Institutional Issues in Micro Finance Organizations*

9.1 Introduction

The present chapter deals with institutional issues related to the sample POs. They range from various organizational characteristics such as field level operations and their management to staffing pattern. Furthermore, information obtained from client members of the POs and the non-PO NGOs have also been processed and presented. Finally, these are put together for an understanding of the organizational and performance effectiveness. Much of the information was collected from the sample POs. But there was also information from case studies conducted on three POs. Before all thee, however, we need to put the POs in their historical context, particularly the small, local MFIs. To this we first turn.

9.2 Historical Context of Local MFIs

9.2.1 Emergence of MFIs–Where and Why?

The origin of NGO emergence in Bangladesh goes back to charity work of the Christian Missionaries during the eighteenth century. Such Charity works still continue in many parts of the country. Even after the war of independence voluntary organizations were the main channel for flowing resources from the donors to the poor. Those NGOs were mainly involved in implementing development projects with the broad aim of poverty alleviation and their activities were funded mainly by direct foreign donation, foreign aid through government or local donation. Micro financing or credit operation through NGOs became popular with the Grameen Bank success. In addition to that availability of fund through PKSF for small NGOs and favorable government rules for expansion of NGO activities specially after the fourth five-year plan (1990-1995) encouraged emergence of small/local MFIs. Such NGOs are mainly stimulating income generating activities of the poor through savings mobilization and credit operation. Thus the aim of poverty alleviation is supposed to be served in an indirect way.

MFIs differ in places and reasons of formation. The head offices of the local MFIs are observed to be in--

• remote villages
• developed villages but away from the district town
• villages adjacent to the district town
• district towns

SSS has its head office in the district town of Tangail and it works in different villages of the district. OSDER’s head office lies in Dhaka but it works in remote villages of Munshiganj and in some parts of Comilla. The other PO, i.e. NGSS has its head office in the remote area of Satkhira district and also works in the adjacent area. Thus emergence of an MFI is backed by two types of concerns –



It is very common that the small/local MFIs first start operation in the village of the relevant initiator (initiators). This makes motivating the prospective beneficiaries easier. Local reputation of the initiator plays an important role in this context. Moreover relatives and friends of the originator can help in motivating the people. Often during the early days, the friends and relatives work as the field officers without any payment. Even it is observed that networking capacity and motivation power of the initiator is a strong precondition for the inception of an MFI.

MFIs usually emerge as a consequence of the initiatives of an individual local elite or a group of local people. Sometimes small local cooperatives of a specific professional group are transformed into MFIs. The broad reason or objective of the emergence of an MFI is to help the poor to involve in income generating activities which will help them to reduce poverty, make them less vulnerable and more empowered.

9.2.2 Early Days of MFIs – Not an Easy Lunch

Small MFIs have to struggle heavily during the early days of their operation. They face both financial and social constraints. These organizations usually start with awareness building and group formation. The formation of groups is associated with small weekly savings generation from the members. The members deposit this amount because a certain amount of savings is the precondition for receiving loan. More over they are accumulating some fund, which they hope to use in future. From the MFI’s point of view the saving works both as implicit collateral for loan and as a source of fund for credit operation. However, often the prospective beneficiaries are not willing to be associated with the MFI and usually it takes time to build confidence among them. The following are found to be the rationale behind such skepticism—

• Those who are not aware of the activities of MFIs, find it hard to believe that they will really be provided with collateral-free loan. This observed mainly in remote areas, where micro credit is still not popular.
• Many prospective beneficiaries are aware of cheating by some of such organizations, which happened in many areas.
• Some people consider the activities of MFIs to be difficult to understand.
• Often the amount of loan is considered to be inadequate.

The MFIs who succeed in forming groups, often encounter clashes with informal money –lenders and rent-seekers. OSDER and NGSS faced such clash. Opposition sometimes also comes from the fundamentalists. Especially this was observed when NGO/MFI culture was new in Bangladesh. Sometimes the disputes have to be settled in the court. Competition with other prevailing MFIs is a common phenomenon in the areas, where multiple MFIs are present. However such competition usually does not explode to direct clashes among them, rather a mutual tolerance and understanding is prevailing among different MFIs. Often the prevailing competition among the NGO-MFIs are enabling the beneficiaries to get a better deal in terms of lower borrowing rate and flexible rules for withdrawal of saving. But competition with the big NGOs often results in member drop out from the small ones as big NGOs often offer social services like special loan during disasters, medical benefits etc.

