c

Report of the field trip to Chidambaram

office of Madura Microfinance Limited
c

ccc cccccccccccccccc c

ccccccc
cc c
 

c c

ccccccccccccccccccccccccc ccc c
c

c c

Amrita Juhi
Roll no. 57
The structure of this report is as follows:-
 3.cGrowth of Madura Microfinance Ltd. over the years
2.cOrganizational Structure in Madura
3.cOperations of Madura Microfinance
4.cMeeting with a SHG in Bhuvanagiri

a



  
  

Bank of Madura (BoM) began in 3 43. Mr. K.M. Thiagarajan was the founder. He started the
rural banking operations in 3 5. The target was women, as they believe that involvement of
women is instrumental in economic development of society as a whole. Also, Women are more
responsible with money as their mobility is reduced due to family responsibilities. By, 2000 they
had more than 3500 Self Help Groups. In 2000, BoM merged with ICICI Bank as they believed
that merging with a nationalized bank will help them in higher growth possibilities. In 2002, the
partnership ended as ICICI wasn¶t interested in the development of women and SHG¶s, which
led to the formation of Microcredit Foundation of India. By, 2003 number of groups had risen to
30000. They applied for NBFC license in 2005 and were declared an NBFC by RBI in early
2006.

There are regional offices ± Madurai I, Madurai II, Trichy, Karaikudi, Sivagangi, Selam,
Chidambaram, Tindyvanam and Chennai. The headquarters are also in Chennai. There are a total
of 57 cluster managers in a total 308 cluster centers controlled by these regional offices. Each
cluster center is a cash point. Under Chidambaram office alone, there are about 5000 SHG¶s.
Under each cluster centre, There are about 650- 700. Regional HR takes care of 6 cluster
managers. There are about 36- 20 members per SHG. Rs. 7500 is given to each person in the
beginning. Maximum amount given to each individual is Rs. 30000.

Pre 2000, bank officials formed the groups. No short term consumption loans were given. A
group¶s activities and the tendency to save were reviewed for a year and only after that loans
starting with Rs. 30000 were given. The recovery rate was 300%, but due to completion from
other MFI¶s who were giving loans at a much shorter notice, Madura was also forced to change
their ways. Presently, their recovery rate is over 0% and the interest rate that they charge is
3 .8% which among the lowest in the industry. The core asset in their own words is their
genuine care for economic development of the society.

0   

   
 

c


  c


 c  c




c 

c 

c 

cccc
& 
c 

c


  c %&#
'

#
!

 c"#

$
c

c $
c



c 







& 

c








   
c( 
c
& 
c%&
$

½  



  

Unsecured loan disbursement is the main activity. There are four basic loans PLR (Pre Linkage
Loan), ATL (Activity Term Loan) ± I, II and III. After successfully paying back these loans,
housing loans are also given. Housing loans are of two kinds:-

3.c House renovation, maximum Rs. 50000

2.c Construction, maximum Rs. 300000

Each cluster centre has one mentor. Mentor is assigned the task of identifying ways that people
can pay. Mentor forms the group and looks for trustworthiness and repayment capacity. For each
individual, he checks the identity and address proofs. After screening of group by the mentor,
their case goes to the Cluster centre, wherein they review the case and approve/ disapprove the
loan. Cluster manager himself disburses the money. Each mentor has to form minimum of 240
groups, which translates to a business of 7 crores.
Total time for a group to get the money is 30 days. Repayment schedule is given at the time of
loan disbursement date. Group members pay Equal Monthly Installments by rotation. Madura
Microfinance has created Member Welfare Association. Their members are involved in group
meetings. Each group has 2 group meetings every month. First meeting is about collections and
accounts. Second meeting focuses on awareness and information material provided by the
MWA. The members of MWA are trained in Madurai for this purpose and is paid Rs. 300 per
meeting. Each member can volunteer for upto 40 groups. The performance of the Mentor and the
MWA is also regularly monitored. The groups are sensitized to understand the importance of
MWA involvement. Cluster Manager also pays surprise visits to review the progress of the
groups. Savings bank account is opened in the name of the group in commercial banks. When the
group has enough savings in the account, then it is transferred in the MFI account and then the
group can qualify for higher amount loans.

Most people start ventures like tea shop, petty shop, idli shop, etc. They organize trade shows
from time to time where these ladies can display their products. They also distribute pamphlets to
all SHG members wherein name, kind of business; phone no. etc is listed of the members.
According to the RBI, an individual can borrow from upto 4 NBFC¶s. NABARD has given
jurisdiction that loans upto thrice the amount of term deposit can be given.

The changes in the operations are that they are trying to move towards a centralized database to
reduce the defaulters. No legal clause can force repayment, so only peer pressure works. An
incentive of Re. 3 per member is given to the MWA if repayment of the EMI is done within the
month.

 0a 

  

We attended a SHG meeting in Bhuvanagiri. This group was one of the best performing groups
in the region. There were about 7 members who were present. These women weave silk saris as a
profession. Each sari is sold for Rs. 2000. They started with PLR and now slowly they have
moved to an individual loan of Rs. 35000. Every month, they purchase raw materials worth Rs.
30000. Each sari takes about 4 days to be completed, so the average they make 6 saris a month
which gives them a profit of Rs. 5000 per member. There is a pass book for a group and for each
member as well. Now that they have been sanctioned a loan of higher amount, they can but more
weaving machines and get other family members also involved in the business.
Women from the SHG weaving a sari Passbook of the group

Repayment schedule of the SHG