Chennai: Microfinance groups can effectively improve agriculture, building of water resources and the standard of life of an individual, says a finding by Dhan Foundation, an organisation for innovation in rural development.

A series of case studies presented during a seminar here on Monday showed that small loans for farmers in Theni, Ramanathapuram, Kancheepuram and Madurai districts helped to build land and water assets.

For instance, farmers groups in seven blocks in Theni district had availed themselves of loans from Canara bank. Five groups were allocated Rs. 94,600 to carry out rejuvenation of tanks and ponds. As this amount was used as people's contribution, the district administration provided grants for the renovation work.

Similarly, Dhan started microfinance groups in Sirumaniyendal in Ramanathapuram district with the focus on fertiliser.

J. Elamurugu, Dhan foundation team leader in Aruppukottai, in his field experiences, lists the following benefits: getting the fertiliser at lower rate than market rate, obtaining the supply at the doorstep and easy availability of credit facilities.

While credit facilities for women's self-help groups were easily available, banks were first resistant to the idea of loans for men's groups. However, through Dhan's Vayalagam programme, the repayment rate of loans to farmers groups was 95 - 100 per cent. "This has helped banks have more confidence on men's microfinance groups," Mr. Elamurugu says. According to Madurai team leader N. Rajasekaran, reducing the risk and vulnerability of Vayalagam members, especially if a family member dies, is important to stave off poverty. "All members of microfinance groups insure their life before credit linkage. As many as 2,246 members have insured their lives under Birla Sun Life insurance and 386 members have insured with LIC's Janashree Bhima Yozana scheme," says Mr.Rajasekaran.

Another benefit of microfinance is that members are able to react quickly to emergency situations and mitigate loss.

"During the recent flash flood in Madurai district, microfinance groups used the common funds to immediately close tank breaches," says the team leader.

Savings have also improved. Six microfinance groups in Ponpadhirkoodam in Kancheepuram district now have a total saving of Rs. 1.97 lakh. Dhan foundation is also working towards deficit rainfall insurance for the farmers in rain-fed agriculture areas.

"Deficit rainfall insurance is a potential means of managing loss but it is still in the early stages of development," says Dhan foundation representative M. Karthikeyan.

He says that insuring for specific rainfall events, for example, loss due to excessive rain in a single day must also be part of the scheme.

For more details, Dhan can be reached at 26280236 (Chennai) or 04522601673 (Madurai).

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