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SKS Microfinance follows the Joint Liability group Model. The methodology involves lending to individual women, utilising five member groups where groups serve as the ultimate guarantor for each member. Our approach is to provide financial services at the doorstep of members in villages and urban colonies. This allows the poor convenience and savings in terms of cost and time associated with travelling to mainstream banks and enables SKS staff to promptly and fully collect repayments. Our loans are designed for convenience with small weekly repayments corresponding to cash flows. Small first loans inculcate credit discipline and collective responsibility. Interest and loan repayments are simplified for easy comprehension. From village selection to loan disbursal, SKS follows a clear process in its operations. Details of our operational methodology are captured below :  Before starting operations, our staff conduct village surveys to evaluate local conditions like population, poverty level, road accessibility, political stability and means of livelihood.  After a village is selected, SKS staff introduces the community to its mission, methodology and services.  Follow-up with interested women, and direct appeal to those who may not have attended earlier because of religious, class, caste or gender barriers.  Women form self-selected five-member groups to serve as guarantors for each other. Experience has shown that a five-member group is small enough to effectively enforce group peer pressure and, if necessary, large enough to cover repayments in case a member needs assistance.  CGT is a four-day process consisting of hour-long sessions designed to educate clients on SKS processes and procedures and to also build a culture of credit discipline. Using innovative visual and participatory teaching methods, SKS staff introduces clients to our financial products and delivery methods. CGT also teaches clients the importance of collective responsibility, how to elect group leaders, how to affix signatures, and a pledge that serves as a verbal contract between SKS and its members. During this training period, SKS staff collects quantitative data on each client to ensure qualification requirements are met, as well as to record base-line information for future analysis. On the fourth day, clients take a “Group Recognition Test” conducted by a different staff member than the one who trained them. If they pass, they are officially accepted as SKS members.  As additional groups are formed within a single village, a Centre (sangam) emerges. During Centre Formation, groups are combined to form a centre of 3 to 10 groups or 15 to 50 members. Weekly Centre meetings serve as a time to conduct financial transactions. Meetings are held early in the morning, so as to not interfere with clients’ daily activities. A leader and deputy leader are selected to facilitate meetings and ensure compliance with SKS procedures. In addition to financial transactions, members use the weekly meetings to discuss new loan applications and community issues. Centre meetings are conducted with rigid discipline in order to sustain the environment of credit discipline created during CGT. |
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