In 2008, with the aim to stop child labour and improve the economic stability of the vulnerable families in India, SIVA Trust with funding from TdH-NL has initiated the ‘Revolving Fund’ programme in Tirunelveli district of Tamil Nadu. Around Rs. 40 lakhs was provided a revolving fund by TdH-NL to SIVA Trust for financing women, minorities and weaker sections of the society in rural villages and urban slums in Tirunelveli. Loans at affordable interest rates were provided to target beneficiaries.
Partnership with TdH-NL
Terre des Hommes –The Netherlands (TdH-NL) is a child rights organisation registered as a Foundation in the Netherlands, with the aim to improve the quality of life of children who are living in difficult circumstances all over the world, regardless of race, faith and affiliation. The Vision of TdH-NL is “A world in which children are no longer exploited. We will continue our work until this is accomplished” and the Mission statement of TdH-NL is ‘Terre des Hommes-Netherlands prevents child exploitation, removes children from exploitative situations and ensures these children can develop themselves in a safe environment’. More details – www.tdh.nl
TdH-NL has been providing grants to various NGOs in India to support their programmes including community development focusing on improving the health, education and economic status of the children, youth and women.
Overview of the Revolving Fund (RF) Program
TdH-NL has provided a revolving fund to SIVA Trust, a charitable organisation based out of Tirunelveli district in Tamil Nadu, India. Since 1995, with the support of TdH-NL, SIVA Trust has addressed issues ranging from water sanitation, housing, nutrition, livelihoods, microcredit, child clubs, pre-schools to shelters for women in need besides relief during displacements due to the conflict or disasters. This revolving fund was provided to train and empower the women in their own preferred livelihoods and give access to micro credit for launching their livelihood activities. The intended outcome of this project is to enable 2000+ deserving women earn adequate incomes through livelihood activities for meeting the basic needs of the family. With the incomes earned the women can repay their loans; pay the for better education of their children and take better care of their children while exposing themselves much less to exploitation.
Progress and Outcomes of the RF Program
Under the partnership between SIVA Trust and TdH-NL, a revolving fund of INR 4 million was given to the trust. That totals to an amount of INR 2 million given to SIVA trust.
It is interesting to note that as on March 31, 2017, the fund has grown to INR 55,969,500, calculated from the total loan amount disbursed. The loan is lended to the members at the rate of 24%, with the condition 12% to remitted back TdH-NL. However it is currently rotated, resulting in increase in fund value at INR 8,971,491.
The loan has benefitted:
- 147 SHGs
- 2,038 members
- 2,343 is number of loans availed
Key Highlights of the Fund
The table below shows how much benefit has been achieved so far from an initial investment of Euro 538,803 in the year 2008.
(Amount in INR)
|Initial Fund provided by TdH-NL||Growth of the Fund||Current Fund Value|
|Total no. of Self-Help Groups (SHGs)||Total Members Availed Loans||Total Number of Loans availed|
Growth of Fund, since 2008
|increase in the fund value||increase in growth of fund||rotation of initial fund|
It is to be noted that the block that SIVA trust serving is often faced with lack of availability and accessibility to finance and capital and if available, the interest rates can vary from 5-10% per month, usually at flat rate of interest. It was for one of the main reasons SIVA Trust, along with consultation with group members, have decided to provide lending at an interest rate of not more than 2% per month or 24% per annum.
Currently RF is loaned at 24% per annum to the member. Here is a break up of how the interest rate or service charge as it is called is divided at.
- 4% is given back to the group
- 8% is taken out that meets out the monthly office expenses, including staff salaries
- 12% is for TdH-NL; currently is pooled within the group
Growth of Fund
SIVA Trust has retained the accumulated fund of Rs.89,77,491/- (Rupees Eighty Nine Lakhs Seventy One Thousand Four Hundred and Ninety One Only) as on March 2017 and would further increase to Rs.97,16,120/- (Rupees Ninety Seven Lakhs Sixteen Thousand One Hundred and Twenty Only) by March,2018, including the service charges accrued with the RF supported by TdH-NL.
From the above said Revolving Fund amount with the accumulated service charges, a maximum amount of Rs. 11,16,944/- (Rupees Eleven Lakhs Sixteen Thousand Nine Hundred and Forty Four Only) has been decided to be converted as one year grant to support the project titled “Sustainable Educational Support to needy Children through Socio-Economic development” of target families for the period of April 2017 to March 2018.
Benefits acquired by RF Loan
On discussion with the Trustees and staffs at SIVA Trust and visiting the members, here are the list of benefits stated:
- Flat rate of interest versus diminishing rate of interest: It is unfortunate that even MFIs/ NBFCs working in the area charge flat rate of interest. However, at SIVA Trust, the revolving fund is given at diminishing rate of interest that gives the members a sense of relief that their burden of interest is also reduced as the months pass by.
- Flexible repayment schedule: The SHGs are empowered to fix their own repayment schedule which might range from 10 months, to 12 months and to even 20 months. However, currently none of the RF loans are given more than 20 months installment period. Sometimes, the members repay the loan when seasonal incomes come in well within the repayment schedule.
- Purpose-driven loans: Every loan given under the RF is conditioned to be used only for income generating activity which could vary from buying goats/ cattles to aid the operational expenses of agriculture or invest in any non-farm activity like buying a sewing machine, setting up petty shops, etc, though with very few exceptions. Members and staff at SIVA trust both think that having this tag ensures that members are discipline in their investment and also ensures repayment of the loan.
- Systematic doorstep service: It is to be noted that the block has only 1 Nationalised bank and 3 cooperative banks to serve the financial need of the entire population there. Clearly, the members felt that accessibility and availability of loan, literally, at their doorstep is highly appreciated. Importantly, the team has meticulously routinized the process that a member can be sure of when exactly at what time she would get the money without fail.
In December 2017, TdH-NL India Program office commissioned a study to conduct “Monitoring of TdH-NL’s Revolving Fund Program” implemented by SIVA Trust in Tirunelveli district of Tamil Nadu. The Gateway Consultancy, an international development consultancy firm, conducted the study.
Download and read the full report here – SIVA Trust RF Monitoring Report.
This report details the progress and outcomes of the Revolving fund, along with case studies of success stories from the field. Besides this, the report also puts forth list of recommendations and suggestions to improve the efficiency of the current processes and systems, accelerate the project and further deepen its impact.
Case studies of our RF program:
- Read about the impact of the TdH-NL’s Revolving Fund Program in an SHG and in a village: Case Study_ Transformation of an SHG and a village
- Read about impact of our RF program that enabled an enterprising women farmer on her path to entrepreneurship – An Enterprising Woman Farmer and Entrepreneur.
- Read about how our women’s SHGs is helping shy women to achieve financial independence – Achieving Financial Independence_ Case study.
To read more case studies about the impact of our RF and other programs, visit our page here.