To overcome the opposing factors, the following steps are usually followed by small MFIs.

1. Local people are recruited in different positions.
2. Frequent monitoring of the groups increases confidence of the group members.
3. Often relatives and friends of the employees and local union parishad members help in social confidence building.
4. Personal contacts were made with some local elite to motivate them to favor the activities of the organization.

Legal identity of an organization is a big step in the early days. It is observed that SSS and OSDER got registered with the Social Welfare Division of the Government of Bangladesh at first and then they became registered with NGO Bureau. This second registration was required to be eligible for receiving foreign funds. NGSS, got registered with the Co-operative Directorate as it emerged as a co-operative. It is still performing its activities under this legal basis. The legal identity is facilitating the activities of the MFIs. However the many of them are found to be unaware of the separate registration required for receiving foreign funds.

9.3 Organizational and Other Characteristics of the POs

9.3.1 Age of the POs

Most POs have been of recent origin. Only one dates from the sixties (TMSS), two from the seventies (both large NGOs), two from the mid-eighties and the rest since the early nineties. Involvement with the PKSF, is of course, a more recent phenomenon most being from 1991. One of the POs have begun dealing with PKSF only since the last year.

9.3.2 Activity Jurisdiction

The sample households have been drawn from 13 PO areas spread over 16 thanas. The number of PO branches involved, however, are twenty two and except in 5 cases all branches have their activities in more than one thana (Table 9.1). This state of affairs may or may not be the best spatial organization particularly if branch managers have to coordinate their activities with the thana administration. This issue, however, has not been investigated any further.

9.3.3 Length of Activity Period

In most cases the POs have been active in the study thanas only since the early nineties (Table 9.1). But in a few cases (such as Proshika, Protyashi, PPD and GUP) they had been on the scene for quite long some time as far back as 1980 (Proshika). While for the small, local level POs, this may have meant a mere existence, for large NGOs such as Proshika this certainly is not the case.

9.3.4 Spread of Activity

We asked the POs about the development of their field level activities and the way an area is chosen for activity (during the case study). Very few of the PO branches could provide the information for the first 12 months of operation. However, information is more plentiful for the more recent period since 1995. The picture is shown in Table 9.2 below.

It is evident from the table that the record of the POs are mixed in terms of the spread of their activities. Some, such as, SSS in Mirzapur had experienced vigorous growth over the last three years while PRP in the Sadar thana of Meherpur has actually experienced contraction. In most other cases, one observes stagnation or a fair rate of growth. To see why or how areas have been chosen we probed the issue during case study. The findings show that it is no easy task.

Table 9.1

Spatial Spread and Starting Dates of PO Branches

Factors Influencing the Area Coverage of the Credit Program

The expansion of credit program in a new area involves positive response on some issues. After the primary decision of the MFI leaders to expand the credit program in a particular area, employees are appointed for field visit. If the field visits provide positive results, then initiative for expanding the credit program is taken. During the field visits data about the proposed area are collected from the union chairman, members and local elite using the particular data collection form. The following issues are considered in taking decision on expansion.⁴³

1. There should be prospective sources of income for most of the people of the area.
2. It is better if the people have some educational background at least they should have some knowledge about numbers and calculation. Thus the educational background of the people of the area is important.
3. It is important to know about other NGOs working in the area and the percentage of the population covered by them. The lower the number the better it is because there will be less competition for group formation.
4. To see whether the social environment of the area is co-operative or not and availability of places where NGO office can be set.
5. The communication system of the possible working area is preferred to be easily accessible.
6. To see that the new area office is at least 8 k.m. away from any old office.
7. The proposed area should have the prospect of forming 100 samities.
8. To find whether necessary government offices are adjacent to the office area.
9. Villages free from social and political clashes are preferred.
10. Less risk of the area of natural disasters.

