Micro Finance Products:

Flexible credit:

The groups consist of the poorest in the villages, which is reflected, in the savings mobilised. Members save ten to twenty rupees per month. Lending out of the savings starts from the first month. A member can take a loan to satisfy any of her genuine credit needs. The women make all the decisions. Thus the group sanctions loans for consumption purposes like purchase of food, social functions, long term investment needs like housing, education of children and production purposes like agriculture, micro enterprises etc., The loans are sanctioned after thorough discussions among members and by consensus. The repayment capacity and the needs of the member are assessed. The intimate knowledge that members have of each other helps in taking decisions. The savings to credit ratio of 1:2 has risen over the years to 1:10. Many of the old groups sanction loans up to Rs.10, 000 per member against the guarantee of another member. The repayment period varies according to the size of loan. Presently interest is charged at 2 to 3 percent per month.
Even after eight years, the groups continue to rotate the group funds and money borrowed from other institutions, which has resulted in deepening of credit needs. At the group level very little idle funds are kept.

Linkage with other institutions:

LEAD is playing a facilitating role in getting the groups linked to commercial banks directly. The banks lend to groups, which are at least six months old. The initial bank credit is equivalent to the savings mobilised by the groups. The savings to credit ratio is progressively increased with each subsequent loan to a maximum of 1:4. Rashtriya Mahila Kosh( RMK) is another agency , which lends to the groups. Recently, Small Industries Development Bank of India (SIDBI) has sanctioned Rs 10 million to LEAD for lending to members for off- farm activities. Housing scheme grants received from Ashram International are lent to individuals recommended by the groups. Apart from the above, loans for construction of toilets have also been sanctioned to the members. The Rabo Bank Foundation, the Netherlands has recently disbursed loans for purchase of milch animals. Finance routed through the groups to the members are as under:

Status as on April 2001

Savings

The groups predetermine the savings to be contributed by each member each month. The savings are mobilised during the group meetings and are utilised for on lending to the group members. There is no other scheme for mobilising the voluntary savings of the members. The savings are managed by the groups.

LEAD does not want to opt for voluntary savings as we think it would affect the equality between members in the group.

Loan Products :

1. General loans.
The group fund consisting of savings, interest accumulated and fines collected are on-lend to the members. On linkage with the commercial bank, bank loan is taken as the group fund and on-lend to the members. LEAD acts as a non financial intermediary. The credit is taken directly from the bank and repayment also made directly.

2. Loan from Income Generation:
LEAD avails loan from Rashtriya Mahila Kosh (RMK) for lending to the members. The loans are used only for income generation purposes. Composite loans of Rs. 7500 are sanctioned to the members. The groups select the members and the group is responsible for the repayment to LEAD. Repayment is made to a bank account earmarked and the repayment is closely monitored.

3. Housing loan:
There are two types of housing loans available to the borrowers - For renovation of old houses and for the construction of new houses. These are individual loans sanctioned to a borrower, with the recommendation of the group. But care is taken not to burden women with land loans of large quantum at a time.

4. Construction of toilets:

LEAD supplies the material for the construction of the toilets and the labour for the constructions are provided by the member's family or hired. Cost of the materials net of subsidy is treated as individual loans and the repayment is monitored by the group members. A revolving fund is established for this purpose.

5. Milch Animal Loans:

For Milch animals, Individual loans are given as per the recommendations of the group and federation at clusteral level. Loans are sanctioned in a cluster with the idea to promote a dairy co-operative, when volume of milk production increases. LEAD has borrowed from Rabo Bank Foundation, upon its own guarantee to be on-lent to members.

6. Loans For Micro enterprise:

Recently SIDBI has sanctioned a loan of Rs. 100 crore to LEAD to be onlent to individuals for setting up micro enterprises.

INSURANCE PRODUCTS

1. Cattle insurance
At the time of sanction of loans for milch animal LEAD introduced the insurance scheme for the animals. The scheme, operated by LEAD, has been made compulsory for the borrowers. The loans are disbursed net of insurance charges. LEAD is considering the extension of the insurance scheme to all the animal loans. It is also proposed that ultimately the federation will take up the maintenance of cattle insurance programme.

2. Social Security fund
LEAD operates a social security fund for covering serious sickness/ death of a member. Rs. 25 per year per member is charged as premium and is vested with the federation in order to facilitate meeting the claims quickly.

3.Life Insurance to group members:

Several insurance products have been provided to the group members in association with other insurance agencies. Group members have been linked with Rajarajeswari Scheme (accident insurance) of Oriental Bank of Commerce, life insurance schemes like H.D.F.C's Development Insurance Plan and Janashree Yojana of Life Insurance Corporation.