Microfinance Methodology

Samhita's microfinance methodology has its roots in the Joint Liability Group (JLG) system of the Grameen Bank of Bangladesh (Nobel Peace Prize awardee, 2006). 5 poor women get together to form a group in order to avail of Samhita's microfinance services. They are of similar age and socio-economic status, unrelated to each other, neighbors who know each other well and trust each other in matters of money. A village center begins to operate when there are at least 3 groups, though a center close to another may begin with 2 groups.

A 4-day training covers Samhita's Financial Literacy training and the procedures of the microfinance program. Illiterate members are taught to sign their names. On successfully passing a test, members start attending a weekly center meeting where all transactions - loan proposals, disbursements and collections - occur transparently in the open. Microfinance services currently include microcredit, microinsurance and micropensions.

Samhita has had to innovate and adapt the basic Grameen model significantly to address various challenges unique to its geography - tough forested terrains, very low population density at a third of neighboring states, poor human capital and infrastructure such as road and markets, etc.

Samhita operates complete branches with as few as 1 or 2 staff members, allowing remote communities to be serviced through tiny branches. Branches share high capital resources such as laser printers at unit centers. Disbursements may be in the form of cash or cheque, at the center or at the branch. Products are weekly but increasingly a monthly payment option is being offered. 

Samhita exclusively utilizes free and open source technologies since inception in 2007. Samhita was a pioneer in using the Fedora / Linux distribution on netbooks since 2008. The network's technology partner eCubeH created the Microfinance StreamsTM suite of enterprise applications which run on servers, netbooks and smartphones, and are available for free to Samhita. SFTP and web servers are hosted in-house at eCubeH data centers leading to great flexibility in configuring services. Branches transmit daily reports electronically, and institutional databases are consolidated daily. Real-time solutions are being developed using Android smartphones and the eCubeH web services platform. Many other experiments are in progress to extend reach into remote communities, while simultaneously maintaining high level of controls and cost containment.

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