The National Credit Fund for Women, India

The National Credit Fund for Women

Rashtriya Mahila Kosh (RMK)

The National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK) was set up in March 1993 as an independent registered society by the Department of Women & Child Development in Government of India's Ministry of Human Resource Development with an initial corpus of Rs. 310,000,000 - not to replace the banking sector but to fill the gap between what the banking sector offers and what the poor need.

Its main objectives are:

a) To provide or promote the provision of micro-credit to poor women for income generation activities or for asset creation.

b) To adopt a quasi-informal delivery system, which is client friendly, uses simple and minimal procedures, disburses quickly and repeatedly, has flexibility of approach, links thrift and savings with credit and has low transaction costs both for the borrower and for the lender.

c) To demonstrate and replicate participatory approaches in the organisation of women's groups for thrift and savings and effective utilisation of credit.

d) To use the group concept and the provision of credit as an instrument of women's empowerment, socio-economic change and development.

e) To cooperate with and secure the cooperation of the Government of India, State Governments, Union Territory administrations, credit institutions, industrial and commercial organisations, NGOs and others in promoting the objectives of the Kosh.

f) To disseminate information and experience among all these above agencies in the Government and non-government sectors in the area of microfinance for poor women.

g) To receive grants, donations, loans, etc., for the furtherance of the aims and objectives of the Kosh.

The Kosh has three main roles:

Wholesaling Role -

It acts as a wholesaling apex organisation for channelising funds from government and donors to retailing intermediate microfinance organisations (IMOs). [The Kosh has so far received only a one-time grant from government and has not needed to raise funds from any other sources].

Market Development Role -

It develops the supply side of the micro finance market by offering institution building support to new and existing-but-inexperienced IMOs by structures of incentives, transfers of technology, training of staff and other non-financial services –

[The Kosh realises that it can play a value adding wholesaling role only when a sufficiently large and well established micro finance sector already exists - this depends on the number of IMOs and the sustainability of IMOs - subsidised institution building increases the equity of any IMO as much as grants do - large and premature disbursement of funds to the IMO can reduce the effectiveness of any institution building effort].

The office of the Kosh is situated in New Delhi. The Kosh does not have any branch offices. The Executive Director is the chief executive officer of the Kosh. The Executive Director functions under the overall supervision, direction and control of the Governing Board.

The Governing Board comprises 16 members consisting of senior officers of the Government of India and State Governments, specialists and representatives of NGOs active in the field of microfinance for women. The Governing Board is chaired by the Minister in charge of the Department of Women & Child Development in the Government of India.

The General Body of the Kosh consists of all members of the Board, institutional members and individual members.

Micro-finance, as is being practiced by the National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK), could be defined as a set of services comprising the following activities:

1. Micro-credit: Small loans; primarily for income generation activities, but also for consumption and contingency needs.

2. Micro-savings: thrift or small savings from borrowers' own resources.

Microfinance approach is based on certain proven truths which are not always recognised. These are:

1. That the poor are bankable; successful initiatives in micro finance demonstrate that there need not be a trade off between reaching the poor and profitability - micro finance constitutes a statement that the borrowers are not 'weaker sections' in need of charity, but can be treated as responsible people on business terms for mutual profit.

2. That almost all poor households need to save, have the inherent capacity to save small amounts regularly and are willing to save provided they are motivated and facilitated to do so.

3. That easy access to credit is more important than cheap subsidised credit which involves lengthy bureaucratic procedures - (some institutions in India are already lending to groups or SHGs at higher rates - this may prevent the groups from enjoying a sufficient margin and rapidly accumulating their own funds, but members continue to borrow at these high rates, even those who can borrow individually from banks).

4. 'Peer pressure' in groups helps in improving recoveries.


The National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK) is working exclusively for poor women. Its loans are available solely and entirely to this target group. The reasons for this are several:

a) Among the poor, the poor women are the most disadvantaged - they are characterized by lack of education and access to resources, both of which are required to help them work their way out of poverty and for upward economic and social mobility -

b) The problem is more acute for women in countries like India, despite the fact that women's labour makes a critical contribution to the economy - this is due to low social status and lack of access to key resources -

c) Evidence shows that groups of women are better customers than men - they are better managers of resources - benefits of loans are spread wider among the household if loans are routed through women - mixed groups are often inappropriate in Indian society - record of all-male groups is worse than that of all-women groups, everywhere -

Guidlines for Monitors

Before sanctioning credit limit or any other facility to NGO under any scheme, Rashtriya Mahila Kosh satisfies itself about the experience, credibility and infrastructure facilities available with them to implement RMK programme. It is done by conducting the pre-sanction study either through RMK officials or deputed institutional monitor. Further the monitors are also assigned post-sanction monitoring studies to know the end use of RMK loan released to NGOs/borrowers for implementing the sanctioned programme.

It contains proforma of undernoted documents:-

(A) Pre-Sanction Study - During the pre-sanction study the monitor studies the following documents:-

a) Verification of original registration certificate, Memorandum of Association and bye-laws of NGO.

b) Whether Bye-laws of NGO/VOs/VAs etc have proper clause for borrowing.

c) Experience in credit management and recoveries including sources of funds and verification from the field,

d) Financial details as per audited accounts and balance sheet for past three years.

e) Details of SHGs members, thrift, savings and loans given and to assess correctness of recovery of internal loans to ensure compliance with our requirement that the recovery percentage of internal loans should not be less than 90 percent of the amount of loan due for repayment during relevant period.

