technique is used to extend loans to women members who have formed themselves into groups of five each, with the general criteria that they have to be of the same age group, of the same area, and known to one another. Family members or relatives cannot be part of the same group. Members of each group receive seven days of training on various aspects of the operating model, during which they learn their own signature to have an identity for themselves. Eight groups come together at a ‘centre’ for weekly meetings. The members assume the responsibility of approving loans and disbursement, and ensuring repayment.
The loans have to be repaid in 50 weekly instalments. There is no collateral to back these loans and repayment is ensured using social/peer pressure, as the group is responsible for collecting the loans. To ensure that the loan is utilised only for the intended purpose, the money is given in a staggered manner to the group members and subject to satisfactory assessment by the field credit officers.
The loans have to be repaid in 50 weekly instalments. There is no collateral to back these loans and repayment is ensured using social/peer pressure, as the group is responsible for collecting the loans. SHARE’s members learn about the company’s loan delivery method through a public orientation meeting that briefs them on loan disbursements and related procedures. After forming groups of their choice and agreeing on the income generating activity they would like to pursue, SHARE assists its members by equipping them with basic business development skills such as pricing, marketing and quality management. Field staff members facilitate weekly group meetings, in which members undertake the responsibility of approving loans and repayments. Members go through additional social development programmes that cover topics ranging from children’s education to health, nutrition and sanitation.
Effectively Reaching the Poorest
A study by the International Food Policy Research Institute (IFPRI) has revealed that SHARE targets the bottom most segment of the poor. About 85 per cent of its members belong to this segment, indicating SHARE’s effectiveness in identifying the poorest of the poor.
Further studies conducted show that 76 per cent of SHARE’s members have experienced significant poverty reduction, leading to greater control over income, assets and expenditure.