When credit program become successful in the new area, non- income generating activities (IGA) are started. Because field visit under the credit program help the area officers to decide which non-IGA program would be helpful and supportive for the credit program in a particular area. Still in general only a few non-credit activities are taken up as the following section shown.

Table 9.2

Number of Villages under PO Activity in the Specified Branches

9.3.5 Number of Activities

Of 19 branches, 12 were involved in only 3-4 activities and only one was in 5 types of activities. Six branches or about a third were involved in 6 or more types of activities. The maximum number was 8 in three branches. These are Boalkhali of Protyashi, Netrokona Sadar branch of Sabalambi and Mahasthan branch of TMSS. The most ubiquitous was of course the IGA or income generating activities meaning credit operations for income generation. All branches had such a program at the time of first survey in 1998. The next most important was a savings program cited by 12 branches. It was not obvious however whether this was a separate program or a program integrated with the credit program. Having said this, it may be pointed out that at least in some cases, savings programs predated IGA. An example is Mahasthan branch of TMSS where the savings program started in 1988 but the credit-backed IGA started only in 1993. Similar was the case with Boalkhali of Protyashi in which the the IGA started 5 years after the savings program. But, generally it had been the case that the two programs were started together or in quick succession of each other.

Other frequently cited programs included sanitation (9 branches), forestry/tree plantation (8 branches) and basic education (7 branches). While it is likely that some of the programs may actually be sub-program of a broader program (such as nursery and tree plantation cited separately by one branch), it is clear that the organizations concentrate on only a few programs which is natural given their size, staff strength and the availability of finance for some of the programs.

9.3.6 Financing of Programs

The IGA program and funding from PKSF is clear as in most cases, PKSF was the main financier during the year prior to the first round of survey. However, own financing (it is not clear what exactly it means) is not completely absent, particularly for non-IGA activities. A few donors including the Government have also channelised funds for specific programs such as sanitation.

9.4 The Characteristics of the Staff of the POs

The results in this section are based upon information on the staff at the offices of the PO under which the sample villages fall. Thus, there are both headquarters and branch offices and all POs are not represented in a similar fashion. With this caveat we turn to the results.

9.4.1 Age of Staff

Nearly 60% of the staff is at the prime age of 26 to 35 years both among men and women. On the other hand, there are comparatively more younger women (in the age group 16-25 years) and fewer women in middle-age group (35-50 years) compared to men. The women therefore are somewhat younger on the average.

9.4.2 Sex of the Employees

Two-thirds of the employees are men. This is in contrast to the finding that the majority of clients of the POs are female (see later). Not all POs have similar relative numerical strength, however. In one case, ASA, all the employees were found to be men while in case of Protyashi, 28 out of 37 employees (i.e., 75%) were women.

9.4.3 Education

More than one-half of the employees have high school to pre-University education while more than 40% are at least graduates. A small minority (7%) has been to schools but have no formal degree.

When categorised by sex, nearly two-thirds of women are found to be high-school graduates while just above a quarter is university graduate. In comparison male employees are better educated. Slightly less than one-half of them hold high-school degrees while just about one-half is University graduates.

9.4.4 Length of Service in PO

Most staff in the present POs have been employed only for a short period, around 30% for less than a year and for 1-3 years. Only about a fifth have been in the same PO for at least five years. There are exceptions to the average picture. In Protyashi, nearly one-half are in service for at least 3 years (one-third for 5 years or more). Nearly 30% of Sabalambi staff are in service for at least 3 years while in case of GUP, 2/3rds are in service for more than five years. The difference between sexes is not prominent.

9.4.5 Present Post and Length of Service

The posts in various POs have different nomenclature. For comparability, therefore, we have divided them into four categories, viz., top management, mid-level management, office staff and the field staff. The difference between the mid-level management and office staff is that the latter category provides general office support service (such as clerks of all sorts) while the mid-level managers are those who are in some sort of supervisory position or when they do not hold such posts are in somewhat higher category (such as accountants). It has been observed that just about one-half of the employees belong to the field level category while the mid-level managers constitute just over one-fifth of the employees. General office staff is rather much less common (only about 14%). The top management forms a tiny group.

