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Grameen Koota is India’s first fully PPI certified microfinance institution
Submitted by mffocus on Fri, 09/16/2011 - 03:18
Microfinance Focus, September 16, 2011: Grameen Foundation India has announced that Bangalore based microfinance institution, Grameen Koota, is the first fully certified user of the Progress out of Poverty Index (PPI) in India. Grameen Koota is a division of Grameen Financial Services Private Limited (GFSPL).
The Progress out of Poverty Index is a country-specific assessment tool that helps institutions measure outreach to the poor, monitor changes in the economic well-being of clients and provide data that helps managers improve the effectiveness of programs and services.
Grameen Koota began using the PPI in December 2008 becoming the first Indian MFI to do so. Over the past two years, it has collected PPI scores from more than 450,000 clients.
It typically collects data on each client annually when they first join the program or renew their loan. It also collects data from clients who leave the program. When PPI information was first collected from these clients, it demonstrated that poverty rates decreased as the loan cycles increased.
Grameen Koota has analyzed the PPI data for almost 62,500 clients who have at least two PPI scores, with interesting results. Poverty levels of clients with two PPIs have improved consistently across all poverty brackets for the duration of their loans: net 22% of the clients who were below the $1.25/day line in Purchasing Power Parity (PPP) – which adjusts for differences in the prices of goods and services between countries – and net 8.5% of the clients who were below the $2/day PPP line when PPI data was first gathered on them have moved above their respective poverty lines.
Grameen Koota plans to use this data to improve its clients’ experience with both financial and non-financial products. Such interventions could include improving product design for targeted clients, increasing outreach to poorer areas, and offering non-financial or other complementary products to poorer clients to facilitate faster movement across poverty lines.
“We commend Grameen Koota’s leadership and staff for their willingness to adopt new policies based on their PPI results, and for their continuous commitment to measure their social performance to inform decision making,” said Chandni Ohri, CEO of Grameen Foundation India.
“The vision of Grameen Koota is to help the poor move out of poverty,” said Suresh Krishna, Managing Director of Grameen Koota. “To do this, we need to track our clients’ progress over time. The Progress out of Poverty Index provides us the ability to do just that.”
Building on the concept of Grameen Bank’s 10-Point System, the PPI was commissioned by Grameen Foundation in collaboration with the Consultative Group to Assist the Poor (CGAP), Ford Foundation and Microfinance Risk Management LLC. Launched in 2005, the PPI is now being used by more than 100 institutions worldwide.
Grameen Koota (GK) is a division of Grameen Financial Services Private Limited, a RBI registered NBFC started as a project of T. Muniswamappa Trust, an NGO in 1999. Grameen Koota received seed capital funding from Grameen Trust, Bangladesh and followed the Grameen Bank methodology for providing microfinance to the poor & low income households. GK currently operates in 3 states of India – Karnataka, Maharastra & Tamil Nadu. GK provides various loan products such as income generation, emergency, water & sanitation, cook stove, education, working capital, etc.
PPI
Does this tool really help the MFIs in selection of clients/strategising.To me the indicators do not give that confidence and for a vast country like India a single tool's applicability is a bit too simplistic.
Howveer, GRAMEEN KOOTA needs to be applauded inspite of the tool not generating any confidence in the outer world.
The rate/speed at which PPI indicators for so many countries have been developed does raise suspicion to me about the quality of this tool.
Congratulation
Congratulation to GK on securing the PPI certification. I am sure this certification will motivate other MFIs in India and Asia to adapt the path choosen by GK.
Indeed GK has shown the
Indeed GK has shown the direction that should have been enshrined in the vision, mission and objective of all MFIs & Banks providing micro-credit to individuals or through SHGs having members BPL to demonstrate that poverty rates decrease with the increase in the loan cycles. GK has demonstrated its concern and commitment to its 62500 clients who had atleast two PPI scores and have improved consistently across all poverty brackets for the duration of their loans.
In India 550 MFIs and 446 RFIs have provided significant amount of credit but the studies of EDA Rural Systems and Andhra Pradesh Mahila Abhivrudhi Society revealed that only 51% SHG members were poor. NCAER studies found that non-poor among SHGs were 63% in Uttar Pradesh, 43% in Andhra Pradesh and 34% in Maharashtra. Poverty audits observed non-poor clients constituting 42% to 88% in five out of eight MFIs. Most vulnerable are not clients of choice for MFIs and SBLP. Even in poorly endowed, backward and remote areas, relatively better off among the poor do not have access to microfinance services. MFIs’ loan products and processes by design exclude the more vulnerable among the poor. Expansion into remote areas is fraught with high risks, additional costs and long breakeven periods. The penetration index brings out that States [Rajasthan, Himachal Pradesh, Assam, Orissa and Mizoram] did well in terms of linkage of SHGs in proportion of poor in these States. There are several States [Haryana, Punjab, Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh], which have very low penetration of SHGs with the index being 0.35 or less. Thus, MFIs & RFIs need to concentrate on BPL families and use the PPI as an assessment tool to measure outreach to the poor, monitor changes in their economic well-being and help improve the effectiveness of the program. Of course, this calls for experise and financial resources, which have to be deployed to accomplish the mission. Dr Amrit Patel, Nj 08837 USA [732-553-0825]
Grameen Koota is India's first fully PPI Certified MFI
Indeed GK has shown the direction that should have been enshrined in the vision, mission and objective of all MFIs & Banks providing micro-credit to individuals or through SHGs having members BPL to demonstrate that poverty rates decrease with the increase in the loan cycles. GK has demonstrated its concern and commitment to its 62500 clients who had atleast two PPI scores and have improved consistently across all poverty brackets for the duration of their loans.
In India 550 MFIs and 446 RFIs have provided significant amount of credit but the studies of EDA Rural Systems and Andhra Pradesh Mahila Abhivrudhi Society revealed that only 51% SHG members were poor. NCAER studies found that non-poor among SHGs were 63% in Uttar Pradesh, 43% in Andhra Pradesh and 34% in Maharashtra. Poverty audits observed non-poor clients constituting 42% to 88% in five out of eight MFIs. Most vulnerable are not clients of choice for MFIs and SBLP. Even in poorly endowed, backward and remote areas, relatively better off among the poor do not have access to microfinance services. MFIs’ loan products and processes by design exclude the more vulnerable among the poor. Expansion into remote areas is fraught with high risks, additional costs and long breakeven periods. The penetration index brings out that States [Rajasthan, Himachal Pradesh, Assam, Orissa and Mizoram] did well in terms of linkage of SHGs in proportion of poor in these States. There are several States [Haryana, Punjab, Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh], which have very low penetration of SHGs with the index being 0.35 or less. Thus, MFIs & RFIs need to concentrate on BPL families and use the PPI as an assessment tool to measure outreach to the poor, monitor changes in their economic well-being and help improve the effectiveness of the program. Of course, this calls for experise and financial resources, which have to be deployed to accomplish the mission. Dr Amrit Patel, Nj 08837 USA [732-553-0825]
PPI
GFSPL has always been a first adopter in this sector. Congratulations to Suresh krishna and Team GFSPL on another first.
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