(B) Post-Sanction Study - During post-sanction study undertaken by deputed monitor, he/she performs following basic functions:-

1. Verification of information/certificates furnished by the NGO.

2. Quality of fund management by the NGO.

3. Whether separate books of accounts for RMK loan have been maintained.

4. Accounting system followed by the NGO. The monitor also verify whether loan from RMK is being shown as liability in the balance sheet or not.

5. Comment on the capacity of the SHG in credit management.

6. Random check on utilization of loans by beneficiaries and to compare it with the information furnished in the loan application.

7. Verification of the documents such as resolution of the Managing Committee from original documents.

8. Verification of the constitution of the current Managing Committee, experience in thrift and credit management, SHG details etc.

9. Checking the diversion in the utilization of the loan as regards the purpose for which the loan was sanctioned,

10. Whether the loan was given for consumption purpose in excess of admissible limit,

11. Whether the loan was not disbursed within the prescribed period

12. Whether the loans were given in excess of prescribed limit per borrower

13. Whether there are any unutilised funds, if so whether the same has been refunded to RMK.

(C) General Terms and conditions under Main Loan Scheme (MLS), Loan Promotion Scheme (LPS) - Whether the NGO has adhered to the terms and conditions of sanction of loan if no deviations are to be specified with reference to unit cost per borrower, rate of interest charged from ultimate beneficiaries and system of charging interest from ultimate beneficiaries etc.

(D) Disbursement Certificate

(E) Utilisation Certificate

(F) List of Borrowers (Part I and II)

(G) Quarterly Progress Report

Accounting System for SHG and NGO

It provides details and proforma of records to be maintained at SHG and NGO level.

Document Execution

The NGO partners who have been sanctioned loans are required to execute following documents in the office at New Delhi:-

a) Agreement-cum-Guarantee Deed

b) Promissory Note

c) Resolution passed by the Managing Committee authorizing the borrowings from the RMK and also the delegating power to borrow from the RMK.

d) D.P. Note Delivery Letter

e) Proforma for computer database on NGO profile

f) List of Governing Board Members as on the date

g) Application for Membership enclosing therewith a demand draft of `.500/- if required

h) Application for drawal

i) Any other information/undertaking as is required will have to be also furnished.

The execution of documents by the Authorised representative of the NGO is to be witnessed by two persons.

Time limit prescribed for disposing of loan application as laid down in Citizen Charter is as under:-

Acknowledgement of receipt of loan application - within 7 days from receipt of the application.

Process of sanctioning of loans :-

1. Sanction of loan up to `.20 lakhs - within 2 weeks after preliminary scrutiny and submission of pre-sanction study report by the monitor.

2. Loan sanctions above 20 lakhs - within 1 month after preliminary scrutiny and submission of pre-sanction study report by the monitor.

Disbursement of loan:-

1. Release of first installment of loan within one week of execution of documents.

2. Release of second installment within two weeks of submission of post sanction study report by the monitor.

Books & Registers to be maintained at NGO level and SHG level

NGO Level

1. SHG Profile.

2. SHG Saving Register.

3. SHG Internal Loan Register.

4. SHG External Loan Register.

(Separate loan ledgers are to be maintained for separate funding agencies)

5. Demand, Collection, Balance, Overdue Registers for internal loan and external loan, and loa extended by the NGO to the SHG from its own fund.

6. Cash Book.

7. General Ledger.

8. Vouchers.

9. Resolution/Meeting Register.

SHG Level

1. Members Profile.

2. Members Saving Register.

3. Members Internal Loan Register.

4. Members External Loan Register.

(Separate loan ledgers are to be maintained for separate funding agencies)

5. Members Demand, Collection, Balance, Overdue Registers.

6. Cash Book.

7. General Ledger.

8. Resolution/Meeting Register.

9. Loan/Savings Pass Book.

In order to know the status/performance/progress of SHG, the NGO has to design one monthly progress/ performance/status register and get information from each SHGs promoted by them. The NGO has to compile the monthly programme report at HO level.

The highlights of few innovative activities introduced by RMK for which micro-credit can be extended


A scheme to enable women member for acquiring a peace of land either for her residential purposes or for cultivation. She can also avail loan for redemption of mortgage property or to take land on lease. The group may also avail the loan for undertaking lease of a common plot of land / pond / similar kind of properties from PRIs/State Government or from any individual for undertaking income generating activities on group basis under Main Loan/Loan Promotion/Revolving fund/Gold Credit Card schemes etc.


Recognizing the importance of health and other small consumption needs it has been envisaged that a component of consumption credit will be included in the loan profile. This will help the member to meet the expenditure for herself or her family member in case of emergencies, hospitalization or other emergent need under Main Loan/Loan Promotion/Revolving fund/Gold Credit Card schemes etc.


The focus of this scheme is on exploiting newly emerging opportunities in I.T. sector (call center attendance, cyber cafes, data entry operators) as well as developing skill in traditional service occupations (house keeping, garment designing/fabrication) under Main Loan/Loan Promotion/Revolving fund/Gold Credit Card schemes etc..


Credit for assisting the women members in crop production, land improvement, post harvest infrastructure and related activities under Main Loan/Loan Promotion/Revolving fund/Gold Credit Card schemes etc.


Support under the scheme is focused in districts with high percentage of landless families. The women member are supported for off-farm livelihood such as trading, marketing, linkages to the other sectors along with training and escort services under Main Loan/Loan Promotion/Revolving fund/Gold Credit Card schemes etc..

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