Women were much more likely to hold all sorts of odd jobs while among office and field staff they were represented in proportions similar to men. On the other side of the scale, women were only half as likely to hold mid and top-level management positions compared to men.

Less than 10% of the people have been in the same post for more than 5 years. More than 3/4ths have been in the same post for no more than 3 years.

Women appear to be in the same post much longer than men. Thus women are twice as much likely to be in the same post for at least 3 years than men. The differences are statistically highly significant.

9.4.6 Prior Job-holding

The reasons for rather short period of service be it in the same post or the same PO are not far to seek. Over a third of the employees have been students, nearly 20% unemployed and 14% involved in household works. Thus, nearly 70% probably either had no job before or been looking for a job. While previous job-holders in Government had been rare (only 2 out of 375), a good percentage (16%) had been employed in other NGOs. Thus people mostly came with little work experience of any sort.

Among the POs, Sabalambi has the highest number of ex-NGO staff (26 out of 82) followed by Solidarity (13 out of 40). Anuvab has one-half of the people who had been in various odd jobs prior to their employment in the PO.

When classified by sex, men were found to be more likely to hold prior jobs. Nearly about a half of women were either unemployed or were involved only in hone-making while the proportion of such men were only just about one-half of that. Prior NGO-job holding was, however, similar across sexes.

9.4.7 Salary structure

The employees may be characterised mainly as one with at most a little education, a little work experience but somewhat aged to be receptive to training for the job at hand. Most are also in the field category. The salary structure reflects these characteristics. Less than 2% of the employees earn a salary of Taka 7500 per month. In contrast one-half earns a salary of only Taka 1000-2500 per month. The next higher category, Taka 2500-5000 per month, includes about 38% of the employees.

The salary structures in Sabalambi and GUP show that in those organizations the top two categories are more important than in most other POs. Thus in Sabalambi, 15 out of 85 and in GUP 8 out of 66 staff were in the top two salary categories. Still, by and large there is not much deviation from the general pattern.

Women are somewhat more likely than men to be in lower salary categories. The difference is statistically significant but not very sharp. This is so possibly because women are more or less equally likely as men to be in office and field staff categories, the largest groups of employees, and also because women are likely to be in the same posts for a longer period thus equalising the differences in terms of pay.

9.4.8 PO Staffing: An Assessment

9.4.8.1 Employment in MFIs

When we utilise information given by POs during the survey and case studies and other information, it is found that MFIs are generating employment for a large number of people. According to the CDF statistics of 1998, 369 NGOs were employing 62603 people in Bangladesh. The MFIs are found to generate employment more for the males than for the females, where as most of the beneficiaries are females (more than 80%). Table 3 shows that around 70% of the employment generation by SSS, NGSS and OSDER is for the males. MFIs often explain such a tendency to be the outcome of unwillingness of females mainly in the rural areas to involve in MFI activities and lack of skilled females. However other implicit reasons behind such a tendency is the idea that females seek more leave, they are unwilling to go far from their village, they are often less capable of obliging the defaulters to repay the loan. . In some localities negative attitude of the society (fundamentalists etc.) discourages the females from involving in NGO activities.

9.4.8.2 Recruitment Procedure

Recruitment of the MFI staffs does not always follow the rules. Often there is no written test, interview with the high officials of the organization is considered to be enough. Advertisement for recruiting new employees is given mainly in the local newspapers or in local schools, colleges and offices. Kinship relation with the NGO leaders plays an important role to in the process, especially during the early days of the organization. Local people are also preferred as they are capable of motivating the target group easily. SSS argues that when recruited on the basis of written test and interview, overqualified (in consideration to academic fit) people are often recruited who ultimately do not work for the organization for long, rather they go for a better job. Sometimes it is observed that people with better academic fit is not expert in MFI/NGO activities where field management is the most important factor. Therefore other than some technical posts (where special expertise required like computer skill, doctors etc), recruitment takes place on the basis of eligibility of the candidate for NGO/MFI activities and the eligibility is tested during the interview with the high officials.

