By Ramesh S Arunachalam, Rural Finance Practitioner
I had an interesting telephone conversation with a colleague from Netherlands sometime ago. We were talking about multiple lending and shared JLGs/Clients and then, he suddenly asked me a question, “Have you ever thought of how the current set of fast growing MFIs acquire their clients?” Spontaneously, I said, “they perhaps form JLGs” and then realised that I could have made a mistake as my mind went back to the shared JLG/clients model that I had been seeing very often – where a particular JLG and its member clients are serviced by different MFIs on successive days of the week and the same happens to other JLGs in the same village/cluster.
The Concept of Shared JLG/Clients: Table 1 below will illustrate this and let us assume that a cluster of 3 hamlets have 7 JLGs. Each JLG has 5 members and there are 35 members in all – the normal size of a centre.
The above is an illustrative case and it highlights how JLGs and clients may be (could be) shared in practice. However, I have personally seen several cases where there are 4 – 7 JLGs in a cluster of villages and at least 3/5 JLGs are shared between MFIs – Mostly with weekly repayment and 1/2 cases with monthly repayments.
Therefore, while multiple lending and over-indebtedness are, as cited, a major reason for the present Andhra Pradesh micro-finance crisis, there also seems to be reasonable evidence to the fact that the ‘phenomenon of shared JLGs and clients’ is perhaps an important antecedent factor that deserves attention. The following questions seem relevant here:
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