9.4.8.3 Training of the Employees

Institutional viability of an MFI depends on the skill of the employees. In particular a micro-financing organization should have professionals capable in well communication with general people. Therefore the MFIs often arrange training program for their employees. Some MFI has its own residential training center. MFIs organizes training courses not only for the staffs but also for the beneficiaries. These courses are aimed at both skill - development of the employees and awareness building about the needs of the society. The skill development training effort aims to prepare the trainees to plan, manage and organize the programs of the respective MFIs at different levels.

9.4.8.4 Incentive Structure

Those who are recruited in an MFI have limited scope of promotion. Often there is no specific system of promotion. There are annual increments of the salary, which is even irregular. Incentive to the employees mainly for the field officers take the form of interest free loan, gift of luxury goods, interest free loan to buy motorcycles, scope of personal investment in micro credit operation through the organization etc.

9.5 Management of the MFIs—One -Man Show or Anything else?

9.5.1 A management prototype

Although the organizations differ in their characteristics, the major steps in the organizational structure of the MFIs by and large takes the following format.⁴⁴

Each organization has an executive committee (EC) consisting of members from different walks of life. As per the organizational rules, the executive committee (EC) plays an important role in various policy- making and decision making processes of NGOs. However in practice, it is not observed always. Even the election process of the members of the EC is not maintained. The members are mainly ‘selected’ by the respective NGO leaders or by the permanent members. As most of the EC members are friends of the leaders, they maintain an irregular but intimate connection with the organization. During the meetings the EC members mainly support the decisions of the leaders of the organizations. Often some of them don’t even bother to attend the meetings. The educational background of these members varies between organizations. Where EC members of OSDER are mostly high educated (some are even Ph.D. degree holders), while those of NGSS don’t even posses a secondary school certificate. Situation of the EC members of SSS lies in between, most of the members are graduates. So the educational background of the EC members may not be a factor determining the performance of an MFI, as long as the members have well and close concern about the activities of the organization. What is more important, in this regard, is the leadership capacity and the managerial skill of the leaders /head(s) of the organization and of the field level staffs. In fact, President or in some cases the Executive Director (ED) remains at the core of all the decision -making process. Although the EC appears to enjoy lots of power but usually they do not realize the power rather the Executive Director (ED) or the head of the organization has the supreme power in decision making.

9.5.2 Decision Making

The small MFIs usually exercise decentralized management systems. The steps consist of head office, zone offices, branch offices and the fields. In some organizations there is no zone office. The activities performed by an MFI involve three types of decision making

1. Credit program related decisions. In this area the major decisions include--

1. Group formation
2. Size of groups
3. Group meeting—where and when will the meetings take place.
4. Selection and reselection of group leaders.
5. Fixing the saving rate and the savings requirements for loan.
6. Grant of loan – its amount, service charge, repayment schedule.
7. Action against the defaulters.

1. Other program related decisions—

1. Starting a new program.
2. Choice of area for starting a program.
3. Financial issues in relation to the new program.

1. Administrative decisions—

1. Recruitment of employees.
2. Fixing the payment.
3. Promotion and transfer of employees.
4. Decisions on lay off and increments.
5. Disciplinary measures.
6. Regular office maintenance.

Field activities of the credit program are directly handled by the branch offices. Field Officers work at the grass-root level, whose activities are supervised by the Supervisors/ Program Organizers and Branch/Zone Managers. The Branch/Zone Manager is the head of the Branch/Area Office. A Field Officer (sometimes called development organizer) visits 2/3 groups every working day (Table 2).

During the group meetings, weekly savings and loan repayment installments are collected. Sometimes the members are advised on different issues like family planning, tree plantation, health care etc. New loan is sanctioned from the branch office. Each member maintains a savings record book and loan repayment record book. These books are regularly updated in the weekly meetings. However it is observed that these records are not regularly updated, rather this is done once or twice a month. As an FO has to visit 2/3 groups each having 25 to 35 members everyday, it becomes difficult for him to update the installment records of all the members. Because he has to return to the branch office by noon and has to update the office records, prepare papers for new loan sanction, etc. The FO also prepares daily and weekly reports on his activities. Heavy work- load on the field level employees along with lack of incentives for better performance can be an important reason for inefficient loan recovery performance of many branches of an organization. The head of the branch/area office delivers a weekly report to the head office. This report from the branch office goes through the zone office. During the monthly meetings at the district head office with the branch and zone heads (where there is zone office), the program chief and organization executives on the basis of the reports arriving from the field take new decisions.

In case of programs other than credit program, the program chief maintains a regular connection with the field activities as those programs do not cover a vast area. Also there are some branch-specific programs which are supervised by the branch head. For any program, the executive chief of the organization is the ultimate decision- maker. The Branch Managers and Zone Managers usually look after the regular affairs of their respective offices. They have the authority to allocate, supervise and steer project activities. For any irregular incidence, they have to discuss with or report to the higher authority before taking any decision. Often the independence in decision making of a particular person depends on his relationship with the ED. Centralization of power in the hand of the ED helps in quick decision making but there is always the risk of exploitation of power by the chief executive.

9.5.3 List of Documents Maintained within a PO

Generally the POs maintain the following documents for successful operation of the credit program. Names of some of the documents may vary across POs but the activity remains almost same.

1. Application form for membership in a group- used for admitting new people in a group.
2. Declaration letter—after forming a new group, the president and secretary of the group are elected (or sometimes selected with the consensus of the members) and in a meeting the declaration is given on this matter.
3. Savings record book—each member of a group is given a savings record book to maintain her record of weekly savings.
4. Credit record book – When a member starts taking loan, she/he is given such a record book which contains the record of loan disburse and weekly repayments.
5. Savings collection description—This belongs to the field officer to maintain the record of the collected weekly savings from each member. This is maintained in the office.
6. Cash credit voucher—This is used by the area office. Through this voucher the collected cash is submitted to the area office by the field office.
7. Weekly description of the current credit—In the last day of each week, each field officer submits a report to the local office on collection of repayment during the respective week. All such reports of the field officers of an area go to the area office immediately and then to the zone office.
8. Application form for taking away the savings – If a member wants to take away her savings, this is the form to fill in. If the application is approved by the area manager, the member may then withdraw all her money and cancel the membership.
9. Debit voucher—This is used by the area office to take away money from the bank in maintaining different expenses.
10. Transfer voucher—This the document, which contains information of both credit distribution –installment collection and savings collection- distribution. The area office maintains this.
11. Application form for credit—This is the form, which is used by the members to apply for credit.
12. List of credit distribution—The amount of credit that has been distributed by a field officer in a working day is reported to the area office.
13. Monthly report of credit-installment collection—This is a monthly report that goes from the field officers to the area office.
14. Monthly report – This report goes from the area office to the zone office in each month.
15. Project planning form
16. Documents on loan default
17. Default reduction planning form
18. Forms for collecting information on the group members.

9.5.4 Member- Program Alliance

In most of the MFIs, members are usually taken on the basis of a program. However in some cases specific programs are initiated focussing a specific group of people. Education program of SSS for the children of sex-workers is such a case. OSDER initiates research on the socio-economic condition of the covered area to get an idea of the development needs and initiates programs on feed the need.

9.5.5 Marketing Service

SSS and NGSS do not provide any marketing service to their beneficiaries. Only vegetables produced by SSS are sold to the employees of SSS. When emerged, OSDER used to provide marketing facilities to the 40 members it had. It used to buy milk, eggs and agriculture goods produced by members at a higher price (compared to the price in the local market) and sell them in Dhaka through home service. Thus the members could earn more. For example, at that time local price per seer of milk was Tk. 10, which was bought at Tk. 15 by OSDER. In course of time, local prices of those goods increased and other producers also started enjoying higher income. Thus, direct marketing service was provided to the members during 1992 to 1994. In 1995, when number of beneficiaries increased, it became difficult to continue with this service. Sometimes, timely delivery of goods to Dhaka was hampered by transport problem and the goods got rotten. So OSDER sold the marketing business (including the goodwill) to Bichitra Distribution for one lakh taka. However the organization is still providing indirect marketing facilities to the members. It has formed a group with 20 wholesalers of agricultural produce, located in Kaoran Bazar (Dhaka). The members from villages sell their goods to these wholesalers in Dhaka.

9.6. Performance of the POs

9.6.1 Issues in Understanding Performance

The POs have various types of programs as discussed above. The IGA (income generating activities) and consequently credit operations, however, dominate the direct economic benefits the clients receive. The indirect economic benefits of course constitute the various impacts such as changes in the income level, employment and asset acquisition that have been analysed elsewhere within this report. Given such impact, the question that we ask in this and subsequent sections are how best the POs have organised themselves so that the cost of delivery of their services is minimised. The answer to this broad question relates to several intermediate issues.

The first one relates to extent of membership. The more members a PO has, up to a limit, the cost of operation falls beyond which additional staff and logistic would be necessary to deliver the same service of equal quality. Thus, even if a PO is efficient, the cost of operation of its program may be high compared to others simply because of the fixed cost that has been incurred in terms of staff and logistics. With membership, of course its nature is important for understanding the equity of the program impact.

The second type of issues relates to credit operations, its level, trend over time and distribution by type of membership. The last one is important. One needs to understand if there are systematic influence of factors such as length or membership or positions held in the groups by the members on the amount of credit received for the distribution of the ultimate impact. To answer this question properly one needs to have information on the characteristics of the executive and ordinary members as indicated above. Thirdly, how do these characteristics relate to the group dynamics, particularly the capacity of the POs to retain their members. If they fail to do so, their cost of operation may go up simply because of such drop-outs. Thus while we look finally at the cost-effectiveness of the credit program of the POs, its explanation shall have to be sought in various aspects of operation of the POs’ programs.

The information on these issues is culled from two sources, the POs and their members. Note, however, that the information provided by the members reflect their position in relation to the POs and also other non-PO NGOs of which some of them are members.

9.6.2. Organization of Samitys and Samity Membership

9.6.2.1 Exclusion-Inclusion Principles for Membership

There are some rules maintained in each MFI for inclusion or exclusion of people in the credit program. To be included in a program, one must be a permanent resident of the program area. Moreover the programs involving credit activities require some additional qualification for membership (only the prescribed rules of the MFIs are noted here, in many cases the exceptions are commonly observed) ---

1. The member must be a poor male or female (e.g. land less and asset less, small or marginal farmer, share- cropper, petty businessman, or day labourer) who is unable to use his/her ability for lack of fund.
2. The member must not be more than 45 years old.
3. The member must have the ability to use borrowed money in income generating activities.
4. He/she must not be a member of another credit –giving organization.

Membership is prohibited for following characteristics—

1. If a female is unmarried.
2. Once a person is suspended from the MFI.

Membership is cancelled when an existing member —

1. is declared to be bankrupt by the court;
2. misappropriates group fund;
3. takes initiatives against the organization;
4. does not follow the rules of the organization;
5. does not pay weekly saving and loan repayment installments regularly;
6. is a dead defaulter
7. expires.

9.6.2.2 Current Membership Situation

Given the above general rule of membership, table 3 shows the organizational spread of the branch activities of the sample POs. It mirrors in a way the spatial spread of the branch activities that have been discussed earlier. But when the average membership in the samitys is considered it appears that in certain cases there had been quite a growth while in other cases, there had been little change. Thus in case of PO branches of GUP or Noabeki (in Rajoir and Noabeki respectively), there had been explosive growth particularly in the last few years. Average membership per samity has increased from about 14-15 to 24-25 raising the total number of members, say in case of Noabeki branch of Noabeki to 5858 in 1997 from a smallish 1350 in 1995. On the other hand, some others such as the Gabtali branch of TMSS has experienced a contraction of average membership by about a third because while the total membership of samitys has fallen by a similar percentage, the number of samitys has actually increased. Why such changes have taken place? Have members actually been deserting for other NGOs operating in the area or that the organizational weaknesses in the particular branch been responsible. We shall come back to this question later.

One aspect of the organization of the samitys is worth noting. Most are pure female samitys. And most members therefore are women. There is one significant exception, though. In case of Agailjhora branch of Proshika, men only samitys outnumber female only samitys, though not by a big margin. The same happens in case of membership. But, on the whole the men only samitys appear to be larger in size than the women only samitys. The average sizes for men and women samitys are 20 and 15 respectively.

Table 9.3

Cumulative Number of Samitys and Members by Branch of POs over 1995-97